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The following is a summarized and edited version of Tim Draper’s answers to some of the questions. For an unedited, unabridged interview, please
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Tim Draper on Crypto currency, Bitcoin, Blockchain Elon Musk, Women, China, etc., on the first exclusive interview by Joanne Z. Tan, Founder and CEO of 10 Plus Brand, Inc. on May 27, 2021, for the Podcast series “Interviews of Notables & Influencers”. Out of 60 questions, Tim only had time to answer 34. But Tim said that if there are enough shares by the audience on social media, he will answer the remaining 24 questions. PLEASE SHARE. Thank you!
(Question from Joanne Tan:)
(Answer from Tim Draper:)
“I predicted … in 2014, I said in three years, Bitcoin will hit $10,000. And …Bitcoin was at $180. …And it did, in fact, almost three years to the day.
“This time in 2018, I predicted that in 2022, Bitcoin would hit 250,000, at the end of 2022, or early 2023. And, and I did that, based on that I kind of had in my head that Bitcoin was going to go through that natural progression is going to go up will hype thing, it got up to $17,000, came way down to $3,000. And then, and then quietly, slowly, but surely, and with some volatility, it will continue to rise way, way past where the top of that hype was. And the reasoning is that the hype was on the imaginations of the people in 2013. And their imaginations have gone way beyond where they were there. And it was in their imagination, but then the reason that the hype goes away is that people go “Hey, but you know, I can’t use this to buy my groceries yet.” And so what has to happen is engineers have to go do all that work to make it easy for people to go buy their groceries with Bitcoin, once they have, and that’s usually like a four year period, then it becomes a use … something that everyone can now use. And so once everybody’s using it, then I was saying that a 4 or 5% market share by 2022, 2023 is probably not even optimistic. I think it might actually be a lot higher. …It’s a combination of my gut, all of the analysis I’ve done on all the industries I’ve ever looked at throughout my life. And that’s how I came up with that number.”
“Oh, of course, there is always going to be competition. But it was pretty clear to me, at that point by 2018 that Bitcoin was going to be the Amazon and the rest of the currencies were going to be the other e-commerce sites…”
“You know, my feeling about pessimists. The pessimists of the world. There. They bring a lot of good points up but they do not accomplish anything. The optimists of the world are the ones who accomplish things.”
“I know that I bought a house and the people knew who I was and they said they wanted Bitcoin instead of dollars. And I was… thinking of donating some money to Stanford. And they wanted my Bitcoin, they didn’t want…dollars, but they’d rather take Bitcoin.”
“Well, it’s the women. One out of 14 bitcoin wallets is held by a woman. And women control 80% of retail spending. So… once the retailer realizes that they can save money, by accepting Bitcoin, and …can spread some of that savings to the women who spend the money, … then the women will all make sure they have bitcoin wallets….So it’s just a matter of every new technology grows at a certain rate that it spreads around the world. And, Bitcoin is similar in that way.”
“Think of all the bankers going to work, all the people who are going back and forth to their bank branch, think of all the energy that’s consumed in banking, people have done the research, and our banks use so much more energy than Bitcoin ever will. And it turns out the amount of Bitcoin, the amount of energy that is used for Bitcoin mining continues to run down over time. And by 2040, it’ll be almost nothing. And because, well, energy use per switch does not comply to Moore’s Law, so it doesn’t doubled every 18 months. But it does drop over time, we used to use five volts per switch, and then it was three volts per switch, and then it was 1.8 volts, 1.3 volts, point nine,… keeps going down. And the amount of energy used per switch will continue down. So the energy argument is not a strong argument.
And in the amount of energy, Bitcoin is the most secure of all the currencies of all the crypto or fiat currencies. …Bitcoin blockchains have never been hacked. So I think it’s worth spending a little energy to get that kind of security.”
“It is sustainable, …most of the stored value in Bitcoin is going to be slow to move and… it’s going to use a lot of energy. But when Bitcoin is used as a currency, it’s going to be used… the way Opennode uses it, they move it off chain, it’s very efficient, it moves very quickly and very efficiently. And then when it moves back on chain, it takes energy. So there is no difference between the amount of energy that Bitcoin is going to be using as a currency and any of the other cryptocurrency but there’s a big difference between what the little Bitcoin uses and the huge amount that banks use. So yeah, I mean, people should look deeply into Opennode. And if you’re a retailer, there’s no reason you shouldn’t be accepting Bitcoin through Opennode. And it’s sustainable. It uses very little energy.”
“People were worried about the speed at which you could transact a Bitcoin transaction. But it turns out that now with Opennode, they’re faster than the visa network. So you can if you’re a small business, you can accept Bitcoin now and you can do all your accounting for Bitcoin now with Cryptio… you now have the ability to operate … entire business in Bitcoin…”
In general, we’re much happier to accept Bitcoin and then fiat. I think most retailers will start feeling that way too. And, I think that they’re gonna say, Well wait, when people swipe their credit card, 2.5 to 4% of my business goes to the banks. Well, what if I use Bitcoin? Well, it’s a lot less than 2.5 to 4%, … nothing goes to the bank…. He can double their profit margin, if they accept Bitcoin, so I think people are gonna start using it.
…Bitcoin would be as interesting just as a store of value…, if you ran Lucas Film, and you realize that… you had to spend $8 for every check, you send out to the assistant, to the assistant to the lighting director. And instead, you could just drop Bitcoin into a wallet, automatically. Every time somebody orders the movie. You’ve got a much better vehicle for spreading currency. Sending money overseas is so much easier with Bitcoin than it is with Fiat. …it will be used as a currency.”
“I think that it’s very important for cryptocurrency to have a known limit to how much is printed, and there is a known limit of 21 million bitcoins. If a currency is in any way centralized, if any one person or one group of people can go ahead and print any number of this currency, then the value of that currency drops. And the whole point of trust in the currency disappears. So the one of the great reasons that you want to move to cryptocurrency, from fiat currency, is that cryptocurrency is not tied to any political force, it’s not tied to any one individual who decides to print a whole bunch of currency of one type or another. It is a fixed number. Now, if you were to create a perfect currency, it might be a little bit more like Tezos, where the voter, the owners of the currency can vote as to whether you inflate the currency, whether you add more to the currency. But if you have, if you have a centralized control of any kind, any currency, you’re not getting that benefit,… ”
“If we are relying on governments to figure out the right model for inflation, to print just the right amount of money, so that it doesn’t go through an inflation, death spiral, or whatever, it’s a very difficult thing to do, because there’s a lot of politics involved….So people’s dollars aren’t going to be worth as much, people’s Bitcoin will be worth more… it just hurries the need for people to have a stable currency that they can trust and build.”
“I’d say Bitcoin is a good store of value. Crypto – it depends on which currency… some currencies are centralized and some are decentralized. Some have inflation attached to them and some do not. I would be very particular on which currencies I would look at as potential stores of value, but Bitcoin is one.”
“I’d be looking to the alt coins…where there are really good engineers working on that token, and that the token has a real purpose, not just a Bitcoin copy, but a real purpose and a real technology that’s going to take humanity forward into a new direction.”
“… we’ve seen since I bought all that Bitcoin and I was in the first two ICOs after the Dow Tezos and Bancorp. I got mobbed with people all wanting my money to start a new token. And it was all a bunch of copycats, and, you know, get rich quick schemes and whatever. I pushed them all away. And I I waited for those, those very select few that had real engineers, real passion behind them, and are focused on those and a real reason to be yes, good.”
“…gold is such an old vehicle as the currency, no one uses gold as a currency. You know, people trying to buy their cup of coffee with gold, it’s ridiculous. Gold is something people retreat to when they’re trying to retreat to the past. And, there is value to gold, but it’s a good use for jewelry. It’s good use in some computers. So there is some value to gold, but it isn’t in being a currency. And so I think if you are thinking in terms of a store of value, the way people used to store value was in gold, then they stored value in the promise of gold like a gold certificate, then they stored value with the promise of the full faith and credit of the government. And now you can store value on a blockchain. And it’s I think we’ve taken a technological leap forward by allowing people to store value with Bitcoin.”
“I think that the IRS got it right. But it’s a currency. And it’s an asset. But it’s more a currency. I think it should be treated as a currency…”
“The US government knows, they have figured out that they benefited in a huge way from letting the internet go, and not regulating it, not taxing it, letting it go. They won big. The same things happening now. US government, there’s plenty of like, pushing, pulling, and the Fed is, you know, concern, whatever, but and the US government might do their own crypto, I think it’d be a mistake, but they might do their own cryptocurrency. But they know that they want the innovation in their country. They know that the golden goose is the entrepreneur. Entrepreneur in the Silicon Valley is driving huge value to the rest of the country, they don’t want to do anything to harm that entrepreneur. They want to make sure that entrepreneur, that 28 year old who wants to start this business and make something interesting happen, they want that person in their country.
…“…so I believe in light touch regulation, and that has been the cornerstone of America for many, many, many decades. Right. And that has helped America grow and grow and grow and become a great, great country.”
“the blockchain keeps perfect records. And so …Bitcoin will be an honest currency. And as people’s names are attached to their wallets, they will be even more honest. And so I suspect that honesty and trust will grow the currency, and people will feel better and better because of it.
Now, one other thing that’s kind of interesting about that blockchain is that it keeps perfect records. And as you said, it can identify who all the owners were before. Well, that’s maybe interesting with currency. But it’s really interesting with art, or with music or with anything, or with fancy purses, or whatever. People really want to know where that came from. And sometimes with food, people want to know which farm that food came from. And the blockchain allows for that. And so that technology is going to be used first for Bitcoin. And then for all these other new services, that are tied to any data that should, that needs to stay permanent. So your medical records or your diploma, or your nursing license, or your ID, or driver’s license, whatever, those things are all going to be very permanent. And so the blocks are your collection, collection of, you know, people’s. All those things are going to be in the form of an NFT, a non fungible token. And that’s a really interesting use of the blockchain. So I’m excited about that use of the blockchain.
The other use of the blockchain I really love is what this company Cryptio is doing, tying the accounting to the blockchain. And so we could run all of our businesses without auditing, accounting, or bookkeeping. And, you know, or all the lawyers that are attached to all of that, we can actually have it all perfectly kept, perfect records on the blockchain, and all the reports and the taxes and everything can all be put out there. And we can all be better off the frame of data around accounting, the accounting profession or the legal profession, does slow down the economy, and we could speed it up a lot by tying our accounting to the blockchain.”
“ I think smart contracts are critical for the long term success of any contracts in general, are critical for long term success of any currency. smart contracts are going to be so much better and so much easier to use than the complicated where we’re putting contracts into words. Words are a lot harder to understand than software is.”
“it’s going to be instrumental and is going to be so exciting…. I can’t wait … to have my entrepreneurs pay their employees and suppliers all in Bitcoin, all on smart contracts. And then when any of my entrepreneurs sell their business, have all that Bitcoin, go back to my investors, according to the distribution waterfall that we’ve set up. And if we can do that, the whole system, and then taxes paid, the whole thing can be one walled garden of Bitcoin.
And… there’s no dispute, there’s no argument that, hey, you know, this word meant this and this word meant this, …it’s all built into the software, and all the contracts are all fixed, dollar fixed, and Bitcoin comp contracts, all the way down, all the way.
So I’m very excited for when we can use smart contracts for all capital business, but it can be in all of finance, it can be in bidding, it can be in real estate, it can be used in all different forms, real estate,… you could have a smart contract, and we have a company called property that is working toward making it so that all title is kept on the blockchain. And all real estate is done on a smart contract. And eventually, you’ll be able to buy and sell pieces of real estate on a smart contract, and that will be a thing of beauty.”
“It could be but if I’m a retailer today, the first token I accept is Bitcoin. But it could be that other tokens come up and rise for one reason or another, that kind of thing makes for a great environment when there is competition…”
“It’s only going to be accepted in China. And I think that it’s got to be global. It’s got to be open. It’s got to be. So they’re gonna blow it too…”
“I think it’s still an infant. But we were very excited to be able to buy that. That Bitcoin way back when, and people ask me, Well, are you going to sell your Bitcoin? When are you going to sell your Bitcoin? And I say, into what? Why would I take the currency of the future and convert it to a currency of the past, it would be like taking euros and trading them for drachma or French francs, or for taking the dollar and converting it to Confederate dollars, it makes no sense. Because we have a new currency that is the basis for a new platform to bring the world economy to another level. And to make us all of them are global and unless tribal is tied to one geographic area or another…”
“…a lot of people got out of poverty by buying crypto. And they took a chance and they bought some crypto.”
“I think Black Swans come all the time. It’s very exciting. They’re coming faster and more furiously because more and more people are free. And more and more people are in countries where they can work in a free market. Superbad where it seems we are losing China as a free market, but most of the rest of the countries are free. And as more and more people become free, more innovation happens and more black swans and I think that the countries that are accepting of new ideas and new technologies and Bitcoin and blockchain and smart contracts and artificial intelligence, all that, the ones who are more accepting and less regulatory are going to be huge winners over the next 40 years. And the ones that put down all of these rules and laws and make it so their country, their people can’t do anything, that those countries are going to be the big failures of the next 40 years.
“I think humanity is the big winner. I think command and control governments are the big loser, because they’ve been operating like monopolies for a long time. And all of a sudden, they have to think, how do I attract people? How do I attract businesses? How do I attract money to my country? How do I attract citizens, and brain power? How do I attract entrepreneurs? That’s the thinking that has to go on, in, you know, the government’s mind. And, if they’re not thinking that way, they’re thinking, I’m going to control everything. And it’s me, me, me, me. And I want my power and whatever. You know, the best governments are not the ones who say I want power. Best governments are the ones who say, I want my people to thrive. And, the ones who were just saying I have to be in control of everything, telling everybody what to do. Those countries are going to be the ones that are the poorest in 40 years, the richest countries are going to be the ones that are free and trusted and do things for the people.
“This is a really critical time in human history. It’s really an exciting time in human history. And so because I think we’re going from tribal to global, but there’s gonna be a lot of wild tumultuous waves along the way. But one bitcoin is still worth one bitcoin. It’s all these other currencies that are very volatile as they slowly disappear from us.”
“…everybody’s job, they all will have to continually reinvent, to see what our job becomes. The media had to reinvent their businesses because of the internet, the movie business, they reinvented their business because of the internet. Now we have Bitcoin, the blockchain, smart contracts, artificial intelligence surveillance, a whole bunch of the biggest industries in the world are going to go through a major transformation because of those things, but all those people, sure we’re all going to lose our jobs. We’re all going to have to reinvent, we’re going to have to find better ways to operate, more productive things to do.”
““And that’s why I love Bitcoin. It’s freedom. And it’s trust. It’s open, it’s transparent, it’s global. It’s decentralized. So it isn’t tied to any geographic borders. It’s moving humanity from being tribal to being global. It’s moving humanity from being tied to geographic borders, to an open globe, where we can all run free with it, within the world. It is a fabulous vehicle for governments, for people, for businesses, for all of us to operate with.”
“…every industry goes through this period where it gets hyped up, and then it comes down. And then over a long period of time, it goes even bigger than the hype, it just keeps going and going and going. And during that time, the also-rans fall out of business. And that has been the way every industry has been developed throughout time. There were thousands of thousands of dot coms e-tailers where they were in the hype, and then disappeared, eventually and everybody sort of consolidated on Amazon. They think the same kind of thing is happening, will happen around Bitcoin.”
“I don’t think crypto is dependent on fiat in any way. But people need fiat right now to buy their groceries. When they don’t need fiat anymore to buy their groceries, they’re not going to use it.”
As one of the earliest investors in digital currency, after paying $19 MM for Bitcoin in 2014, how would you describe Bitcoin’s growth journey so far? Would you say that in 2014 Bitcoin was an “infant”? And now in 2021, a “teenager”? If so, as a 6th grader or a 10th grader?
How “mature” is Bitcoin and crypto currency? How many years before Bitcoin and crypto currency as a whole reach “maturity”? How long will it take for crypto assets (currency and block chain) to permeate the small business markets?
Elon Musk bought more than one billion worth of Bitcoins for Tesla in February 2021, then he voiced the issue about unsustainable use of energy for mining Bitcoin, which is more than all other types of crypto currency coins (I don’t want to compare carbon footprints of Bitcoin’s with Fiat’s and traditional banking institutions’, to keep it “orange to orange”.) Would you agree that Bitcoin is indeed a lot more energy consuming than Ether, Dogecoin, and all other altcoins and meme coins out there?
About Elon Musk’s support for Dogecoin: Unlike Bitcoin that has limited quantity, Dogecoin has no limit thus lacking the “scarcity” element as one of the intrinsic values. Do you think scarcity, albeit man-made, is important to crypto?
Is volatility, as shown in the last few weeks of crypto’s roller coastering ride, an inherent trait of crypto currency?
Is there a correlation between stock market volatility and crypto currencies’ volatility?
In addition to the element of scarcity, what are other intrinsic values associated with crypto currency? Is traceability, (thanks to blockchain technology) that enables transparency of the source and all prior ownership, another unique value proposition that crypto has that fiat does not?
Now adding to scarcity and traceability, smart contracts can be added to crypto tokens such as Ether and the new kid on the block, ICT (Internet Computer Token) for various apps, would that be an indispensable or merely supplemental character for crypto currency?
Do you think smart contracts make crypto tokens more valuable?
As a tree-hugging environmentalist and an extremely concerned advocate for sustainability, I do agree with Elon Musk, and I would like to see adding the 4th element to crypto’s unique value proposition: sustainability. What do you think?
How would you describe crypto?
Do you believe Bitcoin is the “digital gold”? If yes, will it rival and even surpass gold?
About inflation. Technological innovation is usually a force to counter inflation. What is your assessment of the likelihood of PROLONGED inflation in the US in the next couple of years or even beyond? And Globally too?
Is crypto a safe haven for protecting cash from devaluation caused by inflation? If yes, why, if no, why?
I can see the value of using dollar-backed crypto in countries where inflation is out of control, like in Venezuela – folks can bypass the banks and get their money stabilized by crypto. But for Americans, what is the use of having dollar-backed crypto?
If traceability, transparency is one of the cornerstones for crypto’s intrinsic value, privacy is at odds with transparency. But some tokens are offering privacy protection, what do you think of that?
What do you think of the many varieties of crypto coins, Meme coins, even “shit coins” out there?
Peter Thiel was quoted saying in January 2021 that “Crypto is a secret financial weapon of the Chinese government”, then he was in the news issuing his own token and even creating his own exchange, – will you be issuing a Draper Coin and even having your own exchange too?
Is it a reasonable prediction that after the crypto market as a whole will flush out all the “junk” coins and unsophisticated speculators, perhaps half a dozen “finalists” coins will be left on the crypto market? Will that lead to some level of stabilization?
From an average Joe investor’s perspective, is the best crypto coin yet to come, since technology is evolving, and more smart contracts are being created for more apps, and more sustainable ways of mining coins will be adopted?
In addition to all 4 “cornerstones” for crypto I talked about above, do you believe that crypto must be in circulation, must be used in transactions, in order to become viable and competitive with fiat and other traditional currencies?
If yes, what is preventing crypto from being used and circulated more widely?
Would you agree that even without sufficient circulation, crypto is still a store of value, like land or diamond?
You predicted that Bitcoin would reach $220,000 – $250,000 in 2023, what is your basis for such prediction?
You said that you will eat a raw egg if Bitcoin does not reach $250,000 in 2023, – I’m willing to eat a sour lemon on my show (without the peel) if it does, – can we make a deal? Do you dare to eat a raw egg on my show, for the fun of it?
The irrevocability of crypto transactions seems like a double edged sword. To err is human, everyone makes typos and mistakes, and if someone types in an amount with two more zeros than the actual amount, mistakenly sending $10,000 when only $100 is intended, there is no way to reverse that mistake. Do you foresee any remedies?
Any other “black swan” for crypto, in your opinion?
Who will be the biggest winners of crypto? Early investors?
Who will be the biggest losers?
Do you believe that crypto has the potential to replace traditional currencies including fiat, as an independent currency?
Traditional currencies and fiat have existed without crypto, do you think crypto can exist without fiat?
What kind of relationship crypto now has with fiat?
Do you think the US government will allow crypto to co-exist with fiat?
Do you think the government needs to regulate crypto, as the SEC regulates securities?
© Joanne Z. Tan. All rights reserved.
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