Tim Draper, a well-known venture investor from Silicon Valley, founder of Draper Associates, DFJ and Draper Venture Network, a global network of venture funds, was interviewed by the founder of the INVEST-FORESIGHT Business Magazine, Professor Artem Genkin, about the prospects for the development of blockchain, cryptocurrencies and NFT.
— Recently, you predicted that all online stores will soon accept for payment cryptocurrency based on OpenNode. Is your prediction coming true?
— Yes. El Salvador is leading the charge, where Starbucks and McDonalds are accepting bitcoin through OpenNode.
— Is it possible to say that now the era of fintech development for cryptocurrencies has begun and this is a promising direction for investment? What fintech solutions that fiat currencies have today would be good for cryptocurrencies to obtain?
— I believe that everything currently being done in fiat will be replaced by bitcoin and other crypto currencies, and I believe there will be more applications of bitcoin and crypto that can’t currently be done by fiat. For example, Hollywood and the music industry can much more easily pay all the creators and staff directly to a bitcoin wallet through a smart contract that makes payments based on how many times a movie or song is played. It will make that industry much more trustworthy, and the participants will be treated more fairly. In finance, I can imagine a time when I raise a fund completely in bitcoin, invest in startups in bitcoin, and have the startups pay their employees and suppliers completely in bitcoin. The whole economic system could be managed on the blockchain, where exits would go automatically into the LP’s hands, and there would be no need for accounting, auditing, bookkeeping, transfer agents or legal to handle the activities in the bitcoin “walled garden.”
— You have invested in a blockchain platform for trading works of art. In your opinion, is this a promising area of business? What needs should it meet?
— I think that artists will love this solution, where the buyer retains control of the art, but the artist can hold some percentage of the ownership for every time the art changes hands, and fans can hold digital NFT versions of the art and spread the brand.
— Is it possible to predict that a rich and large-scale community of NFT collectors will appear soon? Will NFT collection reach the same scale as traditional collection?
— I believe NFT’s will be a far larger market than the current art market. They are more liquid, and can proliferate more widely. The fine art market is currently only available to a very wealthy clientele and controlled by two auction houses in a duopoly. That can certainly change.
— In what areas do you think the use of NFT is particularly effective and promising?
— I think NFTs can be used for many things, art of all kinds, official documents, identity, proof of ownership, title, etc. Propy is using NFT for real estate title.
— Does business need legislative recognition of the NFT?
— I am not a big fan of regulations of any kind until an industry is proven harmful to a large group of people. NFTs to date are not harming anyone. Freedom and trust are far more important than government rules, regulations and controls.
— Do you think that metauniverses will be needed for games only, or they will provide more serious use cases, maybe they’ll need special jurisdiction?
— We have a company called Arthur that allows companies to have meetings in VR. I think that will be at least as important a market as the one for games. If you read Ready Player One, you get a sense of how much of our world can be virtual—not just entertainment.
— What forms of cryptocurrency investment are becoming widespread today? What is the peculiarity of the relationship between the crypto project and the crypto investor?
— While early cryptocurrencies like Bitcoin, Ethereum, XRP and Tezos were all truly innovative systems that created very real service for users, some other currencies are just copycats or worse, vaporcurrencies that will have little or no value in the long term future. All the activities around DEFi will prove incredibly valuable as will all the smart contracts that people devise around cryptocurrencies. Crypto investors should watch carefully who is driving the currencies that they buy. The true innovators and drivers will create the currencies that last through the tough times.
— Is it possible to assume that investments in the form of cryptocurrencies will grow in volume? For which industries are such investments most suitable?
— I think that all banking, all insurance, all finance and all commerce will all be transformed by bitcoin and other cryptocurrencies. The volumes will of course grow as the applications expand. In 5-10 years, no one will want to hold fiat currency, since governments will be less trusted than bitcoin and other cryptocurrencies that are held on various blockchains.
— Blockchain and ICO hype passed, what’s left? Do we face the NFT hype today?
— Usually, new technologies go through a pattern. First they are ignored, then they are discovered, then they are hyped, then they don’t live up to they hype, then they go way beyond the hype. I believe bitcoin is in the process of going beyond the expectations, and NFTs are just in the first cycle of hype.