WEBVTT - Sonnenshein Discusses Digital Asset Ecosystems

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<v Speaker 1>This is Bloomberg Business Week with Carol Masser and Bloomberg

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<v Speaker 1>Quick Takes Tim Stinovic from Bloomberg Radio. Well, Tim, we've

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<v Speaker 1>been talking about crypto all weeks, so it's been a

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<v Speaker 1>good week for me and I'm excited to keep that

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<v Speaker 1>conversation going with Michael Sonenshein. He is the chief executive

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<v Speaker 1>officer of digital asset manager Gray Scale. He joined us

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<v Speaker 1>now on the phone from Los Angeles. Michael, great to

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<v Speaker 1>have you on the show. And I mean, it's been

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<v Speaker 1>a big week for bitcoin, but it's been an even

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<v Speaker 1>bigger week for ethereum. Ether is up three point three

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<v Speaker 1>percent this week, dusting Bitcoin, and I feel like we've

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<v Speaker 1>been seeing this more that we see Ether outperform bitcoin.

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<v Speaker 1>Are are we back in all season? Well, first of all,

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<v Speaker 1>great to be with you both, and thank you so

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<v Speaker 1>much for having me. You know, I think it's tough

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<v Speaker 1>to say whether or not we're back in all season

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<v Speaker 1>or not. I think what we're seeing now is more

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<v Speaker 1>attention than ever is being paid to crypto as an

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<v Speaker 1>asset class. There is certainly amongst the Gray Scale in

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<v Speaker 1>investors a general appreciation that the asset class is here

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<v Speaker 1>to stay and as a result of that, investors realize

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<v Speaker 1>that there is a lot more than just bitcoin, and

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<v Speaker 1>actually more than just bitcoin and ethereum, and so there

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<v Speaker 1>continues to be ever more demand for them to diversify

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<v Speaker 1>beyond just those top two digital currencies by market cap. Okay,

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<v Speaker 1>where should where? El should they diversify? Well, I think

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<v Speaker 1>what many investors are beginning to appreciate is that there

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<v Speaker 1>are now growing ecosystems within the digital asset universe. And

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<v Speaker 1>you know, we're seeing that in the world of gaming. Um.

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<v Speaker 1>You know, there's been a lot of chatter recently about

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<v Speaker 1>the metaverse. We've seen the convergence of file storage and

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<v Speaker 1>digital assets. We've seen um, a lot of investors beginning

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<v Speaker 1>to think about things like n f t s and

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<v Speaker 1>really starting to unlock other use cases that maybe weren't

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<v Speaker 1>part of this ecosystem when they first began thinking about

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<v Speaker 1>making investment allocations. Okay, you really piqued my interest with

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<v Speaker 1>n f T So there's so much to talk about.

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<v Speaker 1>We fortunately have you for quite a bit, Michael, So

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<v Speaker 1>we're gonna try to everything. Okay, but let's talk n

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<v Speaker 1>f T s because I'm trying to understand what use

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<v Speaker 1>cases are for n f t s beyond what we've

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<v Speaker 1>seen them used for, which you know is collectibles. Sure, well,

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<v Speaker 1>I think what it's highlighting and this is just one

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<v Speaker 1>incarnation of the idea of a digitally unique item that

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<v Speaker 1>the ownership of which is is you know verified, we

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<v Speaker 1>recorded in a way that's completely decentralized. You are starting

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<v Speaker 1>to see how that could certainly be a tailwind or

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<v Speaker 1>a major improvements individuals and companies around the world. You know,

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<v Speaker 1>we fight things like um, you know, fake goods, whether

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<v Speaker 1>they're counterfeit or um you know, having to be able

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<v Speaker 1>to track them and and they're whereabouts and track their ownership.

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<v Speaker 1>And you know art is just you know, one vertical

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<v Speaker 1>that it could be looked at. It could be luxury goods.

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<v Speaker 1>This can extend, you know, really to almost any item um,

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<v Speaker 1>physical or not, that could be tagged and added to

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<v Speaker 1>a blockchain where it's ownership easily be recorded. And I

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<v Speaker 1>think it's really starting for many people to really have

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<v Speaker 1>them rethink the creator economy, the way that artists can

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<v Speaker 1>pump out their content and actually sell it and engage

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<v Speaker 1>directly with their bands and user bases. And that can

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<v Speaker 1>be music, Um, it could be our The list is

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<v Speaker 1>pretty endless, and so sticking with n f T s,

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<v Speaker 1>I mean, Gray Skill has a really impressive lineup of funds.

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<v Speaker 1>It feels like you guys cover every part of the

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<v Speaker 1>cryptocurrency universe. I don't see any of your trusts UH

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<v Speaker 1>specifically focused on getting exposure to n f T s.

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<v Speaker 1>Is that something that you plan to offer at some point, Well,

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<v Speaker 1>I would never rule anything out. UM. You know, we

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<v Speaker 1>today operate fifteen different investment vehicles. Some of them are

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<v Speaker 1>single asset vehicles and some of them are diversified, meaning

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<v Speaker 1>that they have a basket of various assets that they hold.

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<v Speaker 1>And so as we think about where investor preferences are,

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<v Speaker 1>we certainly think that there is a meaningful opportunity to

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<v Speaker 1>expand in both categories, such that we are providing investors

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<v Speaker 1>with an on ramp to certain of these subsets of

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<v Speaker 1>the current of the digital currency ecosystem. UM, and we've

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<v Speaker 1>so far done that with large cab currencies. We've done

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<v Speaker 1>that for Defy, and certainly are always trying to tow

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<v Speaker 1>the line between identifying opportunities that we think are compelling

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<v Speaker 1>and bringing them to investors and trying to reconcile that

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<v Speaker 1>with where investors are telling us they want that exposure. Well,

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<v Speaker 1>listen to that. I'm curious whether you think that n

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<v Speaker 1>f t S could be a flash in the pan,

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<v Speaker 1>whether this is just the bright, shiny object that crypto

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<v Speaker 1>investors are focusing on right now, because there are stats

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<v Speaker 1>out there that you know, obviously n f t S

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<v Speaker 1>get a lot of buzz, but actually dilly average sales

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<v Speaker 1>piece sometime in August and we have just about thirty seconds. Well,

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<v Speaker 1>I don't know that it's necessarily a flash in the

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<v Speaker 1>pan so much as again i'd read a rate. The

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<v Speaker 1>success and the acceptance of n f T I think

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<v Speaker 1>is really a way for everyone to understand the potential

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<v Speaker 1>of what it could be like to have the assets

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<v Speaker 1>whose ownership has trapped on a blockchain, and fcs are

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<v Speaker 1>just one incarnation of them. Still with us is Michael Sonnenshein.

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<v Speaker 1>He is the chief executive officer of Gray Scale. On

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<v Speaker 1>the phone from Los Angeles and Michael, it's finally time

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<v Speaker 1>to talk about the metaverse. And clearly there's a lot

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<v Speaker 1>of corporations out there that are excited about it. Facebook

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<v Speaker 1>rebranding as meta platforms, but there's also a lot of

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<v Speaker 1>people excited on Twitter in my mentions about the metaverse.

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<v Speaker 1>But for the normal person, how do you make money

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<v Speaker 1>on the coming metaverse revolution? How do you even invest

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<v Speaker 1>along that? All? Right, well, let's break it down for everybody.

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<v Speaker 1>So simply put, Katie, the metaverse is where digital experiences

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<v Speaker 1>can take place, right, And so how did we get here?

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<v Speaker 1>When we think about the Internet, it really started with

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<v Speaker 1>the Internet one point oh. Right, that meant that we

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<v Speaker 1>had now a digital place where we could extract information.

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<v Speaker 1>It was really read only. And over the last you know,

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<v Speaker 1>two plus decades, we've seen the Internet evolved into the

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<v Speaker 1>web two point oh where we now have this digital economy.

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<v Speaker 1>Individuals and companies can read and engage with each other,

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<v Speaker 1>but all of the data, all of the activity is

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<v Speaker 1>owned by corporations. Right. We must buy online goods through

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<v Speaker 1>certain sellers, we must interact with one another through certain

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<v Speaker 1>social media platforms, etcetera. And now what we're seeing is

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<v Speaker 1>the emergence of the web three point oh. Um, the

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<v Speaker 1>metaverse being one of those incarnations where digital experiences are

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<v Speaker 1>actually owned by the individuals that are participating. So the

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<v Speaker 1>value no longer attribute to the company, but rather to

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<v Speaker 1>the individuals that are participating. So one of the areas

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<v Speaker 1>of the meta or so we've been excited about, is

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<v Speaker 1>actually a project called a decentralized metaverse where users can

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<v Speaker 1>interact with one another, build businesses, have experiences, and there's

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<v Speaker 1>actually a native token called mana that's associated with the metaverse,

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<v Speaker 1>the Central Land. We lost you for one second, just

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<v Speaker 1>say explain one more like ten seconds ago. What it's called. Yeah,

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<v Speaker 1>it's called decentral Land, and de central Land is one

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<v Speaker 1>of these decentralized metaverse projects where users can interact with

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<v Speaker 1>one another and participate in the economy there by building

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<v Speaker 1>businesses offering experiences, and there's actually a native token associated

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<v Speaker 1>with called mana. We don't have a ton of time,

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<v Speaker 1>so I want to make sure we get all this

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<v Speaker 1>in what is a What is an experience that somebody

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<v Speaker 1>would have in the metaverse that they can't have in

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<v Speaker 1>real life. You can go to a concert, for example,

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<v Speaker 1>and you wouldn't need to leave your couch or your desk. Um.

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<v Speaker 1>You know, if if you want to see a certain

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<v Speaker 1>artist perform and they're not where you live locally, you

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<v Speaker 1>might be able to attend that concert in the meta rios.

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<v Speaker 1>And that's just beginning to unlock the types of experiences

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<v Speaker 1>that are possible, and it's bringing together a bunch of

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<v Speaker 1>technologies digital currencies, computing, gaming, and virtual reality UM and

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<v Speaker 1>we're just just just at the earliest of earliest innings.

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<v Speaker 1>And so a lot of their digital currencies stay like

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<v Speaker 1>Mama and others are ways to Katie's point that investors

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<v Speaker 1>can invest in the metaverse as this technology or as

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<v Speaker 1>these experiences begin to take off. And Michael talk about

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<v Speaker 1>the link between cryptocurrencies and the metaverse because it seems

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<v Speaker 1>like there's a lot of spiritual similarities there. A lot

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<v Speaker 1>of the people I talked to her are excited about

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<v Speaker 1>crypto or excited about the metaverse. Is that because you know,

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<v Speaker 1>in this new virtual reality that will be the medium

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<v Speaker 1>of exchangers, it's something different. Well, I think it's because

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<v Speaker 1>these are decentralized communities that the value UM that is

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<v Speaker 1>typically ascribed back to the company's social media platforms, the

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<v Speaker 1>commerce platforms that we use in the web two point oh,

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<v Speaker 1>can actually be owned and used by the individuals participating

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<v Speaker 1>in the metaverse. So many of these projects have their

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<v Speaker 1>own native digital currencies UM that are you know, either

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<v Speaker 1>offshoots of things like bitcoin or ethereum, or others that

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<v Speaker 1>can actually be only used in those ecosystems. Michael, just

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<v Speaker 1>in ten seconds. Well, I you know, I can't even

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<v Speaker 1>ask you a question that the question that I had

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<v Speaker 1>would require a longer answer. You're gonna have to come

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<v Speaker 1>back and join us once again, Michael. I'm always happy

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<v Speaker 1>to come back. Actually, that helps everybody understand the metaverse

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<v Speaker 1>a little bit better. It absolutely helps we are well, Katie,

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<v Speaker 1>are you still metaverse curious work? I still have some

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<v Speaker 1>existential dread associated with the metaverse, but I'm moving past that.

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<v Speaker 1>This conversation helps metaverse hesitant metaverse hesitant plenty of time

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<v Speaker 1>Web three point out great definitions of that. By the way,

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<v Speaker 1>that was really helpful. Michael Sonenshine, CEO of Gray Scale,

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<v Speaker 1>joining us once again on the phone from Los Angeles.

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<v Speaker 1>Thank you so much for taking a time, Michael,