Ep 44. Crypto Pi Day 🥧
Ukraine Crypto Payments. EU ban bitcoin mining. Holy Metaverse. Play-to-earn Africa
Tomorrow (3/14) is Pi day! Yes, guilty as charged. I’m a recovering math and science nerd. Pi day is an annual celebration of the mathematical constant “pi” which relates to the circumference of a circle. It’s also a great excuse to eat lots of pie.
In honor of Pi day, I wanted to take a walk around the world and touch on a couple crypto relevant stories
Ukraine vs Russia: Crypto in war?
EU may ban proof of work - misguided?
Jambo: Can Play to earn take off in Africa?
1. Ukraine 🇺🇦 vs Russia 🇷🇺: Crypto in war?
War is an ugly business. It brings out the worst of humanity. Yet even in those dark days, heroes emerge and necessity gives birth to innovation.
Over $100M of crypto has been donated to Ukraine from around the world. Without crypto, many of these donations would have taken 2+ business days to be processed and charged up to 6% fees. But with crypto, we have solutions that provide instant, free-to-near-free international payments.
Speed can be the difference between life and death. Imagine you lived in the US but your loved ones were under siege in Ukraine. They urgently requested money to flee. It could be heart wrenching having to wait 2+ business days. Mind you, if the request came on Friday, funds might not arrive till Tuesday. This could be unnecessary exposure.
Many Western governments and companies have put in place sanctions against Russians. This culminated in 7 leading Russian banks being cut-off from the SWIFT global payment network.
SWIFT is a global payment messaging system. It links over 11,000 banks across 200+ countries. The system does not transfer money rather its like an email system for banks. It conducts about 42 million messages every day. The ban on 7 Russian banks would cause inconvenience but I expect they might eventually develop workarounds over time. It remains to be seen how effective the sanctions are. Could crypto provide a workaround?
The other side
In Nigeria, we say, when two elephants fight, the grass suffers. Deep wounds are being gored on both sides. Much of the US news coverage is focused on Ukrainian courage amidst Putin’s over-reach. I have also been thinking about regular Russian citizens - they did not choose this war.
The sanctions and exits of Western companies are dealing a heavy blow to the their economy. Global companies like McKinsey & Company, Visa, PWC, McDonald’s are among the dozens which have ceased operations in the country. Many Russians now find themselves without a job at the exact moment their local currency (the ruble) has lost 40% of value against the US dollar and inflation rising.
Crypto could offer some solutions for them too. Russians could convert their life savings from rubles to US-dollar backed stablecoins or Bitcoin. Out-of-work Russians could consider Play-to-Earn games. Crypto payments could provide optionality in the event that sanctions.
My heart goes out to Ukraine 🇺🇦 and all who have had their lives disrupted by the invasion.
2. EU 🇪🇺may ban proof-of-work
The European Union (EU) has a legislative framework for governing digital currencies, it’s called Markets in Crypto Assets (MiCA). It contains a provision that could limit the use of proof-of-work cryptocurrencies like Bitcoin and Ethereum
Proof-of-work has been a lightning rod as it is an energy-intensive mechanism. Some environmentalists have decried coal-powered bitcoin mining in China as detrimental to the fight against climate change. It is in the in this vein that proof-of-work came under heavy scrutiny. However, I don’t think this premise is based on full understanding of the current state.
Bitcoin miners are highly mobile and incentivized to pursue the lowest energy source. Today, 39% of bitcoin mining is powered by renewable energy while only 13% of US power generation is renewable (EIA). Bitcoin mining can subsidize capital investments to build more renewable energy facilities.
The EU is right to consider opportunities to reduce carbon footprint. But it is odd to start with Bitcoin mining given its miniscule carbon footprint compared to other related activities like the traditional banking system (650x), gold mining (90x), and paper currency printing (11x). Furthermore, a 1% reduction in carbon emissions from global aviation sector would be 5x larger than total carbon emissions associated with Bitcoin mining. Shouldn’t we focus on that?
3. Jambo: Play to earn in Africa💰
Last year, I shared the story of how Play-to-earn NFT games were providing thousands of Filipinos a means of livelihood. Africa has many of the same strong fundamentals: 60% of the population is below 24 years old and almost 50% of university graduates in Africa are unemployed.
James Zhang, a 3rd-generation Chinese-Congolese, founded Jambo in Kinshasa to capitalize on the same trends in Africa. Jambo’s goal is to become the Web 3.0 super app for Africa. They have already reached 12,000 students across 14 countries (Morocco, Nigeria, Ethiopia, Equatorial Guinea, Kenya, Congo, Uganda, Rwanda, DR Congo, Tanzania, Zambia, Namibia, Madagascar and South Africa).
The students go through a 10-weeek program to explore opportunities in play-to-earn gaming and decentralized finance (DeFi). Jambo also takes on some of the students to become local ambassadors. Jambo provides scholarships which enables students to earn money. In some cases, students are making 2x what their salary might be.
Jambo recently raised $7.5M from a group of investors including Coinbase Ventures, Alameda Research and other notable crypto investors. The goal is to achieve 1M downloads by the end of year.
Too often, US VCs looking to invest in Africa focus in on Nigeria, South Africa and Kenya. It makes sense these are some of the most mature and dynamic hubs on the continent. However, it belies the difference and opportunities in the other 51 countries in Africa. I’ve been impressed by Jambo’s strategy of quickly getting boots on the ground in a a variety of countries.
4. Holy Metaverse ⛪️✝️
This week, I learned that there is a VR Church in the metaverse! They host Sunday services, weekly groups, and offer volunteer opportunities…100% in the metaverse. The clincher is that it was established in 2017!
One of the great hopes of the metaverse is to improve access. This has proved true in the VR Church. One of the leaders shared how she had been diagnosed with a neuro-muscular condition which effectively left her homebound since 2010. VR Church has given her an avenue to be actively engaged in a community.
Just when I was thinking this was pretty fringe stuff, today my sister and brother-in-law shared that their church was planning to run part of their youth summer program in the metaverse.
Church attendance in the US has declined in recent decades. It makes sense to leverage technology to reach the next generation. However, VR Church proves that there is staying power. It delivers on creating a more accessible and global experience. What a great time to be alive.
I hope you have a wonderful Pi Day and week ahead.