Cointelegraph spoke to Tim Draper at Arctic15 about how Blockchain and Bitcoin are changing everything in our lives, and also what the billionaire VC is actually doing with his thousands of Bitcoin.
Tim Draper is known for being the 'Nostradamus' of the markets with an incredible track record of correctly predicting the future. He loves Bitcoin, and in 2014 he predicted that the price per Bitcoin would hit $10,000 USD by 2018.
We met with Draper at Nordic startup event Arctic15 in Helsinki (where he was invited as a key speaker) to learn whether he was still as optimistic and enthusiastic about Bitcoin as he was back in 2014.
“There were plenty of opportunities to be depressed”, admits Draper. “When I bought Bitcoin, it was at this price and then it came down. I was thinking, “well, they just don’t get it yet”. But now they start to really get it.”
The future of Bitcoin looks bright
In 2014, Tim Draper bought a huge stash of Bitcoin auctioned by the government after seizing black market site Silk Road. On June 20 this year, Australia will auction $11.49 million worth of Bitcoins confiscated after the arrest of an Australian also involved in the Silk Road, and Draper says he might be interested. “I may do it”, he confirms, “I’ve got a lot and I will be back to it”.
According to Draper, Bitcoin is interesting because some really interesting things can happen with it.
He explains to Cointelegraph why Bitcoin is so good in his opinion:
“I think it is particularly good as an option value as more options happen in Bitcoin. It is good for stored value. I think the most interesting thing will be when people need to pay out dividends and you can just push one button and shoot out Bitcoin into a bunch of different wallets. Or you need to pay a royalty out like the Star Wars guys, just push one button, pick everybody’s Bitcoin wallet and go”.
He believes Bitcoin to be the dominant digital currency. Draper understands that some other coins can be more efficient but Bitcoin is a standard currency now:
“Just like http wasn’t the best technology it was still the best among others because everybody was using it. And if I had some other form of digital currency I wouldn’t really know whether I could trade it for fiat currency. But I know that with Bitcoin I can.”
Of course, there will be other currencies beyond Bitcoin that are the future of money, Draper explains, but it is hard for him to imagine that we are going to have a bunch of fiat currencies out there in 10 years:
“I think it’s going to be all virtual currency. Probably, most of it is going to be Bitcoin and then there will be people around who’ll say “I have this coin and that coin” but mostly it’s going to be Bitcoin.”
Blockchain as the perfect bureaucrat - paying basic income in Bitcoin?
Universal basic income has become a hot topic in the last few months as Swiss voters reject by a wide margin a proposal to have it granted to all citizens. Finnish and Dutch pilots are set for 2017.
"For centuries this has been considered a utopia, but today it has not only become possible, but indispensable," Ralph Kundig, one of the lead campaigners and president of the Swiss chapter of the Basic Income Earth Network, said.
Tim Draper goes even further by making this utopia even more utopian - he suggests paying the basic income in Bitcoin:
“Some governments are starting to talk about basic income for everyone. And they can easily do it by giving everyone a Bitcoin wallet. Every week or every two weeks you could give them their basic income.”
Or is it really that utopian? Daniel Straub, the initiative’s co-founder, argues that a basic income would free people up to do important work that is currently not incentivised by markets, such as care and climate change research. It could also lead to higher wages for unloved and low-paid “dirty work”.
According to Draper, Blockchain technology could help make this plan a reality:
“Blockchain is the perfect bureaucrat, it’s the perfect government official. It’s incorruptible, it’s fair, it’s honest. It just gets the job done. It’s the most efficient thing ever.”
Blockchain is changing everything
Blockchain adoption is not something that is about to happen, it is rather something that is changing a lot of things in our lives already now.
“This is an interesting technology changing the industry. It’s changing banking, it’s changing government, it’s changing investment banking, it’s changing remittances, loans - it’s changing everything.”
However, governments are still very cautious about it and haven't been rushing to adopt it straight away. Speaking about the reasons for their doubts, Draper notes that the same thing happened to Bitcoin:
“They were afraid of it so they tried to come up with all sort of things that were wrong with it. Then they realized, “hey, this is really interesting, we can actually use this technology and do some interesting things. Oh but it’s not Bitcoin, it’s Blockchain”. But it’s the same thing. This is a great technology, a great currency, it’s going make all of our lives so much better.”
The son of Tim Draper, Adam Draper, runs Boost VC, the first institutional fund to commit to funding blockchain companies, and he is a Bitcoin accelerator. He owns pieces of over 50 companies in Bitcoin from 20+ different countries.
“We are more excited than ever about the blockchain and supporting passionate entrepreneurs looking to change the status quo,” it says on the Boost VC website. Tim Draper confirms that he and his son really believe in Bitcoin and Blockchain as “this is going to be a great change of the world.”
With more liquidity, you have a richer society
Draper thinks that friction creates the difference between poverty and riches. “If you have friction in your government, in your currency, your people are poorer because there is no liquidity”, he explains.
He clarifies his idea by giving an example:
“I will give you an example of high friction environment. You own a house but nothing else. I own Uber stock and nothing else. Neither of us can trade for the other. If somebody else owns a farm and lots of food we can’t eat because there is no liquidity. If you have liquidity, everybody gets richer. Suddenly that guy has a place to live, I have a way to get both of you to another location and we all get to eat. So liquidity is really important. And if you can create a society with more liquidity, you have a richer society.”
According to Draper, Bitcoin has much more liquidity than what we have today with credit cards, fiat currency and the existing banking relationships. He thinks Bitcoin presents a way to make society richer because it is more fluid, more liquid, and people can buy and sell things easier. That’s the real value to this.
So, what does the billionaire VC do with his Bitcoin?
When we asked this question, Tim Draper admitted that he had actually bought even more Bitcoin. Some of it he has invested in 15 companies - each of these companies has got Bitcoin and Draper has got equity of their businesses.
Draper says to Cointelegraph:
“I’m not a big shopper so I haven’t bought a lot with my Bitcoin. I’ve also loaned out some of my Bitcoin. There is a programme where you loan it out and you get interest. I’ve got it in a wallet and I sleep pretty well having it there because I feel like no hacker can get to it, it’s good, I’ve got real money there. I’ve got some that I’m using and some that I’m using as an option to use in the future as these new things come around.”
Speaking about the future of money, Tim Draper actually refers to its past, concluding that we all are going to love Bitcoin sooner or later:
“Just go back in time. People used to carry around shells or gold. And then there was a promise for gold, and then they ran out of gold, and there was a promise for silver, and then they ran out silver. Then there was a promise backed by the credit of the government and that’s Federal Reserve now. And then it was credit. This is just one abstraction further from credit. And it’s Bitcoin, and it’s awesome. It is going to change everything, and we are all going to love it.”