Tim Draper on the Myth of Volatility: One Bitcoin Is Only Ever One Bitcoin — CoinMarketCap Blog
Although it is not visible in his headshot for this article, Tim Draper can almost always be found wearing a Bitcoin-patterned tie. While attending crypto conferences, being interviewed on CNBC — and even during an appearance on Fox News — Draper’s apparel tells you all you need to know about his unwavering belief in Bitcoin (even if you have your own opinion about the fashionable aspect of the look).
Draper is the founder of global venture capital firm Draper Associates, DFJ, the Draper Venture network and, of course, Draper University of Heroes, a for-profit school that teaches entrepreneurship and operates both online and in Silicon Valley.
His public role as a Bitcoin advocate really began when he bought all of the Silk Road’s confiscated Bitcoin in the U.S. Marshall’s auction back in 2014 — he told me he didn’t mean to buy them all, but sometimes that’s how auctions shake out, and he’s made the best of it (as well as anyone can who just came into possession of almost 30,000 BTC). In Draper’s words, “once I got ’em, I realized that if this goes big, it’s going to be a big deal — and it did and it will continue to be.”
CoinMarketCap: Do you remember the moment when you first started actively thinking about cryptocurrencies?
Tim Draper: Technically, it was probably 2010, but in 2001 or 2002 I met with this Korean guy who was a very successful businessman, and he said that about half of Korea was playing this massive multiplayer game, and I thought, “Well, that’s really interesting.” He said, “Yeah, I pay a guy to be my avatar when I’m at work in the game.” I thought, “Wow.”
This was the beginning of thinking about how people would live in a virtual world as well as their real world. That meant to me that there would be virtual everything, virtual real estate, virtual health care, virtual money. And so I had been looking for digital money, virtual money for years before Bitcoin arrived.
When Bitcoin arrived, I realized that this was the panacea. I actually thought virtual money would come where one game had shekels, another had gold keys, and that one shekel would be worth 4.2 gold keys and they would start making deals and that was the way it was going to work.
But it turned out that Bitcoin came and it blew all that out of the water, and created a currency that we could all use that was transparent and open and kept a perfect record, and all the great things that are out there about Bitcoin.
When Bitcoin arrived, I realized that this was the panacea.
I got very excited about it. I bought a bunch, I invested in Coinlab, and then I lost it all, or lost much of it because it was stored at Mt. Gox, and Mt. Gox had the big thing [ 850,000 BTC hack and shutdown], and I thought, “Oh, too bad, that was such a great concept. I’m sorry that it didn’t work out.”
But it didn’t end Bitcoin — Bitcoin just dropped a little bit. Then I really dug in and said, “What are all these people using Bitcoin for? Because they seem to still want it, even though all that money was stolen off Mt. Gox.”
I thought, “Well, that’s it. It’s being used for all sorts of things: it’s being used for sending money overseas to your family, it’s being used for selling all sorts of products, some legal, some illegal, it’s being used for remittance, for cross-border business.” I thought this is a big deal — then I started to buy Bitcoin.
There was the Silk Road auction [in 2014]. I knew all the bidders and everybody was trying to figure out what kind of a discount from market they would get for their Bitcoin. I thought that if this works, it’s going to work big, and if it doesn’t work, it’s not going to work at all. I bid above market and I thought I’d get one or two of the nine piles of Bitcoin that the U.S. Marshals Office was auctioning off — I got all nine.
I got more than I wanted to start with. But then once I got ’em, I realized that if this goes big, it’s going to be a big deal — and it did and it will continue to.
This is an amazing time for Bitcoin. It’s amazing how many people during this lockdown have gone and thought, “Well, I’ll get a Ledger and I’ll buy a little Bitcoin.” They’re all starting to see it just the way they’re starting to use their VR goggles and they’re starting to think about health care remotely. When everything’s going well, nobody tries anything new. Why mess with it? Very few people do.
When things are tough, then they start looking for alternatives. They start spinning their wheels inside their house, because of this lockdown. Then they say, “Maybe it’s time for me to try a little Bitcoin, maybe a little of this, little of that, experiment with a few games, do a little work, do some different things.” That catalyst brings Bitcoin from the early adopters to the masses. This is a really exciting time for Bitcoin.
CoinMarketCap: Is there anything that’s happening right now that is highlighting the benefits of Bitcoin over fiat currencies for you?
Tim Draper: Oh, you bet. The government just printed about four trillion dollars. They diluted the dollar by 20 percent. My dollars are decreasing in value as we speak relative to Bitcoin and to other investment products. If a government can do that, then your currency is tied to political manipulation, swings, whatever. You really want something to be one something no matter what it is.
There are only 21 billion Bitcoin out there. It makes a lot of sense to hold on to Bitcoin. You don’t want to hold on to dollars. Gold is this antiquated concept where people think that they’re holding on to some weird value of some sort. Maybe it’s good for jewelry and some electronics, but the real future is tied to these global, transparent, open, decentralized currencies. That’s where the future is going to lie. It’s going to avoid the politics that are associated with currencies today.
There are only 21 billion Bitcoin out there. It makes a lot of sense to hold on to Bitcoin.
We actually have a really unique time right now. I’m liking it. I’m saying that the best place for me to put my money is into Bitcoin and it’s down a little today, so I’m thinking this might be a good time to buy [laughs] [interview recorded April 24].
CoinMarketCap: Are there any misconceptions about Bitcoin that you think really deserve to be corrected?
Tim Draper: People say it’s used for criminal activity ,and it’s just the opposite. They’re catching all the crime. If you’re a criminal, you should be using cash.
You should be using dollar cash. Paper dollar cash. Because with Bitcoin, they’re all getting caught. Because they might get some Bitcoin through some criminal activity, but then that wallet is red-lighted. And then nobody can take money from that wallet because the officials realized that that’s the wallet that this was sent to, and so they can watch. As soon as money tries to move from that wallet out, they can catch up.
I actually think that this is going to be great for law enforcement. It’s gonna be great for honesty. Over time, there’s going to be a premium for honesty. It encourages people to be honest, because they keep perfect records on the blockchain. You can’t have audit manipulation. Your accountant can’t go off the rails. It’s all right there. That is one of the common misconceptions.
Over time, there’s going to be a premium for honesty.
The other is that it took a lot of energy, and it did, too, for all the miners to watch over all the Bitcoin. But it’s interesting that those miners have figured out how to do it so cheaply.
And then the third is that people say that they can’t spend it. Well, that’s just a matter of time. You can use an open node. As a retailer, you can bring an open node in and it can make it so that you as a retailer don’t have to spend 2.5 to 4 percent every time somebody swipes their credit card. With Bitcoin, it’s almost frictionless. Those are the three misconceptions.
Oh, the other is that it’s a volatile currency. I look at it the opposite way — one Bitcoin is still worth one Bitcoin, but over time all the other currencies are slowly falling away. They’re very volatile, but they’re slowly falling away as Bitcoin continues to become the dominant supplier of first cryptocurrency, and then currency generally throughout the world.
I look at it the opposite way — one Bitcoin is still worth one Bitcoin, but over time all the other currencies are slowly falling away.
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To read the rest of the Tim Draper’s interview article, please view the original article below.
Originally published at https://blog.coinmarketcap.com on May 31, 2020.
