On Wednesday, Tim Draper, the legendary billionaire tech investor and co-founder of VC firm DFJ, was interviewed by Adryenn Ashley (the founder and CEO of blockchain-based dating platform Loly) as part of the "Future of Money" online crypto summit. Here are some of the more interesting comments made by Tim during this interview.
How He Decides What New ICOs to Invest In?
"I looked at many... ICOs, and I realized the difference between a good one and a bad one is very clear. A good one is a movement, it's like passionate people saying 'this is the way we've got to do it, we gotta move forward, it's going to be exciting, we're going to change everybody, they're all going to think this way'. And so, the movements are like the equivalent of anti Vietnam War movement, or the Women's Movement, or the ecological movement."
"And then, I look for this one other thing, which is after the ICO, you're going to have a bunch of money, you're going to have coins, and they are going to float around... But if they actually have an after-market that matters, that's really important. So, is there some reason to buy the coin after the ICO? Is there some reason for some real consumer to go buy that coin and do something with it? That's this extra little leap that most entrepreneurs don't even think about. Yeah, you need the coin to be useful, you need somebody to be willing to buy it, and you need it to spread. And the reason you say 'spread' is that the value on the network, the net cashflow, is the number of nodes squared, and what that means to me is the more wallets, the more Bitcoin wallets there are, the more Bitcoin goes up in value. Now, it floats around, but it will go up in value relative to other currencies. And people say, 'But Bitcoin is so volatile', and I think 'No, it's not true.' One bitcoin is still one bitcoin; it's all these other currencies that are volatile against it as they slowly disappear."
Why Is He So Bullish on Cryptocurrencies?
"Right now, there's $86 trillion of fiat money out there... That's the currency of the world... And my projection is that the market will probably double, and the reason it will double is money will move faster with cryptocurrency, and slowly but surely, cryptocurrency will overtake the fiat currency because it's just better currency: it's frictionless, it's decentralized, it's global."
Is There Room for So Many Altcoins to Survive?
"This is an exciting time. You know, when people talk about the 'internet bubble', they think of it as a bubble that popped... Well, the internet, that bubble was just the first little tiny wave, and it got so much bigger... but it was fewer companies... Back then, if you'd bought all the internet companies at the very top of the bubble, you would have made a fortune. You'd have lost 2/3 of your money, but the other 1/3 would have gone so high because it would have included Google and Apple and Amazon... Netflix... all these companies, and you would have done incredibly well. So, same thing is happening now for Bitcoin. You've got this wave and everybody went 'This is great!', and then they go 'Hey, wait a second; I can't use it at Starbucks; what's wrong?' So they are down in the dumps a little now... meanwhile all the engineers, al the entrepreneurs, are growing, growing, growing, building their businesses, making it easier and easier for us to consumers to jump in there and use it, and all of a sudden, we're going to look back and we are going to go 'Oh, my gosh! That was just a little blip on this way to becoming this amazing thing, just like the internet is.'
"In fact, it's much bigger... The internet changed communications, information, music, entertainment, taxis, gaming, a lot of interesting industries... They are all in the tens of billion dollars market size or a little bit bigger if you are talking about information. But now you are looking at the Bitcoin and the blockchain, and those industries are enormous. And you add smart contracts... So now, the industries that goes after are finance, many trillions of dollars, real estate, insurance, healthcare. But there's a bigger industry: government... It's the census data, it's how you collect taxes, it's how you redistribute income, it's how you pay for your social security, your healthcare insurance... all that stuff... that can be done on the blockchain with Bitcoin and smart contracts."
Could Equity Tokens Provide a New Area for Growth?
"This is a big challenge to Nasdaq and the New York Stock Exchange. If everything is tokenized, if I tokenized all my Apple shares, I can buy them and sell them and move them around, and the dividends can move with the tokens, and those things are securities, but they are tokens, so there are no trading costs, so you don't have any middle man in between me selling and you buying my Apple shares. So, yeah, this is a big opportunity. Now, it is a pretty good argument for the SEC to say that is a security. So either the SEC needs to look at it and go 'Hey, do we want to lighten this thing so that can compete with all the other countries that much lighter regulations?'"
"Our millionaires have a real advantage over the people who don't have a million dollars... They can invest in anything they want... If you are a less than a millionaire and you are not a sophisticated investor, you're not allowed to invest in anything... only the public companies, and they are so boring. And the idea is that they are trying to protect you from yourself. That might make sense for somebody who is starting to go senile and they are 83 years old, but it makes no sense for somebody who is starting out, they are already $200,000 in debt, and they are saying 'I am going to take a risk, this looks like a good bet, I know this guy, he is brilliant, and I want to bet on him, and he is going to do something cool, and I only have got a $1000 to give him but I am going to do it.'"