How Tim Draper made a fortune investing in Bitcoin

Tim Draper is a venture capitalist and 
entrepreneur based in Silicon Valley. He   Invests not just in boring stuff like stocks 
and bonds. Nope! Tim invests in early stage   Startups and turns them into big successes. 
He's like a startup whisperer. He invested   In Skype before it was cool. Backed Tesla before 
electric cars were a thing. And supported SpaceX   When everyone thought it was insane and twisted 
a finger at the temple. He even tried to divide   California into six separate states because 
apparently one Golden State isn't enough. Now,   Some folks might think Tim's a little off his 
rocker, but you can't argue with success. He's   A legend in the world of investing. A true 
pioneer who has made a fortune by taking risks   And blazing his own trail. So buckle up, because 
in this video, we're going to take a closer look   At the story of the one and only Tim Draper. 
Trust me, this is going to be a wild ride. The way I got into blockchain and Bitcoin was way 
back when I met this great guy from Korea and he   Said that he had to buy his son a sword, and 
it was for the son's birthday, and it was $40.   And I said: "Well, it must be a 
nice sword." And he said: "Well,   No, it's just pixels on the screen." And I 
said: "Whoa. So people are buying virtual   Goods with fiat currency." And then I thought, 
whoa, maybe there will be virtual currency to   Buy fiat goods. And it got me thinking. And then 
I watched very carefully as games like Farmville   Created new kinds of virtual currency. And then 
when Bitcoin came along, it was the universal   Currency. It was the currency for our entire 
Earth. I was talking to my partner at the time, Joe Jarman. He introduced me to Peter Vessenes. 
Peter then told me about Bitcoin and how it   Worked, and I dug in very deeply and I 
ended up investing in Peter's company,   CoinLab, and also investing with Peter to buy some 
Bitcoin. And Bitcoin at the time was $6 a Bitcoin,   And he was talking about making it $4 a Bitcoin 
because he was going to mine it for us. And   Two things went very wrong there. One was the 
company that he was working with to create the   Chip that was going to mine, Butterfly Labs, sat 
on the money for a long time and actually mined   It themselves for a while. So we didn't really 
even get the equipment until Bitcoin was at $36.   But even then my Bitcoin was held at Mt. Gox and 
that company sort of disappeared with the money. Mt. Gox was the biggest and most popular Bitcoin 
exchange. One of the earliest Bitcoin exchanges   Based in Tokyo. It was started by Jed McCaleb as 
a website for trading cards from the game Magic:   The Gathering. So the name Mt. Gox comes from 
Magic The Gathering Online Exchange. In 2011,   A French guy named Mark Karpelès 
buys Mt. Gox, and shortly after that,   The price of Bitcoin rises. The site becomes 
the most popular place to buy and sell Bitcoin   In the world. Fast forward a few years later, 
in 2014, Mt. Gox all of a sudden goes dark. I thought: "Well, too bad. That 
was a great experiment, there go  

40,000 Bitcoin or something." I thought that was 
the end of it. After I thought Bitcoin was over,   I couldn't believe it, but the next day 
Bitcoin went down only about 15% on the   News that Mt. Gox had taken all that money. 
I thought: "Wow, people really need this.   And they're really using it for a lot of good 
purposes." So I did a deep dive and I started   To figure out what it is that individuals 
are using Bitcoin for. And it turned out   That they were using it to move money around 
in Africa to be banked when they were unbanked,   To pay people who didn't have bank accounts, to 
pay people internationally. There were many, many   Applications for Bitcoin. At that point I started 
to buy more Bitcoin, and I bought a little,   And I bought a little more, and I bought a little 
more, and the price kept going up and up and up.   And then this Silk Road auction came up where 
the US Marshals Office auctioned off some coins. The US Marshals this week are set to auction 
off $18 million worth of Bitcoin. They ended up   With the Bitcoin when they seized the assets 
of Silk Road, the Amazon of illegal drugs,   That was actually a lot more than that. 
It was an anonymous private marketplace   That a lot of people were using. A lot of the 
transactions that they performed, actually,   All of them were done in Bitcoin. And so the Feds 
ended up with it after they took down Silk Road.   Now they're going to auction it off. Now, this 
actually isn't all that different from when the   Feds auction off any other seized assets from a 
criminal or supposedly criminal enterprise. The   Difference is that it's Bitcoin, which is 
itself a very controversial cryptocurrency   That the US government is still trying 
to figure out its policy on and get this,   That the sale is a so-called interlocutory sale, 
which means that the US Marshals actually had   To get a special permission to sell it off even 
faster than they originally intended because the   Goods under question, the Bitcoin is considered a 
perishable or susceptible to deterioration good. It's fascinating that they would put it 
in that bucket. They're almost saying:   "Oh, shoot, like we don't know how 
long Bitcoins will hold their value.   They've been fluctuating, but 
we want to cash in on them now." In that auction there were nine lots and I thought 
to myself: "You know, I think I'd really like to   Get one of those lots." I kept talking to all 
these people who were talking about buying into   These lots, and every single one of them was 
bidding below market. I thought: "Well, if I   Want to get at least one lot, I better bid above 
market." Market was about 618 and I bid 632,   And it turns out I got all the lots, so I got 
about nine times what I really wanted. But then   Once I realized I had gotten it all, I thought: 
"You know, I'm happy with this." It was not very   Diversifying of me to buy all that Bitcoin. And 
it's either going to go to zero or it's going to   Be something very important for the world. It 
immediately went from 632 down to about 180.   And then I started to invest it in a couple of 
companies and they took the Bitcoin and they  

Immediately sold it and turned it into dollars. 
And there was only one company that kind of   Held on as they went forward and that company 
is still doing very well. The rest of them,   I think, are out of business. But I did that 
because I wanted to do experiment with the idea   Of investing into portfolio companies, into 
startups with Bitcoin. The accountants would   Charge me triple what I would normally be charged 
because I had to train them, and the lawyers,   It was very expensive for the lawyers. Everything 
I was doing was cutting new ground and none of   It was really working well. So I stopped 
investing with the Bitcoin and I thought:   "Well, I'll just hold on to it until people are 
ready to go." My son was very enthusiastic about   Me doing it. Both sons actually. One was about to 
work with me and the other one has started Boost,   The accelerator. And he decided that after 
I bought that Bitcoin he would create an   Accelerator just focused on Bitcoin, and 
that ended up being a great success. My   Father was not enthusiastic about it at all. 
He said: "The dollar! Stick with the dollar!" I'm Tim Draper. I'm in the venture capital 
business with Draper Associates. This is   My father, Bill Draper. He's one 
of the first venture capitalists   Who ever went into India. India 
has made great progress over the   Last 30 years. It's a great country. I 
have to say that I'm very optimistic. When I was with the first venture capital company 
in Silicon Valley in 1959, every good entrepreneur   Came to us and there was no competition. 
Then Wall Street arrived. I've wondered:   Why the president of Goldman Sachs came to see me 
in my little office in Palo Alto? I realized our   Returns were like doubling every two years, 
and that didn't happen in Wall Street. So he   Just wanted to put money in his truck. And then 
he came out here with a truck full of money. What I've seen in the venture business that I used 
to knock on doors of companies and they would shoo   Me away and they'd say: "No, no solicitors!" And 
now it's a very different thing. We spend most of   Our time filtering through all of the various 
entrepreneurial opportunities that we see. So as a catalyst to accelerate the transformation 
where we inspire by example, which is great. So yes, it's more competitive, but also there 
are that many more entrepreneurs that have never   Really experienced this in the past. But first, 
let's see what's going on behind the scenes. I'm constantly backing and funding 
entrepreneurs that are somewhat controversial or   We would never see the amazing changes that we've 
seen from all the investments that we've made,   Whether it was Bitcoin, or Skype, or Baidu, 
or Tesla. They were all very controversial at   The time. I do believe that Bitcoin will be the 
big winner and that there will be a lot of other   Coins that are used for specific purposes. There 
will be some failures, but that's the beauty of   Free market system. My goal is never to sell 
my Bitcoin, but to eventually spend or invest.   Really, I want to invest it. I'm going to wait 
for a time when I feel that the world understands  

It and that the world has finally embraced it. 
And I think that's probably five years from now. That's all, folks, about the story of Tim Draper! And remember that innovation is the key to unlocking our future. Let's not be afraid to take risks, embrace change
and create a better world for generations to come!