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When a successful, well-known venture capitalist like Tim Draper is investing in Bitcoin with some $18 million of his own money, you know he must have a really good reason.
Draper was the sole winner of the 29,656 bitcoins auctioned off June 27 by the U.S. Marshals Service. Those bitcoins had been seized by the federal authorities that shut down the notorious Silk Road website last fall.
He beat out 44 other registered bidders of an impressive group that included SecondMarket's Barry Silbert, the Winklevoss twins, CoinBase, and Pantera Bitcoin.
The winning bid has not been disclosed, but the stash was worth about $17 million on the day of the auction, when the Bitcoin price was about $570.
Since Draper won all the bitcoins, he almost certainly bid above that price. A relatively conservative bid of $600 would have cost Draper a cool $18 million. Today (Wednesday) the Bitcoin price is about $622, making the stash worth about $18.4 million.
But Draper, a founding partner of Draper Fisher Jurvetson, isn't worried about such day-to-day fluctuations; he says he's investing in Bitcoin because of its potential to disrupt the financial world.
Bitcoin Will Be as Transformative as the Internet
"I think Bitcoin is as big a transformation to the finance and commerce industry as the Internet was for information and communications," Draper told FOX Business on Tuesday. "I'm very excited about Bitcoin and what it can do for the world. It's going to open up the world in an even bigger way than the Internet did."
Such talk echoes what other prominent Bitcoin venture capitalists have been saying, most notably Marc Andreessen, a co-founder of Netscape and a partner with Andreessen Horowitz.
And like Andreessen, what Draper says and does carries a lot of weight in venture capital circles.
He's been a venture capitalist for 28 years, having learned the ropes from his father and grandfather, William Draper, who is considered the tech industry's very first venture capitalist. (Tim's son, Adam, is also a venture capitalist.)
And over the years he's built up a very impressive track record, having invested in Skype, Hotmail, Box, SolarCity Corp. (Nasdaq: SCTY), Tesla Motors Inc. (Nasdaq: TSLA) and Chinese search engine company Baidu Inc. (Nasdaq: BIDU), just to name a few.
Now that Draper is investing in Bitcoin - and not just through his venture capital firm, but with his own money - it's a good indication that the digital currency will make its mark on the tech world as did many of his other investments.
And as one might expect, Draper has some very specific plans for his new investment in Bitcoin - and it's not the usual payment processors or Bitcoin mining companies you would assume.
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.