They’re not all household names like Warren Buffett…
But they’re superstars in venture capital… And you can learn a lot by looking at what they’re investing.
These elite investors have decades of experience, high-level contacts, huge research budgets, and long track records of success.
We’d be fools not to “look over their shoulders” for investment ideas…
So today, I’m sharing an important idea held by three of the best in the business: Tim Draper, Peter Thiel and Marc Andreessen.
They’re the triumvirate of the tech industry.
Forecasting the future has always been their bold enterprise.
Understanding their vision will enable us to come to a new understanding.
To prepare ourselves for the world that is coming, we must understand why it will be different from what most experts tell you.
For more than 30 years, forecasting the future has made Tim Draper a very wealthy man.
He looks beyond the obvious.
His ideas are a major departure from the conventional.
Why? Because history’s great transitions are seldom spotted as they happen.
Spotting them early can make you a very rich man.
But the thing about predicting the future is that dramatic changes will neither be welcomed nor advertised by conventional thinkers.
Hence, you cannot depend upon conventional information sources to give you an objective and timely warning about how the world is changing and why.
If you wish to understand the great transitions under way, sit up and pay attention to what Tim Draper does.
Draper’s most prominent early investments include Baidu, Hotmail, Skype, Tesla, SpaceX, Angellist, SolarCity, Ring, Twitter, Robinhood, Ancestry.com, Twitch and many more.
He coined the term “viral marketing” in 1996 with Hotmail before it was common to attach a brief advert at the bottom of outgoing emails.
He was the first Silicon Valley VC to invest in China’s Baidu.
In 2007, he invested in Tesla before the company went public.
As they say, Fortune favors the brave.
Today, Draper oversees over $5 billion in assets worldwide.
All thanks to his prophetic vision.
In 2014, Draper saw the future of money. He bid over $18 million for the bitcoins seized by the U.S. Marshals over Silk Road.
Draper is extremely bullish where bitcoin is going. Unlike Paul Tudor Jones who’s concerned about the state of the world’s monetary system right now, Draper thinks Bitcoin is the future currency.
Jones on the other hand, sees his bitcoin investment as a hedge.
Many governments have taken on debts and obligations they can’t pay back with sound money. They plan to pay back their debts with debased, devalued money.
Given all this risk, Jones sees Bitcoin as a great hedge against a potential financial crisis… And he’s urging investors to own some.
Regular readers know I see bitcoin as the ultimate form of “sound money”… and one of the ultimate ways to protect yourself against a financial crisis. (You can read a full explanation in this educational essay.)
Draper calls bitcoin a currency, like the dollar or the euro… It’s an alternate form of decentralized cash.
Draper is one of the world’s most respected big-tech thinkers… and one of the most successful.
In the most quoted segment of a Bloomberg interview, Draper reasoned, “People ask me, ‘Are you going to sell your bitcoin [for fiat]?’ and I say, ‘Why would I sell the future for the past?’
This augments previous remarks when Draper was quoted as saying: “I don’t know why anyone would want to go back to fiat when [it] is distributed, secure and global, while fiat is subject to the whims of political forces”.
The New Recruit
Peter Thiel is a technology entrepreneur and venture capitalist. As of mid-2020, he had an estimated net worth of $2.3 billion.
The majority of his wealth comes from his 10% stake in his data firm Palantir, and transactions involving PayPal and Facebook.
The billionaire entrepreneur’s Founders Fund also made a big bet on Bitcoin.
Thiel has started, invested in, and advised some of the most important technology companies in the past 30 years, earning himself a fortune in the process.
In 1999, Thiel saw PayPal’s potential for transacting money on the internet. He viewed PayPal’s mission as liberating people throughout the world from the erosion of the value of their currencies due to inflation.
Here’s the inspirational speech by Thiel in 1999:
We’re definitely onto something big. The need PayPal answers is monumental. Everyone in the world needs money—to get paid, to trade, to live. Paper money is an ancient technology and an inconvenient means of payment. You can run out of it. It wears out. It can get lost or stolen. In the twenty-first century, people need a form of money that’s more convenient and secure, something that can be accessed from anywhere with a PDA or an Internet connection. Of course, what we’re calling ‘convenient’ for American users will be revolutionary for the developing world.
Many of these countries’ governments play fast and loose with their currencies. They use inflation and sometimes wholesale currency devaluations, like we saw in Russia and several Southeast Asian countries last year [referring to the 1998 Russian and 1997 Asian financial crisis, to take wealth away from their citizens.
Most of the ordinary people there never have an opportunity to open an offshore account or to get their hands on more than a few bills of a stable currency like U.S. dollars.
Eventually PayPal will be able to change this. In the future, when we make our service available outside the U.S. and as Internet penetration continues to expand to all economic tiers of people, PayPal will give citizens worldwide more direct control over their currencies than they ever had before.
It will be nearly impossible for corrupt governments to steal wealth from their people through their old means because if they try the people will switch to dollars or Pounds or Yen, in effect dumping the worthless local currency for something more secure.
PayPal CEO owns Bitcoin.
No other crypto. Only Bitcoin. 🔥https://t.co/HHXhaHjcMO
— Pomp 🌪 (@APompliano) November 20, 2019
PayPal failed to live up to that promise.
In this unprecedented moment …
- The Federal Reserve is printing to the tune of $6 Trillion U.S. dollars
- European Central Bank to print €1.1 Trillion
- People’s Bank of China to print ¥2.8 Trillion
- Bank of England to print £200 Billion
- Bank of Korea to print ₩11.7 Trillion
- Bank of Japan to print ¥12 Trillion
Unfortunately, that is just the start. More is yet to come.
Politicians & Central bankers will do, what they have always done.
When faced with any crisis, the knee-jerk reaction is to print more money. because that’s the only way they know how to solve any problem …
If all you have is a hammer, everything looks like a nail.
I don’t understand bitcoin. Please explain it to me.
— J.K. Rowling (@jk_rowling) May 15, 2020
Pretty much, although massive currency issuance by govt central banks is making Bitcoin Internet 👻 money look solid by comparison
— Elon Musk (@elonmusk) May 15, 2020
I still only own 0.25 Bitcoins btw
— Elon Musk (@elonmusk) May 15, 2020
Elon Musk himself, one of the original co-founders of PayPal sees Bitcoin as a “solid” solution to the current mess.
Musk together with Thiel was both colloquially known as the “Don of the PayPal Mafia“.
Peter Thiel is betting on bitcoin today because he realizes PayPal’s failure to address the age old problem he identified early on.
Governments will always duplicate money at will. (If they can …)
Bitcoin’s new digital gold standard on the other hand is impossible to duplicate & counterfeit.
Thiel sees one cryptocurrency will become the ‘online equivalent to gold‘.
There’s a chance other digital currencies like Ethereum could beat bitcoin, and that others down the road may have better features, according to Thiel. But Bitcoin’s appeal is in its size, he said.
“I would be long bitcoin, and neutral to skeptical of just about everything else at this point with a few possible exceptions,” Thiel said during a conversation at the Economic Club of New York.
“There will be one online equivalent to gold, and the one you’d bet on would be the biggest.”
“Gold continues to be gold because it’s the main asset class,” Thiel said. “Maybe it could be replaced by silver but it doesn’t seem to be happening.”
History has shown that it isn’t possible to insulate yourself from the network effect of sound money.
China and India were the last to adopt gold from silver as the monetary standard and they end up suffering huge losses as silver-holders experienced a sharp demonetizing of their asset. People woke up one day to discover this rude awakening.
This isn’t a pleasant situation to wake up to especially in this day and age with the wide accessibility to information and knowledge at our fingertips.
In a race to become the new monetary standard of the world, there’s no silver medal for coming in second place.
The PayPal co-founder backed the idea of bitcoin becoming a store of value instead of a go-to currency for daily transactions.
“I’m not talking about a new payments system,” Thiel said, adding that bitcoin is too cumbersome for that use case. “It’s like bars of gold in a vault that never move, and it’s a sort of hedge of sorts against the whole world going falling apart.”
Recently he doubles down on Bitcoin by backing a Bitcoin mining farm in Texas for $50 million.
Gold was used as money throughout history… this time, the younger generation could turn to digital gold in a currency crisis. Absolute digital scarcity could be seen as a new economic “barometer.”
With only 21 million bitcoins (BTC) ever minted, Bitcoin’s fixed money supply is enforced by consensus algorithms designed to achieve reliability and immutability.
Just as Ray Dalio, another famous hedge fund manager put, “It’s not sensible not to own gold.”
I don’t suggest putting all of your money into bitcoin (BTC). But if you don’t own some, Dalio says, “you don’t know history and you don’t know the economics of it.”
Lots of people don’t remember a time when folks didn’t use paper currencies.
The names of traditional currencies like the “pound” and the “peso” reflect the fact that they originated as measures of weight of specific quantities of precious metals.
The pound sterling was once upon a time a pound of sterling silver.
Paper money in the West began as warehouse or safe-deposit receipts for quantities of precious metals.
Governments issuing these receipts soon found that they could print far more of them than they could actually redeem from their supply of bullion.
This was easy.
No individual holding a gold or silver certificate could ever distinguish any information about the actual supply of precious metals from his receipt.
A fact that appealed to counterfeiters as well as politicians and bankers seeking to profit from inflating the supply of money.
Bitcoin will be all but impossible to counterfeit in this way, officially or unofficially.
The Verifiability of the digital supply of bitcoins will rule out this classic expedient for expropriating wealth through inflation.
It has a fixed supply of ~21 million Bitcoins, a limit written into the code that governs the entire system. It does not need a central figure like a bank to verify whether a transaction is valid or invalid because it has cryptography built-in to secure the code. No one can ever hack into the Bitcoin network.
Now if you’ve read that Bitcoin was hacked, it was the exchanges that hold the currency that were being hacked.
I agree with Dalio.
Like gold, I suggest holding some portion of your investment assets in bitcoin as part of your “catastrophe prevention plan.” Because bitcoin could soar in a crisis scenario, having some of your portfolio allocated to bitcoin could save you from a huge drop in net worth.
As you may know, bitcoin soared from $0.25 in 2011 to $19,000 in 2018… And it has since fallen by about 50% to around $9,200 per BTC. It has been holding at that level for two years now… And it has likely bottomed.
Whenever Bitcoin experiences a sharp correction in terms of the dollar, skeptics would come forth and say, “If bitcoin is such a good store of value, why was it worth $19,000 last year and now its worth $9,000?”
For the same reason it didn’t crash to zero when Bitcoin held from $1147 to $177 in 2015.
For the same reason it also held from $259 to $68 in 2013.
For the same reason it held from $29 to $2 in 2011.
Remember, we don’t have a single clue how much dollars, pounds or euros are being printed out of thin air.
The banks are doing that on a daily basis to the tune of trillions. It’s called fractional reserve banking.
Now it’s called Quantitative Easing. infinity. Printer go Brrrr…
While the face value of a dollar may show $1, your purchasing power in reality is closer to $0.05 today.
Bitcoin on the other hand has a known fixed supply. The dollar denominated prices reflect the speculative nature of a new asset class trying to bootstrap itself as the hardest money on the planet.
- HODL! Hold and ignore the day to day fluctuations. Add to your position once you’re comfortable with volatility. Hold bitcoin for at least 2 – 4 years, and never sell ALL your bitcoins.
- Never sell bitcoin at a loss! Don’t be irresponsible and put in more money than you can handle. Best strategy I’ve found is to buy everytime Bitcoin drops instead of when it rises. Get cheap bitcoins when people sell on a panic.
Positioned to Make a Killing
Andreessen Horowitz is one of the most prestigious tech venture capital (VC) firms in the world…
The firm invests in tech companies early before they explode like AirBnB, Lyft, Pagerduty, Pinterest and Slack, all of which are today worth tens of billions of dollars in valuation.
Entrepreneurs Marc Andreessen and Ben Horowitz founded the firm in 2009. Just two years later, InvestorRank named it the No. 1 VC firm in the country.
And the accolades don’t stop there… The pair have ranked in the top 10 in the following publications:
- Forbes’ Midas List of Top Tech Investors
- Vanity Fair’s New Establishment List
- CNET’s Most Influential Tech Investors list
So when Andreessen Horowitz invests in a startup, it’s a clear sign the company has the potential to become a disruptive force…
For example, in 2011, Andreessen Horowitz invested $80 million in Twitter. It was also an early investor in blockbuster companies like Facebook and Groupon.
Ask anyone is Silicon Valley and they’ll tell you that Andreessen Horowitz is the oracle of tech megatrends.
That’s why when the firm announced the restructuring of its entire business model, everyone’s head turned.
Despite its huge successes as an early stage tech investor, the firm is renouncing Silicon Valley entirely… It’s found another investment opportunity so big—and so lucrative—it’s giving up its status as a VC firm to pursue it.
Andreessen, who made headway at the age of 24, when Netscape, a company he backed, made the first breakthrough on the internet is now betting that in 20 years, we’ll talk about Bitcoin like we talk about the Internet today.
A New Business Model
In 2019, Andreessen Horowitz said it was registering all 150 of its employees as financial advisors—which will renounce its status as a VC firm.
The restructuring will allow the firm to make more bets on publicly traded securities like cryptocurrencies. However, it’ll also ban the firm’s investors from speaking plainly about their portfolio or fund performances in public.
Here’s how Forbes described the restructuring:
By renouncing venture capital status, Andreessen Horowitz (a16z) says it’ll go deeper on riskier bets: If the firm wants to put $1 billion into cryptocurrency or tokens, or buy unlimited shares in public companies or from other investors, it can. And in doing so, the thinking goes, it’ll again make other firms feel like they have one hand tied behind their back.
For context, the SEC places a cap on how much of a VC’s fund can be committed to investments that the SEC deems high risk—like cryptocurrency. According to Forbes, that limit is 20% and has been a source of great frustration for a16z, which has always been a strong believer in cryptocurrency.
Switching to be a registered investment advisor (RIA) will allow a16z to shed those limitations and put as much as it likes into crypto investments.
It isn’t cheap to restructure the whole company. Now their cost as a firm has just gone up overnight, and they’ll get grilled more often by regulatory agencies.
They wouldn’t be doing it unless they truly believed that the potential rewards far outweighed the risks.
So this is HUGE!!!
a16z will be investing directly into cryptocurrencies. It could’ve kept its old business model if it wanted to continue investing in private blockchain startups. But it changed—which is a huge signal that it’ll be getting involved directly in the crypto market.
The firm was an early investor in Coinbase, and now it has a $350 million dollar warchest dedicated for cryptocurrencies.
Although the Bitcoin whitepaper is now almost 10 years old, we believe we are still early in the crypto movement. The infrastructure needs to be improved and the applications are difficult for non-early adopters to use. Many crypto applications still get dismissed as toys. We believe this will change quickly. For one, crypto is purely a software movement and doesn’t depend on a hardware buildout, in contrast to, say, the internet, which required laying cables and building cell towers. Second, the space is developing extremely rapidly, partly because the code, data, and knowledge is largely open source, and partly because of the increasing inflow of talent.. – a16zcrypto.com
a16z crypto is a $350M venture fund that will invest in crypto companies and protocols. Our fund is designed to include the best features of traditional venture capital, updated to the modern crypto world:
- We are long-term, patient investors. We’ve been investing in crypto assets for 5+ years. We’ve never sold any of those investments, and don’t plan to any time soon. We structured the a16z crypto fund to be able to hold investments for 10+ years.
- We have an “all weather” fund. We plan to invest consistently over time, regardless of market conditions. If there is another “crypto winter,” we’ll keep investing aggressively.
- We are flexible with respect to stage, asset type, and geography. One reason we created a new fund is to have maximum flexibility. We invest at all stages, from early stage projects to fully developed later-stage networks like Bitcoin and Ethereum. We’ll invest in traditional financial instruments like equity or convertible notes, and new instruments including the direct purchase of coins/tokens. Crypto is a global phenomenon, with great projects all around the world, and we’ll invest accordingly.
Be Rewarded for Vision & Patience
Bitcoin rewards those who are patient. It is a dream asset class for long term investors.
It may sound odd if you don’t understand, but it makes perfect sense once you’ve delve deeper into it.
It’s counter-intuitive. Hard to understand. Easily misunderstood.
The vast majority of people still have no idea.
That gives you an Asymmetric upside.
Most people don’t pay enough attention to their currency risks. Most worry about whether their assets are going up or down in value; they rarely worry about whether their currency is going up or down. Think about it. Right now how worried are you about your currency declining relative to how worried you are about how your stocks or your other assets are doing? If you are like most people, you are not nearly as aware of your currency risk and you need to be.
Be skeptical. Dig deeper!
You have no choice but to explore that currency risk.
Like it or not, it isn’t possible to insulate yourself from the consequences of others holding money that is better than yours.
The failure of China and India to catch up to the West during the 20th century is inextricably linked to the destruction of wealth and capital brought about by the demonetization of the money they use.
European countries like Germany joined Holland, Switzerland, Belgium and many others on a gold standard at that time. This move swung the pendulum decisively in favor of countries holding gold reserves.
Since China and India were the last economies to switch over from silver to gold; that lag in adopting the sounder money caused their citizens to suffer the consequences of demonetization ( the lost of purchasing power and wealth held ). The silver backed rupee lost 56% of its value within 27 years, while China lost 78% of its value over the period.
Being last to adopt meant that foreign hard money started to easily substitute easy money within the country which allowed foreigners to easily control and own increasing quantities of capital and resources within China and India during the period…
Even Warren Buffett himself admitted he was too dumb to realize Amazon would succeed at this scale. He opted not to invest in Amazon when he had plenty of opportunities. He did not understand or appreciate the value of technology.
$1,000 in Microsoft 10 years ago = ~$8,000
$1,000 in Netflix 10 years ago = ~$100,000
$1,000 in Apple 10 years ago = ~$9,000
$1,000 in Bitcoin 10 years ago = >1,000,000,000 ( 185,185 bitcoins at $9,800 per BTC)
Based on an account of a Norwegian man buying 5,000 bitcoins for $27 in 2009. I had to recheck my calculations 3 times to make sure I had the right figures which amounted close to $2 billion. Note: Of course in those days, it’s extremely difficult to find and buy bitcoins.
If only the majority of investors were patient enough… Food for Thought!
The best way for most folks to own bitcoin is in “BTC” form… buying from a peer-to-peer exchange like Localbitcoin or Paxful. Buy some bitcoins today… Store it somewhere safe… Ledger / Trezor. And HODL!!.
Again, you don’t have to start by buying a whole bitcoin (1 BTC) You can own bitcoin denominated in Satoshis (Sats).
One satoshi is equivalent to one-hundredth millionth of a Bitcoin. If the price of Bitcoin ever reached $100 million USD, each satoshi would be worth $1 USD.
E.g. Elon Musk said he owns 0.25 bitcoin (BTC) is equal to 25,000,000 satoshis (sats) for just ~US$2,440. There, you can still own as many sats as Elon Musk today for less than $2500!
You may never need your bitcoin. But like car or home insurance, if you do need it, you’ll be glad to have it.
We’ve only just begun…
In the world of Bitcoin, there’s so much more to delve into. That’s why I created The Zodiac Collection, that tells the story of Bitcoin and the cryptocurrency revolution from every angle you can dream up.
There’s a lot of exciting stuff to read — I’ve selected a few of the stories, to start with, below.
To read a curated list of the most important news stories, subscribe for FREE. It will be everything you need to know, in your inbox. No brainer 🙂
Want to Find out More about Bitcoin? Check out our latest mind-bending content here.
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I certainly don’t want to overload your brain with the library of Bitcoin resources we have here.
Here are some special picks:
How to Invest in Bitcoin if You Missed the Bull Runs. – An honest look into investing in Bitcoin; if you decided to get into Bitcoin after reading about it in the mainstream…
- CoinMama Walkthrough Guide for Beginners: Buying BTC with USD/EUR Cards
- Buy Bitcoin With Paypal Instantly on these sites (Explained Step-by-step)
- How to Buy Bitcoin In Different Countries [+International Infographic Guide]
- 7 of the Fastest Ways to Buy Bitcoin (BTC) Today!
- How to Capitalize on the Bitcoin Halving (and Profit in the process)
- How to Buy Bitcoin At Discount
- 12 Popular Types of Bitcoin ATM Near Me (In Locations Worldwide)