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November 25, 2020

In Conversation With

How DeFi is doing things banks could never do with Tim Draper


Venture capitalist Tim Draper, founder of Draper Associates, is a bitcoin bull and is actively investing in cryptocurrencies. He discussed the dynamic between Wall Street and crypto, saying:

(18:32) “I have a pretty good sense. Because we’re investors in a lot of great crypto companies, Coinbase, Tezos, a lot of these currencies. And they have had a heyday during the lockdown. Things have gone very well. So here’s what happened. All the early adopters were there and very impassioned and excited about what they were doing. And then the lockdown happened, and then people said, ‘huh, what is this crypto thing? Well maybe I’ll put together a bitcoin wallet, let’s see what happens.’ And then they go, oh my gosh. I can keep all my money in something like this? I don’t have to give it to the banker?’ And so they started to take their money out of banks and put it into crypto. Well naturally that’s going to freak out Goldman Sachs.”

Draper also discussed the destabilization of the world’s fiat currencies and how it is making bitcoin look good.

(21:14) “If you’re in argentina with the peso you know that it’s going to devalue about 30% a year. Or if you’re in Nigeria with the naira you know it’s going to devalue 50% a year. Or Venezuela with bolivar. They all devalue and everybody knows it and holding onto those currencies is like a hot potato. And they’ve all started to adopt bitcoin as their above-government currency. Well now, I think the US is starting to realize, hey, our currency is also subject to political winds and we are going to need an alternative that doesn’t dilute, that doesn’t force inflation, that is easy, transferrable, open, global, which is better than the dollar — the dollar isn’t accepted everywhere — and it’s transparent, it keeps a perfect record. And so all these people are starting to use it…and they’re pulling their money out of the banks.”

Draper is also bullish on decentralized finance, saying that DeFi is going to challenge the banks.

(29:19) “So I think DeFi is just, it’s pretty interesting because it’s not only doing all the things that you can do with your bank but it’s doing new things that no bank could ever do — micropayments, airdrops, new ways of moving money around or to different countries, new ways of employing people/of working with people, new ways of helping the…economy, which we need really badly right now because we’ve got 41 million unemployed in the US and about ten times that worldwide. Yeah, I think DeFi is a big opportunity and people should be getting behind it. And you do sort of side-step the bank…The world is changing and it’s going crypto and it’s going toward bitcoin and the blockchain and smart contracts.”

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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