Venture capitalist Tim Draper argues Bitcoin's fixed 21 million supply makes it a hedge against inflation, using examples from Argentina's hyperinflation and Syrian refugees to show how crypto enables cheap cross-border payments. He sees women's purchasing power and Estonia's digital governance model as keys to mainstream adoption.
Chapters
Gregory Shepard, an entrepreneur who's built and sold 12 businesses, a recipient of 4 private equity awards, TEDx speaker, and Forbes author. This is The Boss Podcast with Gregory Shepard.
Welcome back to part 2 of my interview with legendary venture capitalist Tim Draper. Tim, you are a leading voice for cryptocurrencies, You even said that you expect the value of cryptocurrencies like Bitcoin to rise. Could you explain crypto to people who aren't involved in that sector?
Well, first I'll say right now we rely on our politicians and our government to distribute out our currency. And all the world currency is something like $86 trillion. And they just printed $13 trillion. That means that the dollar has just decreased in value by about 20%, maybe 30%. And if it continues down that path, we'll have huge inflation. So the dollar will be worth less and less and less, and it'll cost more and more dollars to buy things. We now have a currency that is global and open and transparent, and there are only 21 million of them. So you will never have a government coming and printing more Bitcoin 'cause there is only 21 million Bitcoin in the world.
Mm-hmm.
That'll be the most there ever is. And so you will not be subject to these inflationary political whims that mess up the economies of various countries. I mean, if you lived in Argentina, you'd understand this a lot better. Well, I was there in 2017 and met with their president, and I told him about Bitcoin, and their currency was at 75 cents to the dollar, and Bitcoin had just hit $10,000. 2 years later, I went back and I met with him again, and I said, well, Bitcoin's down to $6,000, but your currency has dropped to 25 cents, and, you know, I'll bet you that Bitcoin outperforms your currency. Over the next year and maybe the next 10 years, but the next year, if you win, I'll double my investment in Argentina. If I win, you make Bitcoin a national currency. That was our bet. And since then, Bitcoin's gone from $6,000 back up past $10,000. And the Argentinian peso has gone from when I first said $0.75, then $0.25. It's now less than a penny. So those people look at their currency as a hot potato. They're saying, oh, I've got some currency, how do I trade it quick?
Yeah.
Turn it into something else. Nobody wants to hold an Argentinian peso. And that is the way of any inflationary currency. It happens in Nigeria. And now with our, Government printing $13 trillion and just throwing it into the economy, that is going to inflate. And that'll create people looking at the dollar as a hot potato.
Mm-hmm.
First of all, Bitcoin is global. So you can take it from, let's say you're a Syrian and you get pushed out of your country and you have a bunch of Syrian money, but then you arrive in Greece as a refugee and you have no money. Because they don't take your money. Well, if you had Bitcoin, you could start your life over right there.
That makes a lot of sense.
Frictionless from country to country. There's no friction, whereas Western Union charges 8% to 16% every time they send money overseas. When you are a retailer, you pay the credit card companies 2.5% to 4% every time somebody swipes a credit card. Well, that would go away with Bitcoin. That does go away with Bitcoin. And so why would you want to have a currency that is charging you all that friction? And the other thing about Bitcoin is it keeps perfect records. So once the accounting is all— accounting software is all built around Bitcoin, you are not going to have to have an accountant to figure out how to pay your taxes, to figure out how to report your financials. This will happen automatically with Bitcoin on the blockchain. And there's something called a smart contract. Basically, it's a contract that can be built into software. And that means you can build a contract with someone and the outcome— I mean, a simple contract would be betting on a basketball game and we each put a Bitcoin up and the winner gets the 2 Bitcoin. That can be built into software so that I don't have to come collect from you, or you don't have to come collect from me, depending on who wins. The outcome determines the switch the software throws to send the right money to the right place. And that could mean— I don't know if any of these listeners have been involved in the Hollywood world, Mm-hmm. But when you watch a Star Wars movie, you got 15,000 people who had contributed to this Star Wars movie. And then every quarter they're supposed to send out an envelope that gives you your royalty for whatever you did for the Star Wars movie. So they're sending out envelopes that cost them $7 apiece to send and stamp and whatever. But if that were all done in Bitcoin, that would be frictionless.
Yeah.
I've gotten checks from when I did a little thing with my sister, and I get these checks for 25 cents, and I know that the studio spent $7 to send me 25 cents. And that could just be— you drop that into a Bitcoin wallet, it's automatic, it's set up in software in a smart contract, and everybody gets paid exactly what they're supposed to be paid exactly when they're supposed to get paid. So it's going to be a more honest currency. It's not going to be subject to political whims. It's not going to charge you the extra 2.5% to 4% that you are giving to the banks. It's not going to charge you the extra 8% to 16% every time you send money overseas. It's an amazing currency that It's easy. It's super easy. I could send you Bitcoin like this. No matter where you are, I can just go, oh, okay. You know, if I wanted to send you dollars, what do I do? I call my bank, I figure out how to wire money. With Bitcoin, I just go, oh, okay, give me your QR code. Boom, there's your money. Very easy.
Yeah, I agree that it's a better system. I think it's a better system and definitely more efficient. Reminds me of Estonia. I don't know if you've looked at the way Estonia operates, but they're extremely sophisticated in terms of the way that they handle social services, fire, police, all that sort of stuff, right? They have one code, one thing, and it is your name. And because it's your name and not just a number that gives you access to anything, it's totally protected. And they've done this since 2005 and never had a problem.
I know, they have digital voting too.
Yeah, exactly. Yeah, they have digital voting.
Everybody's fighting about whether we should do vote by mail. What the heck are we thinking? Everybody's got a smartphone.
Yeah, it's like in Estonia, you get that number, right? And it's your driver's license, it's your security number, it's your health services thing, it's everything, this one number. And voting too. They file their taxes in like 30 seconds. It's crazy. So in the grand scheme of things, When we talk about cryptocurrency, it's relatively new. And I guess my question is, how long until you think that it'll be used so commonly that it'll be accepted by more and more institutions and vendors and people doing business together? And what needs to change before that happens?
Yeah, that's the user experience. That's all about the engineers getting their full vision down to where the user experience is frictionless. You know, when Steve Jobs put, you know, made it so that the iPod just had one button, suddenly the user experience for keeping all your files in one place and all your music in one place, the user experience was delightful. That is pretty much getting to be the case now, but it's slightly different from what we're used to. And I think it'll probably be another year or two before The knowledge of how easy it is proliferates to the world so that, and here's another sort of interesting fact where women control about 80% of the retail pocketbook. They are also one person in 15 that have a Bitcoin wallet is a woman. So once the women, and the women are good at communicating, And getting the word out. Once the women start to move, they'll all move. And that will be the moment that everybody feels like Bitcoin is the thing. You know, 'cause I'm already using Bitcoin for collecting tuition from my students, collecting rent from my renters. I use Bitcoin to buy certain things. It's very easy. It's second nature to me. That will be the case when women realize that they're going to be able to save 2.5% to 4% every time they swipe their credit card. And I think they, they really need a service that is easy enough to use so that they feel like, okay, I can do away with my existing way of doing business and I can move over. But me personally, I'm moving as much of my cash over to Bitcoin and other crypto As I possibly can because I know that that is the future.
Oh, that's very interesting. And so your advice for people would be to, even though it seems like it's not very accessible, to just like start using it to find out how accessible it actually is and then to protect yourself from the dilution of the US dollar, go into the cryptocurrency because it is global.
Yeah, and there are only 21 million. You're not gonna, You're not gonna lose value in your Bitcoin, but you could easily lose value in your dollar.
Yeah, it makes sense. It makes sense. To wrap this whole thing up, I wanted to ask you if you could give the entrepreneurs out there some positive vibes in these extremely tough times that would benefit the group of entrepreneurs that are out there trying to make things happen.
This is your moment. You're an entrepreneur. The world has just come to a freezing stop. It's a reset, it's a reboot, it's an opportunity to reinvent the world. And now's your time. This is— I don't think I've ever seen a better time to be an entrepreneur. So the true entrepreneurs are going to lead us out of this weird mess we've gotten ourselves into and into a future that is so much better and more powerful, more exciting than the future that we would have had, had we had no coronavirus. So I think you've got an opportunity. You have a new platform from which to create and to take us to the world you want the world to be.
Tim, I want to thank you very much for your time. I really appreciate it. And All of the wisdom and the, uh, this was a really fun conversation for me. Uh, I really appreciate it. Thank you so much.
All right. Yeah, my pleasure.
Thanks for checking out the BOSS Podcast with Gregory Shepard. Get more on Greg's Business Operating Support System, BOSS, at GregoryShepard.com. This has been a production of Forbes Books Radio.
