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00:00Ryan you guys you're crypto guy. You talk about the fad all the time and permission list stuff and censorship free store of value doesn't the door going to just show that it's all a big gambling game. Well you could say the same thing about the stock market and GameStop and what we saw earlier in the year on Robinhood. So I think there's a bigger trend at play which is more retail investors are are buying into meme stocks meme coins and having fun with it. And you know Elon Musk has quite the cult following. So when people see that he's going on Saturday Night Live and he jokes that the episode is going to be called the DOJ father punch people kind of follow suit and and have a little fun with it. You know from an outsider's perspective it does look a little bit crazy. But does Klein if you just take it with a grain of salt as part of the broader market move up and crypto is not quite so outlandish. The asset class as a whole has performed you know just incredibly staggeringly well so far this year. Yeah it has. I mean we've also seen a lot of activity here Ryan in some of the other cryptos out there and not just you know the ones that were basically started specifically to be jokes here. The rally that we've seen lately in the theory um and in some of the other some of the other cryptos out there I'm curious as to whether there is a sort of a fundamental story here that's driving some of this because it's not all just hope and faith. Yeah exactly. And I think if you look at some of the assets that perform performed really well. The theory being one of them the decentralized finance assets being another that are in some cases up 5 10 15 even 20 times even year to date. A lot of it is driven by increased network activity. It's actually driving fees to those took an old person theorems case. There is going to be a new fork over the summer and a new change of the system where the transaction fees are actually going to flow through to the holders. With currency as they transition to proof of stake. So it's a really capital efficient asset that can be staked and used to earn some of the fees that are passing through the system. That's the case for assets like Maker Compound. Some of these other decentralized lending decentralized derivatives markets that are actually processing real transaction volumes in the tens of millions of dollars on an annualized basis. Ron how much are you starting to see. Of course what drove Bitcoin higher a lot was talk of institutional players getting involved. Now they seem to be latching onto a theorem to him. How soon until you see real institutional participation in some of these old coins or in in terms of some of the real defy real products that are being built. Well you know these things take multiple years and multiple cycles in some cases to to kind of come up the curve and the way that I always think about it. You have overlapping hype cycles in crypto and you don't just go from retail investors straight to the big banks and institutions the world. There's usually a specialist professional class that takes advantage of the opportunity first. In this case it's the crypto funds that emerged in 2017 2018 that invested in many of these assets. So yes we're just starting to see institutional adoption and real serious interest in assets beyond Bitcoin theory and primarily. But we expect that that's going to take a couple more years before larger money managers start dipping their toe in the water. And we might be getting close to a tipping point where they take it seriously since we are looking at assets that command 50 billion plus valuations beyond just decline. And in theory today. OK. I'm sure you want to talk about stuff that's not dogecoin but I want to go back to it for a second for real because you know of course you'll look at those coins soaring and you'll look at basically any coins. You mentioned some of these five protocols or coins and compound or whatever. And you say like OK well there's like some sort of like serious thing happening. But how do we we know that it's not just someone going to the front page of your Web site and just buying one of those coins and doge and ripple and Bitcoin cash because they see an up arrow like how do we distinguish between like what sort of real and fun and speculative vs. what may be the sort of infrastructure of a new kind of finance. Well I mean I think it's both right. I mean what's the fair value of a stock. What's the fair value of a crypto asset. And historically you look at Bitcoin and you say well that's just a currency that's priced in is priced in comparison to gold or some other scarce commodity. These different assets are different. Right. The ones that have been really rallying this year have underlying unit economics that are interesting. And you can look at them as if they're stocks in a certain case. They're not owned by a shareholder base. They're owned by a ticket holder base. But those network fees are real. Right. There's interest that's accumulating to folks. That provision capital for four lending markets. There's real capital is being earned by market makers that are providing liquidity for these decentralized exchanges. So that's I think the big difference in this cycle and the 2017 cycle. Yes 2017 the ICAO euphoria it was greater fool investing all the way up until it crashed. Today you're going to see a rising tide lifts all boats including Dogecoin for better and for worse. But most of the assets there are in the top 50 this time around actually produce real fees which is which is a far cry from what we saw in the last cycle. And I'm sure though that in this cycle that we're in right now and the rise that we've seen in Bitcoin and just all the other asset crypto assets out there here there seems to be a direct negative correlation here to how people view fiat currencies. The devaluation of the dollar or at least the perception of the devaluation of the dollar because of all the monetary policy stimulus and the fiscal stimulus out there. If we ever get to a point Ryan it might not happen in our lifetime but we ever get to a point where the Fed decides to raise rates and normalize monetary policy here. Does that take some of the luster off of any alpha crypto assets. I'm not sure. I think maybe temporarily because you know as as we've seen when the Fed does tap the brakes on the market more generally crypto is somewhat correlated to the risk on markets. I think over time though those will separate. And there's there's so much fundamentally interesting activity that's happening at the protocol level for for all these long tail networks. That's going to keep this rally going and this long term secular trend moving in the right direction. So if you're asking me to give a trade recommendation I'm not very good at it. But I can tell you in five years my outlook hasn't changed.

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The Rise in Digital Tokens Is Real: Ryan Selkis

Animal spirits are alive and well in the cryptocurrency world, with the frenzy sending Dogecoin surging as much as 50% again and crashing Robinhood’s trading app. Other so-called altcoins also took off. Ryan Selkis, co-founder and CEO of Messari, talks with Bloomberg's Caroline Hyde, Romaine Bostick and Joe Weisenthal on "What'd You Miss?" about digital assets. (Source: Bloomberg)

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