In 2014 Tim Draper bought 30,000 Bitcoin for under $20 million. Today, it's worth almost $215 million.
Tech startup founders tend to live in the future, seeing future developments that most can't yet perceive as achieved facts. The same is true, apparently, of venture capitalists. Tim Draper has led investments in companies like Skype, Tesla, and Twitter.
"In five years, if you try to use fiat currency they will laugh at you," Draper told me at WebSummit while wearing a tie with cryptocurrency logos on it. "Bitcoin and other cryptocurriences will be so relevant ... there will be no reason to have the fiat currencies."
Bitcoin, of course, is the grandfather of cryptocurrencies and currently has a market capitalization of about $120 billion U.S. That compares poorly to a global fiat currency value in the $2 trillion range. (Fiat currencies, of course, are how cryptocurrency fans tend to refer to national currencies.) But Bitcoin has appreciated over 700% in 2017 alone.
Draper's DFJ Venture Capital has long been bullish on Bitcoin. He famously bought 30,000 Bitcoin in 2014 in a government auction of assets seized from Silk Road, the online black market. At the time, it was worth under $20 million.
Today, that same 30,000 Bitcoin is worth almost $214 million dollars.
Making over $200 million on just one bet might tend to make anyone bullish on Bitcoin, Ethereum, and almost any other cryptocurrencies.
And Draper is bullish.
Fiat currencies, he says, are bounded by country borders. The Nigerian Naira drops 30% when you cross the border. Outside Argentina, the country's peso is currency non grata, and there are other countries where this is true as well.
The U.S. dollar travels pretty well, as does the Euro, but there are challenges here too. Conversions between currencies are often double switches, TNG Fintech Group CEO Alex Kong told me, and losing 1.4% in the switch from currency A to U.S. dollars to currency B is fairly standard.
That will all disappear soon, Draper says, as we look to cryptocurrencies as stores of value and transfer agents.
Even in an ICO-mad universe where new cryptocurrencies are being born in bulk every day. That is of course one of the charges leveled at new tokens and currencies built on cryptographic foundations: hundreds are being created out thin air, and are worth aproximately the same.
But Draper thinks we'll survive just fine in an era of hundreds, if not thousands of currencies:
"They’re all going to interrelate … and there will be exchange rates for all of them," he told me. "My guess is that it will centralize around a wallet that you have, and when you pay for that Starbucks, your wallet will optimize to whichever currency has most value."
It doesn't necessarily sound simple -- another criticism leveled at the cryptocurrency field -- but Draper thinks that technology and smart marketing will abstract away the complexity.
"If it doesn’t get simplified it won’t get adopted ... good marketing people will simplify all use of these things," Draper said. "And we might have a johncoin and a timcoin …we might be trading those in realtime, putting a value on our time and attention."
