SAN FRANCISCO (AP) - Silicon Valley venture capitalist Tim Draper is betting that bitcoins will bring more financial stability to countries with shaky economies, even though the digital currency faces an uncertain future itself.
SAN FRANCISCO (AP) — Silicon Valley venture capitalist Tim Draper is betting that bitcoins will bring more financial stability to countries with shaky economies, even though the digital currency faces an uncertain future itself.
The financier revealed Wednesday that he snapped up nearly 30,000 bitcoins in a recent U.S. government auction and plans to trade them in on a platform catering to markets looking for alternatives to their own volatile currencies.
Unlike most forms of money, bitcoins aren't backed by any government. Bitcoins also provide their owners with anonymity and enable transactions that can be completed over the Internet without the involvement of banks. That has turned bitcoins into a financial vehicle for money laundering and illegal drug sales, too.
The bitcoins that Draper bought were auctioned off after the U.S. government seized them last year in a crackdown on Silk Road, a website that stockpiled the currency while selling illegal drugs.
Draper prevailed over 44 other bidders registered for the auction, according to the U.S. Marshals Service. The price he paid isn't being revealed, but the bitcoins currently have a market value of about $19 million.
Pouring millions into risky investments is something that Draper has been doing in his nearly 30 years as one of the best-known venture capitalists in Silicon Valley.
Enough of Draper's hunches have paid off to enrich him and the people who entrust money with his venture capital firm, Draper Associates, in Menlo Park, California.
The firm's investment portfolio includes an early stake in satellite maker Skybox Imaging, which Google Inc. last month agreed to buy for $500 million.
Draper occasionally also has made a splash in politics. After striking it rich during the dot-com boom of the late 1990s, Draper poured more than $20 million of his own money into an unsuccessful attempt to provide $4,000 for each child in California to attend private schools. This year, he has been pushing a proposal that would divide California into six separate regions, including a region that would be called Silicon Valley.
His latest vision foresees bitcoins helping less prosperous countries build stronger economies.
"Using Bitcoin could benefit you more than any other currency out there," Draper said Wednesday during a press conference.
In an effort to circulate more bitcoins in the targeted markets, Draper is working with Vaurum, an exchange that is part of his investment portfolio. Vaurum says it already has set up trading systems in several emerging markets where bitcoins have been scarce.