Billionaire Investor Tim Draper Explains Why Bitcoin Will Hit $250,000 in 2022*

Few billionaire investors have been so vocal and bullish on Bitcoin and cryptocurrency price appreciation as Tim Draper, the founder of venture capital firm Draper Fisher Jurvetson.

*TheStreet sat down with Draper in early May at the Collision tech conference and later chatted after Draper spoke at the Federal Reserve in San Francisco in mid-May, where he told the people at the organization in charge of U.S. monetary policy that it might be time for them to think about getting new jobs as centralized fiat currencies gradually get replaced by decentralized cryptocurrencies.*

Ripple CEO: Bitcoin Is Owned by China
Cryptocurrency Regulation Is a Must for Long-Term Sustainability, Expert Says
In an exclusive interview with TheStreet, Draper weighed in on where he thinks Bitcoin's price will be in the future, cryptocurrency regulation and price volatility. What follows is a condensed and lightly edited transcript of our discussion.

TheStreet: Let's jump right in. Former chairman of the Commodities and Futures Trading Commission Gary Gensler recently argued that Ripple, Ether and other cryptocurrencies should be regulated. What's your take?

Draper: Regulations need to be reined in and made clear. The governments of the world are in competition for us now and the best of them are creating very clear and light-touch regulations for crypto. Cryptocurrencies are the next big technological tectonic shift and governments have to weigh their need to protect investors with their need to be included in this potential economic powerhouse that is crypto. I believe cryptocurrencies will overtake fiat currencies in the next five to seven years.

I hold a lot of cryptocurrencies and mainly Bitcoin. I am buying more. I feel that crypto and Bitcoin are the future. Fiat is the past. I do still have to hold some fiat currency for everyday transactions today, but I suspect that that will change over the next few years. I cannot wait to be able to go to a store and make purchases using cryptocurrencies. Fiat currency will eventually become as passé as trying to pay for coffee with pennies.

Security is one of the best features of cryptocurrencies. The Bitcoin blockchain hasn't been hacked, but banks are constantly being hacked. They are playing whack-a-mole trying to keep hackers away. Bitcoin is like the hero that came at the perfect time to save us as banks have begun to lose their safe hold on people's money.

The larger the network of wallet holders, miners or stakeholders, the more secure the cryptocurrency. So Bitcoin is the most secure. By contrast, hackers are finding more and more holes in our banking systems.

TheStreet: Certainly digital wallets that hold cryptocurrencies have been hacked. Do you see that as an issue?

Draper: There are plenty of instances where digital wallets have been hacked and cryptocurrency has been stolen [Editor's note: Over the weekend, a South Korean cryptocurrency exchange was hacked, losing as much as $40 million, which sent the price of Bitcoin and other cryptocurrencies tumbling about 10%]. But the underlying blockchain has never been hacked into. Knock on wood. And it is getting harder and harder to penetrate as it grows.

TheStreet: So if cryptocurrencies aren't securities, then what are they?

Draper: They are very much currencies. They are recognized tender throughout the world. If you are a knee surgeon, everyone looks like they have a knee problem you need to solve. If you are a securities regulator, everything looks like a security to you. Unless the tokens are tethered, they are not securities in my view.

I expect that since cryptocurrencies will increase the velocity of money, the current $86 trillion global market for currency will grow to be about $140 trillion in the next 10 years, and that growth will be in crypto. In fact, I estimate that fiat currencies will actually decrease in use, and that crypto will become as much as $100 trillion of that market. I expect Bitcoin to be about 10% of that market, or $10 trillion. There is a lot of room to grow there.

Other cryptos will grow and surprise us. Entrepreneurs have a way of surprising everybody. I believe that in about four years there will be a big change when people start paying in cryptocurrency. It used to be the case that the Bitcoin block was too slow to make small transactions, so it was better as a store of value. But what is happening is that as time goes on, more technologies make it easier for us to use. We have had the introduction of Lightening, Bitcoin Cash and Bitcoin Gold, and I think what eventually will happen is that these cryptocurrencies will be more ubiquitous as engineers continue to make them faster and more useful.

I think the best approach for most people to get involved is to move over gradually. I have a whole bunch of Bitcoin and a whole bunch of other cryptocurrencies, and when I look at my fiat currencies all I am thinking is, is this enough to live off of in the next four to five years, because what I really want is for everything to move over to Bitcoin and other Cryptocurrencies. I'm not really interested in holding fiat, because it loses value over time.

I have no interest in selling my Bitcoin. What would I sell it into anyway? Moving from crypto to fiat is like trading shells for gold. It is reverting to the past. I'm thinking long term I'll use it, spend it, invest it, or just keep it.

Price-wise, we'll continue to see Bitcoin move higher. I've revised my estimate up to $250,000 four years out, so we'll see Bitcoin trade around the $250,000 mark in 2022.

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