Tim Draper is still buying up bitcoin
In an exclusive interview with Protos, Tim Draper says he’s still as bullish as ever on bitcoin. The venture capitalist and investor in early technology companies such as Hotmail, Skype, Tesla and even Theranos says he has never sold his BTC and instead continues to buy it up.
Draper bought the 30,000 bitcoins seized by police from Silk Road, auctioned by the US government for a total of $17 million in 2014. The Tezos and Coinbase investor is convinced that bitcoin will replace the US dollar to become the world’s most important global currency.
Fiat, he says, is a thing of the past — as more women buy up bitcoin, it will eventually be used for retail payments.
In this email interview, Protos tries to challenge Draper about his idealism. We also ask him about the speculative nature and excessive leverage that the bitcoin market has become known for.
Protoss: The use of Bitcoin for payments is insignificant compared to its use as a speculative asset by wealthy investors. Do you think excessive speculation has killed the Bitcoin dream?
Drape: No. Speculators are part of the process. All new industries go through periods of elation and depression before they find their place in society. Think dotcom boom and bust and then boom again. The second boom was many times bigger than the first, but nobody wrote about it, it just happened.
Protoss: Do you see it as a potential risk to the Bitcoin market that someone who has a significant portion of the supply of leverage could potentially be forced to sell their holdings?
Drape: Markets tend to stabilize over time. The extremes in an industry tend to happen first. We are in the first half. No one should borrow more than they can pay back, but of course it happens.
Protoss: Why are you so sure that Bitcoin will win the payment war when there are many other competitors: CBDC, other cryptocurrencies and companies like PayPal and Visa that are constantly increasing the number of customers?
Drape: CBDCs are a bridge to Bitcoin. They just gradually bring people into the use of digital currencies. Other cryptocurrencies are (except for a few like Tezos) centralized and the consumer will again be at the mercy of a centralized power. The dealer is smarter than to let that happen.
PayPal charges 3%, Visa (banks) charges 2 1/2%. Bitcoin through OpenNode can charge base points and it can be a faster and more efficient network than either of these options. Dealers will care a lot. They run on small margins. Bitcoin can double their profits.
Protoss: We get the idea of Bitcoin as a sovereign asset that no government can touch or interfere with. But have you ever doubted that this idea can never catch on with the public and as a result Bitcoin becomes this alternative resource for idealistic rebels, speculators, criminals and gamblers?
Drape: I don’t have those doubts. Idealists drive our future. Speculators are a natural occurrence in any marketplace. Blockchain keeps perfect records. I think criminals would rather use paper fiat that is not easily traceable. Gamblers are usually defined as playing games with expected value lower than 1. Bitcoin has a very high expected value.
Protoss: You also believe that bitcoin is the currency of the future and that fiat currencies including the dollar will become a thing of the past, but how would this work in reality if bitcoin’s value has to be measured by something else? Doesn’t the existence of bitcoin actually strengthen the dollar as it allows for more access to it?
Drape: Not really. As the dollar and other fiat currencies are controlled by less and less accountable bureaucrats, dictators and politicians, they will be printed in greater and greater volume and their value will fall against better alternatives like Bitcoin.
Protoss: Have you sold any of your Bitcoins?
Drape: No. I continue to be a net buyer. Draper Startup Houses accepts Bitcoin for rent. Draper University Accepts Bitcoin for Tuition. Meet The Drapers sponsors can pay with Bitcoin.
Protoss: Are you hedging your Bitcoin position by shorting it in the futures market?
Drape: No.
Protoss: What would you say to central bankers today, especially in relation to their efforts to introduce CBDCs?
Drape: Their efforts to introduce digital fiat currency will create nice bridges to Bitcoin use. Trust in Bitcoin will surpass trust in bureaucracy over time. In many cases it has already done so.
This interview has been lightly edited for clarity – all views expressed are those of Draper. For more, follow us further Twitter and Google News or listen to our investigative podcast Newly created: Blockchain City.
