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THE BIG BITCOIN INTERVIEW: TIM DRAPER, SOLE WINNER OF SILK ROAD CRYPTO-CURRENCY AUCTION, SPEAKS TO DIGBOSTON

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An earlier version of this story implied that comments by Stephanie Chang appeared to run counter to those of Tim Draper. Chang contacted the Dig to say her company, Wedbush Securities, is in fact “very supportive of the Bitcoin protocol,” and adjustments have been made to reflect that position. We regret the error and apologize for any confusion.

The current issue of the Dig features an update on Bitcoin one year after the crypto-currency fever pitch of 2013. In researching the piece, we checked out a Boston Idea Week event called “Innovation in Electronic Capital Formation,” where we talked with keynote speaker and venture capitalist Tim Draper who, as it turns out, is an even bigger player than we thought in these new markets.

Since publishing our overview, we’ve learned that Draper was the sole winner of nearly 30,000 Bitcoins, now worth around $19 million, that federal agents seized from the Silk Road online black market in late 2013 and auctioned off last week. The New York Times quoted a generic press release. We spoke to the source directly.

“There is a real need for Bitcoin throughout the planet,” Draper tells the Dig. “Certain governments aren’t that good at managing their currency, or they print too much money, so there are countries that need it more than the U.S. does.”

He continues: “The ability to move money from one country to another always has a lot of friction, costs a lot of money … You have to go through Western Union and they charge you eight percent if you want to transfer money, but people can transfer money with Bitcoin almost for free.”

Bitcoin’s volatility has made some hesitant to invest. Draper’s less concerned.

“In 2008, nobody knew whether the dollar was going to be worth anything,” he says. “But if there’s a currency that’s virtual and it’s all over the world, it’s pretty likely that’s going to be trade-able. Maybe not right now, but long term it may be more stable than any of the individual fiat currencies around the world.”

As for other crypto-currencies that may compete with Bitcoin … Draper concedes they can have certain benefits, but says that since Bitcoin surfaced first, it’s likely to remain the most valuable and widely traded digital currency.

Says Draper: “I think (the other crypto-currencies) have some chance of success, like a very small chance of success. Because I think once you’ve standardized on one, you know maybe there will be one that will sort of be a copycat, but once most of these businesses are built up around Bitcoin, the other currencies, while easy to add in, are going to be more difficult to trade in. The liquidity won’t be there.”

Others are additionally considering other developments. “Bitcoin may be kind of the equivalent of web 1.0.,” says Stephanie Chang, another speaker at Idea Week and a head of research strategies at Wedbush Securities. “The story’s still unfolding. We don’t know whether it’s here to stay, but it is the most sound protocol right now and a lot of implementations are being built off of that framework.”

Chang continues: “What digital currency represents is a more efficient way of transacting, and many companies may come and go and fall on their swords, as evidenced by the growth of the internet and a lot of other disruptive technologies.”

From Draper’s perspective,  at least for now, Bitcoin is the best bet. He says he’s not looking to immediately flip his new stash, and instead hopes to increase the nu-currency’s circulation in various markets.

“I’m excited about it,” Draper says. “I think Bitcoin could be a major revolution around the world. It could be really important.”

We. Shall. See.

 

FURTHER READING

CHECKING IN ON CRYPTO-CURRENCIES ONE YEAR AFTER THE BITCOIN FEVER PITCH

DRINKING ON THE SILVER LINE FOR BOSTON IDEA WEEK

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