📺 10 Predictions About Crypto in 2022 | Ryan Selkis

hey bangles nation welcome to another state of the nation episode this is the episode where we update you on something relevant going on in crypto we do a deep dive today we're super excited to talk about the 2022 theses brought to you by missouri we've got ryan selkis on david i love this time of year because uh it's it's a time of reflection right you finally get to like take a deep breath and look at the past 12 months all of the craziness that happened we always joke when we say like one year is like 10

in uh one year in kryptos like 10 in the regular world and so december late december in particular is a time to kind of reflect and that's what we're doing with ryan selkis he wrote this fantastic theses he's written this every year since i've been in crypto i've read these front to back every single year this year is no exception uh and we're going to dive into it with him david uh what what are some of your thoughts coming to this conversation this is a it's a ceremonious time at this point the consistency and robustness of ryan selkis's theses is

just always something that the industry collectively points its attention towards at the end of the year and it's just it's a nice way to end the year so i definitely appreciate ryan taking so much time out of his just daily life i think he said something like 10 percent of his yearly labor goes into writing these theses uh and it's just a nice way to like recap the year especially when crypto moves so fast like some of these things and that are in the the theses for 2022 you'll you'll forget that the context started in like this year right like uh

so many things happening crypto is just a nice way to wrap up the year and kind of understand it holistically uh to really get that context before we move into what is probably going to be another crazy year in crypto in 2022. so absolutely so we're going to dive into that with ryan we're going to recap the year extrapolate on what's coming next year and have a conversation about how this all plays out david we've got some predictions of our own coming to bank list that is going to be published in the bankless newsletter next week so stay tuned it's definitely not as robust as ryan selkis theses but we've got some

ideas some predictions and kind of a recap that we're doing so check that out on the bankless newsletter that's newsletter.banklesshq.com to subscribe also david gotta talk about metamask uh we had ledger on the podcast this morning actually on our youtube show we're talking a lot about this meta pass plus ledger partnership and i know metamask wanted us to tell the bankless community that it is doing big things when it comes to hardware wallet support

you want to talk a little bit about that david yeah brand new to support with metamask is the loudest one which is what i've been calling like the fort knox of crypto wallets uh it's a it's a desktop type thing it's a kind of you would put it next to your amazon alexa or your your uh whatever your home smart lady person is uh and it just stays physically in your home and it's super super secure super tamper resistant and that is now supported by metamask along with um other hardware wallets as well there's

the keystone which is an air gapped qr code wallet bunch of hardware wallet support coming to metamask as well as them ironing out the the issues with chromium uh so overall the user experience is uh getting new getting into new heights thankfully and we've all been waiting for that so uh tapped off to metamask if you have not downloaded metamask what are you doing go to metamask dot io slash download and get that installed in your browser absolutely and don't forget to use uh use protection with your metamask wallet right it's hardware protection uh you don't wanna save those private keys in

software that's for sure david let's start with the question i ask you to be in every single state of the nation that is this what is the state of the nation today sir the state of the nation today is reflecting it was such a long year in crypto and i think if we go and zoom all the way back back to q1 people will forget how recent some of these things that we are going to talk about actually happened uh so much happened in 2021 i think it was it was the year that crypto people really really wanted to see uh super high inflation pushed people into

the concept of digital scarcity uh you know just poor performance by banks pushing people to go more bankless you know capture and in my mind corruption of web 2 platforms pushing people into the world of web 3 is kind of the year that we all dreamt of as crypto people going into it and so it's just a nice time to sit back and reflect and so we shall go ahead and get right into those reflections with ryan selkis right after a moment to talk about some of these fantastic sponsors that make the show possible bankless is proud to be supported by

uniswap uniswap is a new paradigm in asset exchange infrastructure instead of a cumbersome order book system where trades are matched with other humans uniswap is an autonomous piece of software on ethereum which is what ryan and i call a money robot no human counterparties or centralized intermediaries just autonomous code on ethereum input the token you want to sell and receive the token you want to buy something brand new in the uni-swap ecosystem is the uniswap grants program is now accepting applications for grants

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stake and deposit them to the leido validating network lido is working to make sure proof of stake stays as decentralized as possible and is committed to decentralizing its own validating network to eventually become a completely permissionless protocol so if you want to stake your eth terra or soul and get liquidity on your stake go to lydo.fi to get started hey guys we are back here with ryan selkis the founder of massari ryan has been writing a year-end crypto theses for as long as i can remember in kryptos at least four years maybe longer it's

become something of a ceremony at this point something i read every year i like that it's objective right and it's got a lot of the takes that ryan and the team at missouri have been compiling throughout the year we pulled out some of those themes we're going to discuss them today with ryan you've seen him on the podcast before i think last had you on in august welcome back ryan celcus it's always a pleasure excited to be back hey you guys are just a lot of punishment yeah well you know what you you brought us some material you brought

us a lot how many pages is this uh is this theses ryan it's like a 105 it's 165 but that's including all of the uh table of contents and everything so yeah that's cheating i i don't know i mean if this was book form this is uh this is pdf form so there's a lot of words per page so this is uh this is basically a full book i didn't do the full word count but it's it's hefty yeah it's definitely hefty and as a content producer in this space like uh color us impressed this is

a lot of work that went into this and this is a synthesis of i think a lot of ideas a lot of things that that went on in 2021 and i think that's maybe where we'll start is sort of a lot of this is going to be kind of a recap of things and extrapolation moving forward but let's start with um i guess the first page of substance in the thesis and that is this idea of the collapse of institutional trust that's the tiding that that's the title heading it's got this very compelling graphic it's like a

quadrant based graphic uh and the axes are from ethical to unethical less competent to competent and it maps different i guess institutions on the score and you see government and this is from uh you know i guess the way the people see these sorts of institutions government is to many people in the bottom left quadrant of being very incompetent and not not very ethical you don't want to be in that quadrant that's the best yeah it's the quadrant of pain quadrant of doom where

you're like incompetent and unethical media is there too we see some other institutions traditional institutions like ngos and businesses businesses are maybe a little unethical but the perception-wide perception is that they are also more competent than government but i think this entire section speaks to the collapse of institutional trust that we've seen can you talk a little bit about that trend was like 2021 the year that we lost trust in our institutions

well i mean i think this has been building for a very long time and i don't think mistrust in government is anything new uh in the west if you look at kind of congress's approval rating for decades now um it's been a slow and steady decline if you think about kind of trust in media i'd say the same thing it's gotten increasingly bifurcated between um just extensions of you know the democratic and and republican party depending on which source you're you're looking at so i don't think those are new i think what is interesting is

the fact that ngos and business are also not included in that upper right quadrant which is ethical and competent and one of the things by the way i think andreessen horowitz this entire presentation that they prepared for policymakers called how to win the future and that is linked to right below this graphic i think it's a terrific plain english explanation for someone that's trying to grapple with the challenges of um of crypto and and think about the

potential that it has for good and you know moving some of these institutions both into the competent uh and ethical spectrum i think it really comes down to incentive alignment between users employees owners and and basically all the stakeholders within an organization regardless of how it's structured um and then ultimately you know if you can encode values in into those businesses or protocols uh then then you can actually have something that's viewed as ethical as well so both effective efficient and you know kind of

incentive aligned i think is is an important thing that crypto brings to the table and we're starting to see that you know in terms of first with money right you remove money from the government uh because they're the least competent and least ethical um i think we've seen a lot in decentralized media that's not necessarily crypto related maybe crypto adjacent where you've seen a progressive decentralization of media the rise in podcasts verizon sub stack and medium and of course twitter being you know one of the originals and social media in general its impact on the

mainstream media um i think with dao's you're starting to see what we might be able to do with um ngos and and bringing you know public goods into a more competent management structure that's arguable of course because of how nascent tools are within crypto and then obviously a business i would argue um yes they're competent i think that the reason they're viewed maybe is unethical is is less about their um them being evil and more about incentive misalignment and that's what i think we

get really excited about in terms of how well web3 could could fix some of those issues with incentive alignment in terms of you know the end users and customers of these businesses so um you know first off you know i'd say you know hopefully you can read it or at least skim some of the thesis um but i think a16z you know this this is kind of required reading for anyone that's going from zero to one on like why bitcoin why web3 period that has no prior knowledge and is you know just trying to grapple with the why not necessarily like all the

specifics of how this wild west is operating and for the podcast listeners out there it's really important to know that the there's again four four quadrants ethical to unethical less competent to competent the competent and ethical quadrant is empty there's nothing there and this is a this is again a perception of the people that that took this survey and the people are saying that they do not see both a an ethical and uh something that is simultaneously both ethical and competent out there they can't find anything any institution out

there that they view to be both good and and and actually good at being good uh and and so ryan just go ahead yeah and this was edelman that ran the survey this was not an internal a16z survey this is just kind of cited from their from their presentation so it is an independent survey um that uh that had quite a bit of uh foolproof uh you know kind of stress testing and and kind of establish you know survey methodology not just something that's kind of crypto native

and uh you put this as this is your first big point in a in a document that you know hundreds of thousands of people are going to read so you wanted to put this very very first as in letting everyone know that no one no one really thinks of any other institution out there that can be good and also be good at being good and then you also added in the second thesis which i think we want to go to now uh saying that crypto and web 3 is inevitable uh and uh so is is the idea here is that like crypto and web3 is

going to hope the idea is hopefully that they fill the missing niche fill the missing quadrant of both good and ethical uh uh institutions out there can you and you elaborated it on a little bit but can you just keep on going is why why what about crypto and what about web3 is really doing a good job or hopefully aspiring to fill that that ethical and competent niche i think it's a little bit too early to say that we're going to fill that quadrant when it comes to public perception but the point of number one is to show

that crypto doesn't explode in a vacuum right there there is a reason that something like crypto can take off and it has oxygen so all the developments all of the institutional capital that's basically you know fire and and the early kindling but at the end of the day it means oxygen needs end users and i think number one is really about how do you fan the flames um once the fire is started which we've seen you know kind of over the last 10 years that infrastructure has been built the zero

to one innovations in bitcoin and ethereum and d5 in non-fungible token ownership and digital assets ownership um and and now you know some other kind of emerging areas like decentralized social media you you have the mvp but the only way that those mvp actually catch fire and and become something that can really eat large swaths of the economy or you know our society in general is as if something else is broken

out of the incumbent uh system uh i do think it's a good pairing and and i think the the reason i'd say that um crypto's inevitable at this point it's um it's really comes down to the fact that there's many different uh avenues that people can take if they're if they want to participate in crypto and in some cases we're getting closer to that state of the world where they might not necessarily know or care that they're actually using crypto as rails right um the important thing is that uh we've got you know aligned

end user incentives and you know for many of these networks the end users are also the owners and governors um so uh that comes with it you know financial incentives there are you know governance rights and basically a say in how things are managed and i think that's a pretty transformative zero to one understanding that that people are gonna like at some point you know everybody talks in crypto about going down the rabbit hole and having the uh the red pill moment

right when did you get red red pill or when did you fall down the rabbit hole and and it really is like something that clicks sometimes it takes a little while sometimes you know i don't really understand bitcoin or i don't understand eath because it's kind of turtles all the way down or i don't you know d5 there's no real economic activity there but then someone will look at you know an nft and say okay digital art and providence i believe that we're spending more of our time online so i believe that like some provable digital scarcity for a painting or an avatar that's going to be

relatively easy to enforce and i can see that being important a wall street type might have gone from zero to one on d5 right because now there's all the stable coin infrastructure and i understand you know i understand yield farming because there's some you know uh favorable economics in terms of lending or in terms of decentralized exchange you know kind of market maker earnings but also because you're early you're basically getting effectively equity in some of these emerging protocols i i think for everybody it's a little

bit different and the fact that there's so many discrete sectors now that have all crossed the chasm and there's so much institutional capital that's been raised to deploy into the next round of infrastructure and also to potentially backstop some catastrophic kind of market breakdown that we might see in the next you know six to 12 months i think it's a a good you know one-two combination that um might prevent the uh the industry from from taking you

know basically years off or or years where we're sucking wind that's not to say that prices won't correct i think that's you know that's overblown that hey we're never going to see a bear market again but um there's a difference between a bear market and token prices and a bear market where teams fire fifty percent of their of their workforce right or eighty percent of their workforce just because the token prices went down um and when you when you take that into consideration you take the five year play into consideration and then you just see the the talent

that's entering the market day in day out it's hard to bet against that um and i think it's unwise to bet against that is this the first time you would say something you would use that phrase ryan this is the inevitable right because i you know look some believers would have used this phrase in you know 2012 and just said look bitcoin is inevitable right um but uh i'm wondering if this year was unique from your perspective in crypto's ability to hit uh escape velocity

i would say so so everybody should panic because maybe that's the sign of the market top and then and things are going to completely unravel all throughout next year i would say inevitable with the one important caveat that crypto's success and medium-term viability depends on some measured proportionate response from western regulators and i do go into it later in the morning i know we'll probably talk about but i

think as the us goes so goes crypto and in the medium term um i think uh bitcoin is kind of in its own completely different universe right now i think um ethereum is the highest potential asset out there but it's also still not without risk um and i think that you know where i disagree with you guys on kind of the ethos money stuff as we've gone over in prior podcasts um i don't view its success as inevitable um from a regulatory perspective just

because so much of the activity that rides ethereum's rails is in the crosshairs throughout the west right now so in the worst case scenarios which i think fortunately we're starting to to dial back from but in the worst case scenarios the um the layer 1 networks and all the applications i i think are for those that are most at risk so um the question remains is you know have we gotten too big as a community to uh basically force into non-existence

and i think we're close i i i think 2022 will be interesting to see if there is a a large sell-out sell-off and and we have a bear market on par with the 2018 do we lose all of our user momentum and then does that kind of turn the tide of public opinion so you know people start clamoring for regulation or basically don't really care to fight you know for crypto um basically the polar opposite of what we saw this summer right so how much how much of the outcry this summer

uh will persist in a 80 down market um i think that's the one thing that um that i'm still keeping an eye on last thing before we move from this idea of institutional distrust and crypto kind of occupying this upper right quadrant of ethical and incompetent because i think that's a really core thesis but you also said this and this is maybe one of your first predictions in the report is and you're talking about inflation inflation the money system the dollar being an institution in and of itself

right you said this things will get worse before they get better in the real world inflation will remain above 5 throughout 2022 above 5 we're at 6.8 now while late year interest rate hikes uh stall the stock market's momentum and hurt growth stocks it's an interesting prediction uh this is good for crypto in the short term but risky in the medium term as more crypto companies than users get de-platformed and censorship from western tech and banking platforms accelerates admits the biden

administration's crypto crackdown so a few predictions you're starting to to make here is that we're gonna have persistent inflation not transitory inflation persistent inflation next year uh that will lead to the fed raising interest rates which will lead to some decrease in the stock market momentum all of this might be good short term for crypto but then you also see sort of a a crypto unfriendly biden administration executive branch kind of cracking down anything you want to say about these

predictions before we move on i think the only thing that i would note is that we're recording this on december 14th and keep in mind that this was written you know pencils down about a month ago uh and it was published uh a couple of weeks ago now so uh so this happened you know i think it was written that you know bitcoin at 65 000 or or so and then you'll find a fully polished and edited when we were at 58 so we've already kind of seen a 20 correction we've seen the correction in

the s p and and we've seen a bit more fear in the market um along with you know some of these uh cpi prints that that were way ahead of forecast so um i think you know some of this is already starting to hold up well um and yeah the question is always you know from white what height do you fall or or from from what florida you rally so i i think i don't really have a directional sense of of where the stock market or where crypto is going but there are you

know a few different scenarios and at this point i would say most of crypto's momentum is going to be tied to the stock market unless we start to see some really um nasty inflation and uh there's you know kind of a breakdown in the narrative of bitcoin in particular and to lesser extent heath as a risk on asset and instead you know the inflation hedge narrative really does take hold and people start to you know flood to bitcoin and ethan's as kind of safe

assets the last narrative that we want to touch on in this uh section of the the narratives to watch is uh on page 11 ryan where ryan you said uh ryan celcus ron sean adams ryan selkiss you said that uh this is the cycle where crypto use cases unrelated to bitcoin were finally validated and achieved meaningful adoption and for those that came into crypto in 2020 or 2021 this this narrative this take might not land with um as much as some of the

old-timers can you just unpack the significance for people that may have come just recently into the industry why is uh use cases unrelated to bitcoin finally being validated and adopted and adopted why is that a big deal i think it happened to a lesser extent in 2017 as well with the ico boom um became the reserve currency for uh all the new tokens that were raising capital right all the rc20s um i think this year it's a little bit

different because last year was all about the macro trade paul tudor jones getting in michael saylor getting in uh you know and kind of corporates and nation states alike think about bitcoin as a store of value and something that would um be a uh a hedge on the fact that 40 of the dollars uh that have ever been you know put into existence were printed in the last you know year and a half and if you look at the kind of throughput

on the ethereum blockchain and all the demand last summer for d5 and then this year for nfts and uh what we're i think starting to see in gaming it's it's now not imperative that anyone comes through bitcoin in order to get their first crypto exposure right you know you could go on open c and not really even understand that you're using eth you might just want to buy you know digital art but you're going to create an ethereum wallet in order to you know constitute that um and i think that's a pretty big

change now the question becomes um and i'm particularly interested to see how coinbase handles it when they roll out their nft marketplace um will the same thing happen with nfts that happened previously with erc20 tokens and with d5 where ultimately everything gets dollarized right everything ties back to stable coins and the volatile cryptos are basically extracted from from the process i think that's probably likely because most normal people are not going to denominate jpegs and eth

but we'll see the important thing is that the use cases that i think have really gotten people excited are not tied to bitcoin the asset now you could argue that bitcoin is going to be bridged to other uh other blockchains and and you'll you'll have like a settlement there that is a bitcoin blockchain but ultimately you'll have bitcoin equivalence trading on all other sorts of you know layer one and layer twos um

i think uh that's kind of a coin flip for me whether that actually takes hold or or whether we see a proliferation of a number of other like layer one assets that kind of almost represent the gdp as i've referred to uh from from some folks uh of those native chains um and i think that's you know that there's pros and cons um to that happening for ethereum right because uh you know in ethereum's case it's got to ward off all these other ones and then you have a question of how much value

for ethereum-based settlement goes to the primary chain versus all three of those twos that are securing all these set of transactions um so there's uh i i think this is probably the greatest environment that you could imagine for an activist specialist crypto investor particularly on the kind of liquid side of things because things are so fluid and there is such um incredible information asymmetry um i would imagine um next year is going gonna be a good time

for for folks like that uh this year was already a great year for that but i'd say for for like the smart fundamental oriented speculator next year is probably gonna be even better it's because of this theme where uh cryptos are decoupling so everything isn't just moving completely lockstep yeah would you go as far as to say ryan that 2021 kind of marked the death of bitcoin maximalism and what i mean by that is there was this idea that was kind of popularized after the 2017 sort of crash right hype crash ico mania craziness

everything sort of died off that okay we're back to bitcoin bitcoin is the only use case of this whole blockchain thing see we told you so and that was very popular sentiment in 2018 in 2019 the purpose of blockchain is bitcoin that's kind of it now we've seen sort of a resurgence of lots of different use cases defy took took on life and nfts and all of these things so that that old notion of bitcoin maximalism bitcoin as the only use case is that dead now do you think

that's dead gone and buried or do you think it's going to come back at some point i think any type of maximalism uh any type of coin maximalism um those are your in cells right um anyone that is just a like complete mercenary you know that's probably your more promiscuous types and then you've got folks in between that are just really passionate about like the community that they're in for different reasons they they could you know have terrific you know fundamentals

driven reasons um you know those are the nice boys that you want to marry so like as long as you know as long as you don't go like too far down you know either side there i i think you want to split the up rates and look at the end of the day these are investments so i think it would be crazy to think that you're going to have um people that are excited about crypto that are not also going to have intrinsic biases based on what they're holding right because what they're holding usually matches where they're spending time