Digital Transactions Authoritative, insightful and timely information for payments professionals
By Kevin Woodward
Venture capitalist Timothy Draper wants to use the nearly 30,000 Bitcoins he won last week in an auction held by the U.S. Marshals Service to fund a Bitcoin trading platform targeting emerging markets, he said last week following the auction. He would not disclose the price of his winning bid.
The FBI seized 29,657 Bitcoins last October when it took down Silk Road, a bustling Internet black market that accepted only Bitcoin for payment. Bitcoin is an electronic currency maintained by a decentralized network of cryptologists and application developers. It offers anonymity, international utility, and inflation protection, and has no connection to the existing payment systems.
Draper will work with Palo Alto, Calif.-based Vaurum to create avenues for investors to buy and sell Bitcoin. “We want to enable people hold and trade Bitcoin to secure themselves against weakening currencies,” Draper said in a statement.
“We want to leverage our exchange and use the auction pool of Bitcoin to help provide liquidity in underserved markets,” Draper said at a press conference following the auction. “Clearly, there’s interest all over the world for a new kind of money.”
Draper said he went after the Silk Road Bitcoin cache because “We needed a lot of Bitcoin to build our business.”
Vaurum offers a trading engine that enables financial institutions to host exchanges. Vaurum itself operates the Bitme exchange that only accepts Bitcoin and wire transfer for deposits and withdrawals.
Governments, too, are interested in Bitcoin, he said. The public nature of the U.S. Marshals’ auction sent a signal, he said during the press conference last week. If the U.S. government held an unfavorable attitude about the digital currency it might not have been so open about disposing of the Bitcoins, he said. “I think they were thinking this of real value to our society,” he said.
Consumer awareness of Bitcoin has come a long way in the past two years, Draper said. Even his 90-year-old aunt asked him about it, he said. Draper didn’t say if she also asked about Silk Road or Mt. Gox, a now shuttered Bitcoin exchange that lost $450 million in Bitcoin.
He is optimistic about Bitcoin and its growth. “My belief is Bitcoin will spread all over,” Draper said. He doubts another currency concept will emerge and knock off the ascendant digital currency. Even other digital currencies may see gains, but Draper is betting on Bitcoin. “Other currencies may come later,” he said. “We really want one to succeed and others may follow.”
