Where is the money in 2021. 2020 In Review.

“Never far behind, ’cause I think too forward. All about the grind like me so horny” — Jay Z (Dead Presidents 3)

This is to the supporters, stakeholders, customers, subscribers of all my ventures. But also for anyone who cares to read this at all. Most importantly, I wrote this for myself as an exercise to articulate my thoughts about the year 2020.

It’s no secret that 2020 has been a very challenging year for the world. I’m writing this on Christmas day and I’ve seen so many social media posts of people just being thankful that they did not lose a family member. Covid-19 besides, it just seems like Darth Vader was in control and Luke overslept. Breaking into 2021, I suspect things will be a lot more upbeat due to the psychological closure of 2020.

Besides the pandemic, we’ve seen social unrest, political instability, and division around the globe. I think the world has become so complex that political structures can’t keep up or make sense of it. What’s more interesting to me is how our governments and institutions got exposed for their incompetence, it’s either we’re led by sociopaths or idiots. I hear that there’s a lack of leadership, I disagree. Maybe we need less “leadership”, via negativa.

For people around my age, we grew up thinking words like technology and IT are synonyms. When we think tech, we think computation, very flawed I know. This is due to the enormous amount of innovation that’s been happening so fast for the last 30+ years in the world of bits, especially in communication tech. So fast that older generations sometimes complain about how toxic some of these innovations are. But maybe 2020 was the beginning of the end. Maybe it’s time we see innovation in other areas like governance systems, transportation, architecture, food, etc, and come up with new models that could protect us from related risks. I hope 2021 will be the beginning of building a new future. Maybe we’ll also start to care about climate change a lot more.

I entered 2020 with lots of energy and a smoking drive to win but I wasn’t really sure what to do. I was in the middle of a bear market since 2018, saw my portfolio depleted by a lot, and my business models disrupted. Then we thought, maybe we were too deep in the crypto space, it’s time to venture out in what I like to call “real life” businesses. This meant we had to allocate some capital into building some businesses in the real world. I did and Alfajiri Ventures was born, started with fire. I was so sure that my focus in 2020 will be running Alfajiri and trading cryptos.

That business did not last 6 months, it got killed by Covid. As bad as it sounds, it made me think hard about what a business is in the world we live in. When lockdowns hit the streets, everything looked downwards with very little foresight of what will come next. 2 months in, we already saw job losses, bankruptcies, and foreclosures around the globe, also exposing how over-leveraged most people and companies were.

This was my first economic crisis as an adult. I was so scared of losing everything but also naively excited to see how I can maneuver through it, especially coming out of it better, stronger, and worthier like a movie character at war. I even tried doing a few PPE deals with very little success until something raised my eyebrows. Sales at our Buy Bitcoin Malawi exchange almost doubled, Paxful also reported an increase in their volumes, the watch time on my Youtube channel increased massively as well. The data was clear, I had to leave the real world business stuff, get back online, and really figure it out.

On Markets

If the world was as linear as politicians make it out to be, you would’ve thought everything would go to shit. But the investment world also provided diverging data. The start was linear. Equities, commodities, crypto, and many other asset classes crashed massively. We even saw oil contracts trading at negative prices. Gold and the dollar gained as compared to many other currencies. In retrospect, this was due to investors escaping shitty positions in other currencies in search of a safe haven. That was the case until the US Federal Reserve decided to go on a money printing spree to save the American economy through bailouts and stimulus checks. By June 2020, the US printed more money than in the first two centuries of its founding. Let me put it this way, about 30% of all US Dollars in circulation were created this year. This puzzled me; how is it possible that there’s more money than ever in circulation but the people are poorer? It made sense when the financial markets went bullish, some even hitting new highs.

Fundamentally, nothing is rational about the stock market rally but then markets aren’t meant to be rational anyway. It became why most people lose money by trying to reason the market. That was a result of monetary theory, the printing inflated the fiat currencies. The majority of that money went back to the rich because they own means of production. All this cash had to go somewhere but with the current rates, anything other than bonds and cash at the bank seemed better.

On Bitcoin & Crypto

Bitcoin had an incredible year, the institutional investor’s search for a safe haven has led some of them into Bitcoin and they are buying big. Michael Saylor’s MicroStrategy invested $400 Million in BTC in August, Jack Dorsey’s Square invested $50 Million of their cash in BTC as well. Bitcoin recorded a new high of $25000 on Christmas day. I’ve always believed that Bitcoin is the new gold, it seems like the world is waking up to it. I started a fund called Reflexivity in 2017 and was even buying more aggressively when everyone else was staying away from crypto during the 2018–2019 bear market. Here are my Reflexivity crypto fund results as compared to S&P 500 and gold in 2020:

Two things stood out for me this year in this market:

1. DeFi — Some might think this was just another bubble, but if you look closely. The crypto market added an extra layer of maturity, market cap, and made it comfortable for institutional money to enter the space. With innovations like flash loans, staking, liquidity mining, wraps, more stable coins, etc. One can easily predict what the future of money will look like. At the same time, it showed how immature the Ethereum blockchain is and that we need scaling solutions ASAP. Ethereum 2.0 phase 2 launched in November, hopefully, I never have to pay $100 gas fees again in the future.
2. Confirmation — For many in the crypto space, we thought the next big money will come from institutions buying crypto as a reserve or a hedge. We were wrong. Relatively, we’ve seen more VC than Wall street money. It’s very easy to spot this if you look at the tokenomics of recent successful projects in 2020 ie Compound, Uniswap, Celo, etc. To me, this is a confirmation signal for a bigger bullish market ahead. One can easily predict that there will be a race for accumulating Bitcoin as a reserve currency by institutional investors, it has already started and this will push the BTC price even higher in the future.

5 years from now, the average person may not be able to afford Bitcoin. Besides the price, the transaction fees alone will make it less economical to buy a small amount. Now is not a bad time to buy as much as you can. This is not financial advice.

The big opportunity

“The effect of a telecommunications network is proportional to the square of the number of connected users of the system.” — Metcalfe’s law

I’ve always believed that the internet is still the next big thing for business, especially in Africa. The big opportunity however is hidden behind the mindset of thinking that there is a gap between real life and online business. That alone is a multi-billion dollar opportunity because you can simply build simple tech solutions and let others do the hard work of running the “real business” just like Uber did with taxis and restaurants. In 2016, I made a decision to invest my time and money into building what I call the “online real estate”, the current growing internet penetration rate, multiplied by 10 years time, I would have enough online real estate to generate income that can sustain me for a lifetime. In Q1 2020, Africa’s internet penetration rate is 39.3%, the world as a whole is 62.9%. The pandemic was a good wake up call for most nations to prioritize investing in internet infrastructure and subsidize data costs, we should expect the penetration rate to increase much faster than usual. My rationale is that as more users get connected to the internet, they will need these very same things we currently take for granted ie content, education, tools, games etc. The right thing to do here is simply building and owning as much online real estate as possible. Now the job is to find the right things and build them. If you’re in Africa, you barely have competition and the startup costs are very little. One can get away with learning the skills to build if they don’t have capital leverage.

On Crypto University

With the mission to educate the world about Cryptocurrency. 2020 has been our best year. It was our first full year of operation. We did very well without any distraction from investors etc. Pure bootstrapped. Thousands of people from around the world registered for our courses. The world is thirsty for crypto and we did a great job of giving them that.

One thing we picked up is that Crypto companies find it very hard to understand the value of education in this space. You would expect exchanges to be pushing for more quality education since they keep flooding the market with new complex products on a daily basis, but they don’t. They instead create their crappy academies that fail to even demonstrate their own products. We see that as an opportunity for us to partner with some of them and grow even bigger. It only makes sense for them to partner with us.

With crypto becoming more relevant in everyday life, especially E-commerce, we expect tremendous growth. Some of our key goals are to:

• Launch institutional training
• Partner with legacy educational institutions
• Get accredited to issue certificates

On Khodo & Buy Bitcoin Malawi

Satoshi Nakamoto was right, Bitcoin was built to thrive in disorder. It’s anti-fragile 101. The deeper we got into lockdown, the more demand for Bitcoin there was. I was very surprised. Buy Bitcoin Malawi was booming. It was time to build an App to be able to keep up with demand. I built an incredible team around it and we launched the Khodo App, Malawi’s first Crypto App for buying and selling Bitcoin. Very soon, we will be listing Ethereum and a stable coin. Our goal is still the same, to make it possible and easy for anyone to buy Bitcoin. We started in Malawi and shall expand further into East Africa.

In 2021, we are taking an extra step and adding more services that are perfectly crafted for the ecosystems we are serving. Some of those are custodial and crypto investment products to name a few. We are also going to do a lot of educational work on the ground which will lead to bringing more people online.

But where is the money in 2021?

For the most part, the world is so paralyzed and itching for things to get back to normal. That I think is the most dangerous place to be because it’s never going back to that. The right mindset is finding out how to fit in or thrive in this new world order. Better yet, capitalize on the majority’s wait for the old world. There is a market for anything.

The pre-covid question was; how much more money can I make?. But since lockdown, the question has now changed to; how can I make money?. From what I’ve learned this year, I’m convinced that if you want financial freedom then you need to somehow be leveraging the internet. At this point, it’s only fair to say that every one of us must be looking at ourselves as a business. If you don’t have a business, start one and make sure it has an internet element to it. The reasoning is simple, network effects. Depending on your trade, there are no borders on the internet meaning that by simply getting your business online, you are already exposing yourself to half of the world’s population. You are exposing yourself to over 40 Trillion dollars, you only need a small fraction of that to survive, a little more to build generational worth. At least that’s my mindset now.

How to get the money?

If you know what you’re doing, it’s going to be a lot easier to make money in money markets. The world will be opening up and markets will have to react to that in either direction. Bull or Bear, it will be a big move. I can teach you a few things about Crypto here.

With a high unemployment rate and uncertainty, the world is a perfect marketplace for people who already have capital. By capital, I don’t mean millions of dollars here. Even a little can go a long way if allocated correctly when labor and real estate prices are super low. If you have capital, you could leverage that and use other people to build your online real estate. If you don’t have capital, or business or service then you are the capital. It means you need to start branding yourself up around what you do. This however makes a lot of people uncomfortable for no reason. But remember; beggars can’t be choosers. Go hard or stick to the 9 to 5 and live in fear forever.

Another cool thing I figured out online was sales. If you know or can learn how to sell. Then you don’t even have to start a business. You can simply sell other people’s products online and earn commissions. I know people who make thousands of dollars per week doing this.

Let’s work together

We’re all playing our role to change the world for the better and it’s hard. If you’re an investor or entrepreneur who thinks what I’m working on fits in with your vision. Please feel free to contact me here and we can find a way to work together.

Create value, change for the world

The world has suffered so much loss or pain in a year like this, it can be demotivating. When it all goes down, it’s important to remember that we are all here to contribute something to the world, leave it better than we found it. If you dedicate your life to creating value for others and the world, you can never die of starvation. Keep building. Oprah Winfrey, Elon Musk, Aliko Dangote are great examples. They relentlessly provide the world with so much value and they get rewarded beautifully. If we all stick to that, we shall survive.

Happy holidays

Grey Jabesi

CEO

December 26th, 2020