Vaurum and Bitcoin’s Future: Tim Draper Wins USMS Auction of 30K XBTs
For those who have been following Bitcoin for the last year or so, you’ll know of a few key events:
“Darknet” online marketplace called Silk Road was shut down by the US government, and a large cache of Bitcoins were seized.
Those Bitcoins, 30,000 of them, were put up for auction last month. That’s about $19.5 million USD worth of Bitcoin.
There’s been a lot of buzz about who won the auction, because it could have a significant impact on the future of the cryptocurrency.
Well, the winner was announced today: Tim Draper, a venture capitalist, won the auction for the entire amount. He will not disclose the amount he bid, as curious as the internet has been about it, but he did offer a number of forwarding-thinking statements regarding what he plans to do with them.
Today he and some partners held an impromptu press conference to discuss their plans. I took the opportunity to write up a rough timeline summary of the conference and its highlights, which is on the relevant /r/bitcoinmarkets reddit thread.
Here’s the full text of what I wrote earlier, with my personal thoughts at the end:
EDIT: I apologize if any of this is wrong. It’s hard to hear.
[5:09PM EDT] Currently discussing the history of Vaurum.
[5:10PM EDT] Camera zooms in, background really painful on eyes.
[5:11PM EDT] Goes over Vaurum’s purpose and background.
[5:12PM EDT] Ensures that XBT market liquidity will increase because of new companies emerging, not just because of Vaurum.
[5:14PM EDT] Discusses interests in alternative currencies, not tied to “political machinations”. Said thank you to “Satoshi Nakamura”. X(
[5:15PM EDT] Makes a call for everyone to buy Bitcoin and buy things with Bitcoin.
[5:15PM EDT] Turns it over to founder of BoostVC, and one of the founders of Vaurum. Talks again about the background of their respective companies.
[5:18PM EDT] First question is about how nervous he was waiting for the USMS office to transfer the funds to the correct XBT address. Apparently this was done over the phone.
[5:22PM EDT] Talking about current money transfer options like Western Union, where it is relatively very expensive to transfer money.
[5:25PM EDT] “Bitcoin is unstable, why get into it?” Bitcoin is safer than other currencies because other currencies are tied into human politics. Bitcoin could survive revolutions, where others cannot.
[5:27PM EDT] “To say Bitcoin is unstable is a very American view.” (said by the guy on the right, Vaurum cofounder.) People in Argentina and other countries are fighting to get their money out of their native currency and into Bitcoin. Believes “volatile” is a better word than unstable when describing it - it needs to be volatile, it’s more a feature than a bug.
[5:29PM EDT] “How much?” “I bought at a lot of different prices.” Jokes that he paid more than everyone else in the auction, but does not answer the question.
[5:30PM EDT] Press question time.
[5:31PM EDT] India, Brazil, Argentina, Turkey are top countries “on our list” says Vaurum founder. They have both high GDP and high inflation rates. Press question was inaudible but these seem to be countries they want to launch exchanges in.
[5:33PM EDT] Draper: In those countries, their businesses are anxious. Retail, hotels, etc. that handle cash find that it’s like melting ice cream, they have to get rid of it as fast as they can. They’d love to use another currency than their own, and Bitcoin is a great alternative for that.
[5:35PM EDT] Tim Draper’s interest in bidding wasn’t because of the value of the individual coins, but on the business that they could build around having a “large piece of Bitcoin.” When asked if he expected a price fluctuation after the auction ended, he responded: “In 5 years, it’s gonna be worth a lot more, or a lot less. I’m not a trader, I’m a long-term investor. A lot of people are hoarding their Bitcoin, but this is money I can put to good use. It helps this investment, but it also helps other Bitcoin users around the world.” (Paraphrased.)
[5:38PM EDT] Are you looking for more Bitcoin? “I might. I think we’ve got enough to do what we are planning to do.” Are you keeping any aside for your personal use? “I have spent some.” Mentions Atlas Card as an intermediary for buying things with Bitcoin that normally are not available for Bitcoin purchase. (He kind of made a big deal about dropping the name.)
[5:43PM EDT] Do you think deflationary nature of Bitcoin will encourage hoarding and saving, or will this be an issue with spending? “The true value to society is when its pushed through the economy.”
[5:45PM EDT] All three of them reiterate that Bitcoin gains and holds its value when it is spent, not when it is hoarded.
[5:46PM EDT] Can the blockchain ever become too big? “The blockchain is a stream of data, and that data can be compressed.”
[5:47PM EDT] Can Bitcoin ever be adapted for SMS instead of just smartphone compatibility? “It’s already been done.” (Paraphrased.) Already been done by 37 Coins and Glyph(sp?).
[5:48PM EDT] Adoption will increase with more use cases. Bitcoin didn’t come-and-go with the media, it’s been ever-present since it hit the media. In 10 years, it will still be relevant and widely used.
[5:50PM EDT] Does Litecoin have potential to grow like Bitcoin? Draper: “We just answered that.” Guy on the left: “I believe in Bitcoin over the other ones. Like TCP/IP, it may not have been the best protocol for its use, but it works.”
[5:54PM EDT] Draper: “Thank you for coming on short notice.” Conference ends.
Personal conclusion: I feel good about his attitude and approach to Bitcoin and building a business very much centered around the currency. I’m not convinced his understanding of Bitcoin, the protocol, etc. is infallible, but that extends to technical details rather than his business sense - I should hope that is at least in tact, as it would, in his words, benefit “Bitcoin users around the world.”