Tim Draper who made a prediction last month that Bitcoin will hit $250,000 by the year 2022 is a well-known venture capitalist and an inspiring entrepreneur.
In 2014, Draper predicted that Bitcoin would be worth $10,000 in three years. The prediction turned to reality when Bitcoin was soaring above and beyond this amount to reach an all-time high last December.
Tim Draper told Forbes in an exclusive interview:
“I didn’t want to make any predictions after that for a long time because I wanted to let the dust settle. For a while now I have been thinking that it was time for another prediction while introducing my new book, How To Be The Startup Hero: A Guide and Textbook for Entrepreneurs and Aspiring Entrepreneurs.”
Draper’s new book talks about his belief that cryptocurrency will eventually replace fiat currencies completely.
In his description of the hero in his title, he describes a HODLer who is a real hero according to him.
Tim Draper says:
“As a ‘hodler’ myself, I believe it’s important to sacrifice in the short term for a long-term gain. Having a long-term approach to everything goes a long way – from investing to being an entrepreneur to just living your life.”
“A ‘hero’ takes a long view of a low probability outcome, but the outcome will always be big. In fact, the outcome may or may not happen. In the world of ICO, the heroes are those who are putting their necks out there to create a new coin or token to transform industries. For instance, ICO heroes are creating a token to transform governments by making them virtual. The heros of the crypto world have identified a technology that can take on the big monopoly and transform the world.”
Draper’s prediction that led him to come up with $10,000 by 2017 was based on the idea that Bitcoin was going to be easy enough to use in the future and that people would be able to start trading with it and using it as a store of value.
He thinks people are going to be able to spend cryptocurrencies like Bitcoin, in mainstream situations. Cryptocurrencies will be something people can access on their phone as it will eventually replace credit cards. He truly believes that cryptocurrency will replace fiat currencies entirely.
As of now, there is about $80 trillion worth of fiat currency in the world. As the cryptocurrencies are expanding, Tim Draper believes that fiat currency circulation in the coming time will fall from $80 trillion to $30 trillion and will be replaced by cryptocurrencies eventually as it will grow to $100 trillion.
He predicted that Bitcoin might end up with a 20% to 30% market share. As he explains the scenario, he believes the asymptote will be somewhere around $130 trillion, but only maybe $100 trillion would be cryptocurrency and 20% of that would be Bitcoin.
Tim talks about reaching the asymptote:
“As far as my opinion goes it would take 10-15 years to reach that asymptote, so I’m thinking that along the way we are going to see Bitcoin at $250,000 by 2022. That was one way I looked at predicting it.”
He is of the view that Bitcoin has a network effect. For instance, if a user has Bitcoin and no one else does, then it is worthless. But if two people have Bitcoin, and recognize it, then a connection is created. With it the connection grows – it’s the square of how many nodes are in the network. Right now there are 40 million Bitcoin wallets. Tim predicts that this number will continue to grow and the value of Bitcoin will be determined by the square of that.
Tim, in his interview with Forbes, later shares his strong opinion that fiat currencies will disappear completely
Tim Draper on cryptocurrency replacing fiat currency:
“I think that in the future fiat will resemble carrying around change. For example, in the future if we would buy coffee with fiat, the barista will look at us like we are crazy. I also think that soon we will be able to buy coffee and other things with Bitcoin, Ether, Bitcoin cash or any number of other cryptocurrencies all on our phone.”
Following the Mt.Gox crash, Tim Draper said that it really boosted him to invest in Bitcoin back then. In the context, he told Rachel from Forbes:
“Wow, the biggest exchange just collapsed and then kept going. This made me realize that the world really needs Bitcoin.”
Bitcoin was priced at $632 when Tim bought it and it slid straight down to $180. Following this, he made his prediction that Bitcoin would hit $10,000 in three years. And somehow, Bitcoin hit the $10,000 mark in three years – exactly on the number. Suddenly, the world saw him as visionary.
In the last few minutes of the interview, he gives a couple of pieces of advice for the new investors:
“The way I look at getting started with cryptocurrency is to get involved a little at a time. I’d suggest purchasing a small amount of cryptocurrency on Coinbase or to put some crypto on a ledger. A ledger is a hardware wallet, so if you are worried about someone taking your cryptocurrency you can put it there. It’s amazing that all you need now is a USB port and you are able to hold all your money in your own hands.”
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