The Wolf Of All Streets - Bitcoin Is Going To Be Worth A Lot More | Tim Draper

Starting point is 00:00:00 This episode is brought to you by Voyager and Matcha. Stay tuned for more information on both later in this episode. What is up, everybody? I'm Scott Melker, and this is the Wolf of All Streets podcast. Now, everyone in the crypto space is likely aware of the incredible Bitcoin story of today's guest, who famously bought 30,000 Bitcoins in 2014, confiscated from Silk Road for $19 million at a price of $633 per Bitcoin, which reached a value of roughly $1.3 billion. This story is typical for Tim Draper, who's been ahead of trends for decades, investing in some of the most

Starting point is 00:00:37 important companies of our time, including Coinbase, Tesla, SpaceX, Robinhood, Skype. The list is nearly endless. I'm looking forward to speaking with Tim about the importance of Bitcoin, how to identify paradigm shifts before they happen, and what the future looks like for both Bitcoin and the broader economy. Tim Draper, thank you so much for taking the time to come on the show. Terrific. Well, great to be on your show. This is fun. So listen, as we're talking today, Bitcoin's corrected roughly 35% to a low of $42,000. What are your thoughts on the catalyst for this drop? And do you think that there's any evidence that this bull market is finally coming to an end?

Starting point is 00:01:12 Well, Elon's wreaking havoc on Bitcoin. First, he got all involved and it went soaring high. And then he decided he didn't want to be a part of it. And then it drops way down. But it's still I mean, people have done the energy equation. It's so much more efficient than than the banks. The banks are use more energy than Bitcoin does. No question. So any crypto is better than the banks. And I think he should recognize that. I think he's made a mistake in his calculation because he didn't calculate all the bankers going to work and back, all the people going to the banks and back. When he calculated how much energy Bitcoin used, he didn't compare it to anything. He was just thinking it was a fixed thing. Well, it turns out you compare it to the banks and you say, oh my God, this is so much more efficient.

Starting point is 00:02:10 And yeah, I think we've got, this is an ongoing thing. Every tech industry goes through a process. It goes up to sort of a hype point and that was 2017. And then it drops way down and then it stays flat while all these engineers and entrepreneurs are doing all this work to make it better. And then it just starts taking off and nobody really notices as it gets bigger and bigger and bigger and bigger. And I think that's what's happening as this industry matures and as more applications and more interesting things are happening with Bitcoin, the price will just continue to rise. And sure, we're going to have fits and starts, but anybody who's been involved in Bitcoin at all knows that 35% is a blink. We just call that Tuesday, right? But, you know, listen, I'm a perma Bitcoin bull, as you know, but just to play devil's

Starting point is 00:03:16 advocate, is it an indictment of this space that a single tweet from an eccentric billionaire can actually rock the market like this? Or do you think that it's actually much deeper than a few tweets from Elon Musk? And perhaps we had some euphoria in the market that needed to be flushed. He's maybe eccentric, but he's almost a trillionaire. This is extraordinary. And Tesla was a leading indicator for all the other companies to get on board. And it looked like they were going to all sort of follow. And now he's backtracked. And hopefully he's not doing this for, you know, financial gain.

Starting point is 00:03:58 Hopefully he's doing it for the good of the world. But I think if he's doing it for the good of the world, he didn't do his calculations properly. But, yeah, I mean, it's been moved by all sorts of things. And people have talked about the energy use for years. By the way, the energy use for transaction keeps dropping, dropping, dropping. It's like Moore's law. So it's not a big deal.

Starting point is 00:04:20 It's just a big deal right now. And I think he may have had some political pressures from the government because he was in the middle of doing some big deal with Tesla and the government. And they decided they were going to take a piece out of his hide. And maybe that was the piece. There's been rumors about the EPA that I've heard or that having to do with the credits that, you know, the energy credits and perhaps his ability to qualify for those. Yeah. So he was I think he was doing a little horse trading there with the government. But in any case, we've got an amazing currency. Bitcoin is an amazing currency. It is frictionless. It's

Starting point is 00:05:07 open. It's transparent. It's global. It's all those things. It makes it so that we don't have to worry about borders. I mean, over time, we're going to be much more global and less tribal. We don't have to worry about some government deciding just willy nilly to print trillions of dollars. We know what a Bitcoin is worth. And, you know, I know when when Bitcoin drops like this, some people get scared. Some look and go, there are only 21 million of them. Let me grab a few more. I can get it for $44,000.

Starting point is 00:05:46 And I know it's going to be worth a lot more than that later. So, yeah, we have an amazing new currency. And it's going to lift. It's going to give us an anthropological lift. It's going to be the equivalent of moving from shells to gold or gold to the promise of gold or promise of gold to the promise of a government. Now it's going to be, look, we've got a trusted third party with very low overhead. It doesn't have to be a banker with a big building and the glass and steel and the fancy tie and the fancy cars that are polluting our environment. It can be just efficient.

Starting point is 00:06:33 So, yes, and it's the best store of value and it's the most decentralized cryptocurrency. So I'm still a big bull on Bitcoin, long-term bull, bull, bull. Well, I've been aggressively buying the dip myself the last few days. And I would imagine there's quite a few people salivating at the opportunity to do so. And when there's a news item, it's always go, everybody sort of goes, oh, I got to sell. And then you go, oh, what are you selling? Yeah. I mean, you don't have to look far, just check into Twitter for five minutes and you can see how angry and depressed people seem to be, which hopefully means that we're finally approaching a bottom here. Oh yeah. Well, that's going to happen. I mean,

Starting point is 00:07:15 people are going to be down. This will probably clear out some of the SHIT coins. But I think it'll be very good for the top 25. I mean, I think they'll end up being where people are going to spend most of their efforts. Well, that's sort of the parallel that people often make to this present crypto cycle being similar to the dot-com bubble of the late 90s. And I always argue that's a good thing. And you touched on earlier, you get all this innovation when things are down and all the entrepreneurs rush into a space and actually most of them fail, like in any industry or any business. But you end up with the most important companies in the world rising from that phenomenon. Do you think that that's an apt parallel between the dot-com

Starting point is 00:08:01 bubble and now? Yeah. And when they fail, when an entrepreneur fails, the entrepreneur is still pushing the ball along. It's just, they didn't hit it just right, but you know, there would be no Facebook without MySpace and Friendster. You know, and there would be no, without Hotmail and viral marketing, there would be no social media at all. And so, so as these companies try different things, they test this, this, this, and this, and then one thing works. And if they catch that just right, then they win. But, but even the ones who don't win, the ones who go out of business are always helping. They're helping move the ball. And I think entrepreneurs, sometimes their egos are tied up in success or failure, whereas what they should really be thinking is, hey, I did this.

Starting point is 00:09:01 I moved the ball along. I'm the reason that Facebook became what it became because I helped build MySpace. That kind of thing can make a big difference. Same thing with crypto. You're seeing a lot of people try different things with these with the alt coins and some of them are working and some don't. And then you see them adopted by Ethereum and then the best of those are adopted by Bitcoin. And so you you see that it's a little bit Bitcoin's operating a little bit the way Microsoft did. Well, all those people were experimenting with what kinds of software to run. And then Microsoft waited and they said, OK, we need a spreadsheet. We need a word processor. We need a database. We need an art program.

Starting point is 00:09:55 And they and they went after those. And I think that's what Bitcoin is doing now. I mean, you have a long history of picking the winners, though, right? I mean, you have a long history of picking the winners, though, right? I mean, you have millions of people. It's a lot of luck, but it's also we here's what I do when I meet with entrepreneurs. I think, what if it works? That's my big question. What if it works? And if it's no big deal, if it works, then I think, well, why would I bother with this?

Starting point is 00:10:23 But if it works and it's huge, I mean, if it works, it becomes huge or it becomes a real transformational thing for humanity, then I'm all over it. And I look at Bitcoin and I say, that is a transformational thing for humanity. That's going to open up borders. It's going to make us more global. The world will become wealthier. We'll all have a better experience. We all will know what one Bitcoin is worth. And that's something you don't know if you hold Argentinian pesos or Nigerian Naira or Venezuelan Bolivar. Those things drop 50, 70% a year against the dollar and the dollar's dropping over time. So yeah, we've got now with all sorts of cryptocurrencies,

Starting point is 00:11:17 we've got great, this is a very exciting time because as much as, in fact fact the internet transformed some great industries it was communications and information and gaming and media and entertainment a lot of great industries eventually hotels and taxis but now we've got a technology, combination technologies that are going to transform not just banking, but finance. I can imagine a time where I raise a fund just in Bitcoin, invest it all in Bitcoin, have the companies pay their employees and suppliers all in Bitcoin, have that all be a walled garden where taxes are taken out and the whole thing in Bitcoin. And it requires no friction. It requires no accounting, no auditing, no bookkeeping, no legal. It's all done in this perfect walled garden because the blockchain keeps perfect trackers, the Bitcoin blockchain. So that's going to change finance. Then you're going to see insurance change because you could have an insurance company that is completely

Starting point is 00:12:33 artificial intelligence and surveillance that doesn't require people to fight with over your claim. In fact, I could imagine an insurance company that sends you a check before you issue a claim because the surveillance has recognized that your house has burned down or that you've got cancer or that something horrible has happened. And then what is government but a bunch of insurance companies put together? And that government can also be much more streamlined. All those insurance programs, the health care insurance and workman's comp insurance and unemployment insurance and welfare and pension, social security, they're all insurance programs. You can set those up on a smart contract with Bitcoin and they're completely fair and you don't have people getting in the way. And those people can go be productive in other things. So I think government's going to change

Starting point is 00:13:43 too. And then healthcare is going through a major transformation. And some of that is tied to, you know, putting your healthcare records on the blockchain. But a lot of it is that it's all going digital, you can do your, your both your therapeutics and your diagnostics in digital form. In fact, I got the mRNA vaccine and that was completely manufactured on a computer. That was not a wet lab. So things are changing and they're changing fast. I'm excited about it because we'll become, the internet really did help us become global. And then Bitcoin allowed us to have a global currency. And that was when some of these governments were kind of going, oh, wait, wait, do I really want this or, you know, and the ones who are embracing it are accelerating their, their country's growth. And the ones that are pushing it away

Starting point is 00:14:46 are decelerating or putting a cap on their country's growth. And over the next 40 years, the winners of the next 40 years are going to be the ones, like winning countries, are going to be the ones that set it free and allowed the trust of the blockchain to flourish. If you've been paying any attention to me or have been following me for any length of time, then you know I absolutely love Voyager. Every single time someone tweets me or asks me, hey, Scott, where do you trade and invest? The answer is always Voyager. They offer over 50 assets to trade commission free. I save so much money, it almost feels too good to be true. And that's not even my favorite part of Voyager. My favorite part is the insane interest that I

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Starting point is 00:15:58 when you create your account. What are you waiting for? Go download Voyager. Guys, Matcha is absolutely awesome. If you've traded on Uniswap or PancakeSwap or SushiSwap or any of them, you know that all of these dexes have their issues. Well, Matcha allows you to trade on all of them at the same time. It finds you the best price. It optimizes your gas fees so they're cheaper and also allows you to use limit orders, which is huge because you don't have to be married to your screen sitting

Starting point is 00:16:22 there staring, willing your exit or entry to finally arrive. It's really mind blowing. Once you go on Matcha, I can assure you that you will never go back. To check it out, go to thewolfofallstreets.link slash Matcha. Guys, I'm telling you, go check out Matcha right now. This might not be the most popular statement, but Bitcoin is a lot of things, but it's not everything, obviously. And so, you know, I don't, I've never understood sort of being a maximalist in one direction or the other, because I think there's so much incredible technology. No, no, there's some, there's some other great technologies out there. And a lot of these tokens are tied, not just to, they're actually securities, they're tied to real estate or oil or stocks. And people can trade them more easily than they could have in the stock market. And that's exciting. Some of them are tied to, like Aragon, the A-N-T is tied to a new form of

Starting point is 00:17:23 government, like a liquid democracy. And that's going to be exciting. Some are tied to a new form of government, like a liquid democracy. And that's going to be exciting. Some are tied to these tokens that are like Maker and the DAI is tied to the dollar, but Maker is the insurance token for the DAI. And that's a unique model. And then there are these that are more centralized, but still, but they have, I call them despots that are, instead of being decentralized, like Bitcoin is totally decentralized. Ethereum is somewhat decentralized, but they have a metallic. Some of them like XRP and Bitcoin Cash and whatever have rulers that are benevolent. And I think that they're going to be very good. If anything happens to those rulers, though, that could be a problem. Who knows what you're going to get

Starting point is 00:18:31 the next time. And the more engineers you have working on something, the better it's going to be. And of course, Bitcoin has twice as many engineers as any of the others. And then Ethereum and then a number of others. So there are many, I'm excited about Tezos because they've got a new form of governance that's tied to proof of stake. So proof that you're in there allows you to check on that so-called blockchain. So there are some really interesting new technologies that are coming. I love NFTs. I love what that could look like in 20 years. I'm not as excited about the NFTs right now, but they're fun.

Starting point is 00:19:22 That's the hype thing. and then it's going to go down and then it's they're going to be better and better and better and they're going to do like they're going to make sure that the purse you buy is definitely Hermes and the art you buy is legitimate I don't know how you knew I had an Hermes purse. And then you're going to have a piece of Michael Jordan rookie card or whatever. I mean, there are all those things that can happen. And they'll also have, I think you'll be able to show your NFTs in a way where you say, this is my driver's license, my diploma, my nursing license, whatever. So I think NFTs are going to be great.

Starting point is 00:20:13 And it's been a fun experiment on Ethereum. And now, of course, the NFTs are being done on Bitcoin. Yeah, I mean, I completely agree with you that it's in a bubble and that, again, I think the best use cases will rise from the ashes. A lot of them you talked about, which is tokenizing everything and exchanging it directly, which will be the case for stocks and assets well beyond art and collectibles. Yeah, a lot of these things happen because regulators get very set in their ways and the world moves forward. And so people have had to figure out ways to make things tradable. Like real estate, very few people have the money to buy a commercial building. And, and now you can buy a piece of a commercial building through some tokenization. And, you know, you could have done it, I guess, through crowdfunding, but,

Starting point is 00:21:20 but the tokens are more permanent and you feel this permanence. And I think that that's going to be a great thing. So I'm big on the future of Bitcoin, all the altcoins, the blockchain and how it relates to NFTs. I love what Coinbase is doing. I mean, they're going to be the center of the universe. No matter which coin ends up being the big winner, Coinbase will be a big

Starting point is 00:21:53 winner. I like Ledger. I like what they're doing. There's some really great things coming out of Ledger and they're very secure. So I'm excited about that whole industry. It's going to be amazing. I couldn't agree more. So I want to just pivot. You've touched on the government quite a few times and their obvious lack of efficiency and how this can improve some of that. What do you make of the insane increase in the money supply, the printing that's going on? Do you think that it's sustainable? Do you think that they'll ever stop it? What's the end game? I mean, we just saw more stimulus announced, right? What's the end game of all this? Well, if it's anything like when Jimmy Carter was president, for a while, you can do sort of a quick stimulus, particularly if you feel there isn't enough currency out there, you can do a quick stimulus.

Starting point is 00:22:50 But if it's anything like that, first you're holding dollars, I hope it's just to keep your family alive because, you know, they're going to be worth less in a year. And Bitcoin likely will be worth more in a year. Just as, you know, people, you know, go to gold or real estate in inflationary times. The going to Bitcoin, you get the benefit of two things. You get the growth in this new economic world. At the same time, you have a hedge against inflation or bad government. And so, yeah, and they print money for a variety of different reasons. In this case, it seems as though this lockdown was nutty.

Starting point is 00:23:52 But when they did it, they put all these people out of work. All the people that they say they're trying to protect or trying to improve the lives of, you improve the life of somebody by giving them a job. Well, all those jobs were lost. So then all those people were out of work. And then the homeless population, at least in San Francisco, goes up fivefold. And so then they print a bunch of money to send it to those people. But that's different from having people work and have a job and have that money continue to come in. So that is a, it's lucky that we're getting so efficient and our productivity as humans has increased so quickly because otherwise you'd have a lot of people out of work and have no money to support them. And hopefully they'll all

Starting point is 00:24:57 eventually come to their senses. And just the goal is get everybody back to work. That is the absolute goal. Once you've got that, everything else falls in line. But they're printing money now, and it's sort of a stopgap measure. a spiraling inflationary effect where the dollar is worth, you know, 80 cents next year and 50 cents a year after and 10 cents the year after, unless they put a curb on it. And that curb can be painful because then they raise interest rates, stock prices go down. I mean, so, you know, we're in that place before all that stuff happens. And if they're Fed, there are a lot of smart people there. If they manage this well, that printing of money doesn't have to bring on too much inflation. And we get some people taken care of during the stopgap,

Starting point is 00:26:08 and then we get them all back to work. And that's the best outcome. So we're not necessarily at an end game where either scenario causes pain. I had Caitlin Long on and she made sort of the same argument. She said that it's not sustainable, but it's also not the end of the world necessarily, that it can naturally deleverage the system and actually be an improvement with time. So it's good to hear that there's a chance because you often just hear if there's inflation, everyone's in trouble. And if they stop printing money, we have a depression and everyone's in trouble. Yeah, right. You don't want to have that. You want to make sure at least that economic engine is running. But what you don't want is you don't want socialism. You don't want this feeling like the government's going to do everything and

Starting point is 00:26:55 make all my decisions for me. And I was starting to feel that way when they're telling us what we are allowed to say, when we have to wear a mask, how we're supposed to act and whatever, that can be very dangerous, because then you start moving toward acting more like North Korea than South Korea. And as you know, North Korea is socialist dictatorship. Everybody does what the government tells them to do, and they can't do anything else. South Korea, of course, is a free market system, open democracy, capitalist, good system. They now, 70 years after, there's a demilitarized zone between the North and the South. And now, 70 years later, the average South Korean makes 460 times what the average North Korean makes. And that's with purchasing power adjusted.

Starting point is 00:27:54 And they're now four inches taller in South Korea than they are in North Korea because they're starving in North Korea because they don't allow freedom and they don't trust. So there's no trust and no freedom that doesn't work. You got to have trust. You got to have freedom. And what's great about Bitcoin, it's all about trust and it's all about freedom. That is, I mean, it's the perfect governmental tool. It really is. I know we're getting up against it with time. I want to ask you one more question. This might be a stretch for you. Imagine you had nothing. They're all a stretch for me. I've never really felt like it was. Imagine you had nothing. It's always a challenge. Yeah. Imagine you had nothing and somebody handed you a million dollars today. Well, until I could pay my grocery bill and my rent with Bitcoin, I would first make sure that I could pay for six months ahead. Emergency.

Starting point is 00:29:04 So everybody was taken care of, the family, the whole thing. And then the rest of it, I would put into Bitcoin. It's just, and then not think about it, not worry about it, because you know that it's the winner. And, or at least I feel like it's the winner. There are others and they're going to rise and fall and do interesting things. But you know that in your heart that that's the winner. And, oh, I might buy some coin days with it.

Starting point is 00:29:35 Because that, that even allows for if an altcoin becomes bigger. Yeah, that makes sense. That makes sense. It's kind of one horse. I think that I'd, and I'd be probably yeah i i wouldn't do the big diversification that i can do now i would do more like concentrated well they say that yeah concentrating concentrations how you get rich and diversification is how you keep it. Yeah. Mark Yusko told me that actually.

Starting point is 00:30:09 I'm sure you know him. Well, thank you so much for taking the time. Where can everybody follow you and keep up with you after this? My pleasure. I'm Tim Draper, at Tim Draper on Twitter. And then you can, well, if you're an entrepreneur, you can apply to Draper University, go to draperuniversity.com. And if you're an entrepreneur, and you've got a business plan and model, and it's starting to work, you can go to Draper Associates. I'm Tim at draper.vc. So thank you. This is terrific.

Starting point is 00:30:45 Thank you so much. We appreciate it. Now I know the headline's going to be, Tim Draper says, put all your million dollars into Bitcoin, right? That's perfect. Thank you so much for taking the time. I really do appreciate it. Bye-bye. Bye.

The Wolf Of All Streets - Bitcoin Is Going To Be Worth A Lot More | Tim Draper

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