Bitcoin's eye-popping price movements have some observers saying the market is in bubble territory.
But while he's not ruling it out entirely, Naval Ravikant, the co-founder of AngelList, holds a less alarmist view. "Money is a bubble that never pops," he said at yesterday's Token Summit II in San Francisco.
He told attendees:
"It's a consensus hallucination."
And speaking to the newfound attention to bitcoin, Ravikant said people are interested in growing the wealth that they have. With most savings accounts returning zero these days – as central banks conduct what Ravikant called their "grand money printing experiment" – the general public is looking for alternative places to store their money and watch it grow.
Bitcoin and other protocols seem to offer that, as even the less-developed cryptocurrencies are showing substantial returns.
"I think people are looking to solve their money problems," he said.
Yet at the same time, he warned that some of the cryptocurrency industry has been overhyped. In particular, Ravikant believes the market puts way too much faith in the concept of decentralization.
"One indicator we are in a very frothy environment is we have a lot of tokens trading at very high values that are junk," he said, without specifically naming any. "Right now, I think the market isn't distinguishing quality."
Having said that though, Ravikant concluded that the cryptocurrency economy is here to stay.
In fact, he gave the audience some insight into what cryptocurrencies he's interested in. These include bitcoin, for storing value; zcash, for transacting easily; basecoin, to act as a stable unit of account; and tezzies, to access the Tezos smart contract platform.
"I think we'll see a lot more of the money use cases realized," he predicted, adding:
"If you can redefine what money is, that's a trillion-dollar outcome."
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Zcash Company, the for-profit entity that develops the zcash protocol.
Naval Ravikant photo by Brady Dale for CoinDesk