Why One Venture Capitalist Went Big on Bitcoin

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Late last week, the U.S. Marshals Service auctioned off 30,000 bitcoins seized from Silk Road, an online drug emporium shut down by the FBI in late 2013.

Venture capitalist Tim Draper—with whom some readers may be familiar—made the winning bid for that treasure trove of crypto-currency, which he’ll use to boost bitcoin liquidity in emerging markets. “Bitcoin frees people from trying to operate in a modern market economy with weak currencies,” he wrote in a statement posted to Medium by Avish Bhama, CEO of Vaurum and Draper’s partner on this new project. “With the help of Vaurum and this newly purchased bitcoin, we expect to be able to create new services that can provide liquidity and confidence to markets that have been hamstrung by weak currencies.”

The statement added: “Of course, no one is totally secure in holding their own country’s currency. We want to enable people to hold and trade bitcoin to secure themselves against weakening currencies.”

Bitcoin has only increased in popularity (and valuation) over the past few years. A new California bill rendered commerce in digital currencies valid, reversing a previous statute that limited “legal tender” in the state to U.S. dollars; shoppers at Newegg and some other retailers can pay for purchases with bitcoin; ATMs dispensing the crypto-currency now operate in Boston, Austin and Albuquerque. And if you have a lot of spare bitcoin—Tim Draper certainly does—Virgin Galactic will happily accept it in exchange for shooting you into orbit aboard one of its extreme-altitude craft.

A pool of 30,000 bitcoin is a considerable liquidity source, considering how each bitcoin currently trades for roughly $642. By using it to expand bitcoin’s influence even further, Draper could have a major say in how the cryptocurrency evolves over the next several years.

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