On October 3 the price of bitcoin touched $360, marking a low for 2014. The week before, venture capitalist Tim Draper – the winner of the giant government bitcoin auction that saw Draper come into possession of 0.25 percent of all BTC – went on Fox Business to dispel any fears that the ride was over. Well, not only that the ride wasn’t over. That it was just beginning.
Was he there to dispel fears, or was he there because they wanted to ask him what he's doing with his money?
In talking up the currency, he said “I am still predicting, Bitcoin, $10,000 in three years. It is a hedge against a lot of fiat currency, because it is a new way of transferring cash throughout the world in a much more efficient way. And Bitcoin has a created a whole infrastructure of many, many companies some of which came out of Boost the incubator. And those companies are creating this whole new culture, and this whole new way of thinking.”
By "talking up" do you mean "explaining why he bought"?
It’s a lot of justification for the big headline: bitcoin will hit $10,000 in three years. Why would Draper say this?
Because he believes it and because he understands economics?
He certainly might believe bitcoin is going to be the future, to be sure.
That's the impression I get.
But the reason he’s going on Fox Business to make this claim is because he has a sizable stake in it. He needs people to believe bitcoin will increase 30 times in value. Or people will lose interest and sell, and he’ll lose even more millions (in USD) than he already has – Draper bought in when bitcoin was worth almost twice as much, and is on the hook for roughly $9 million in losses in just four months.
I don't think he called up Fox News and said, "Put me on the air, I need to pump up the price of BTC." I think they contacted him and said, "We'd like to ask you on air about your bitcoin purchase."
What do you mean by a "sizeable stake"? What's his net worth? Is BTC 1% of his portfolio? What happens if people don't agree with him? Does he lose 1% of his portfolio? You do realize that BTC has had these volatile price swings in the past, right? This is nothing new.
He's a venture capitalist. He's not afraid of taking a calculated risk.
This is not to point out the obvious, the Draper is a businessman and he needs his investment to make money.
Does he? You think he's gonna be wiped out and living under a bridge if Bitcoin fails?
Rather, it raises a question indirectly that a lot of bitcoin diehards need to ask themselves: is there any price point that would cause you to pull your money out of bitcoin?
You mean convert sound, honest money back into fiat? Do you not understand how the fiat scam works?
Regardless, I don't think the "diehards" have bet everything on Bitcoin.
A lot of people, even ideologues invested in bitcoin as an entirely new paradigm that can upset the accepted fiat currency system, are simultaneously hoping to make a little money with their bitcoin stake. While they might not spend a lot of time thinking about price, the major players like Draper certainly care. As does a large swath of the market. Because there’s the possibility of BTC going to $10,000 in three years.
I don't think Draper is as short-sighted as you seem to think he is. I think he bought with the intention to hold them for a few years, regardless of what happens in a few weeks.
"...Make a little money..."? Bitcoin is money.
And there’s also the possibility of it going to $1. Many of bitcoin’s ideological adherents tend to hold no matter what. But does that mean there is literally no point from which to cut losses and sell out? What if bitcoin goes back to that penny trading range? What if it stays there for a year? For five years? How long will you buy and buy and buy at a continual loss? Until you die?
Certainly a possibility. But has there ever been a better form of money in human history?
I've already sold some. It's a free ride from here on out, and no I will be holding BTC until the day I die and will pass them on to my posterity. Furthermore, I don't care what the price does over the short term. I'm looking 10, 20, and 30 years down the road.
If bitcoins go back to pennies, I'll happily buy thousands of them, but that doesn't mean 100% of my money will be BTC, just a fraction that I'm comfortable with. That fraction is different for everyone. For some it's over 50% of their assets, for others it's 0%.
People like Draper can talk a big game, but they are beholden to their investors, same as any business. And make no mistake, Draper has a point where he will cut his losses and move on.
I'm pretty sure he understands the risks involved with Bitcoin. Those who invest with him also understand they are investing in risky ventures.
Bitcoin could go to $10,000 and stay there, though it’s highly unlikely. It could also go to five cents and stay there (also highly unlikely). But one way or another, bitcoin players need to answer the question: am I willing to go down with the ship even if Draper doesn’t?
Bitcoin could also go to $1,000,000. It all depends on supply and demand.
Yes, unless some fatal flaw is discovered with Bitcoin.
No thanks, probably nothing intelligent going on there.
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