[music] I'm Alexander Heffner, your host on The Open Mind.

I'm delighted to welcome Tim Draper to our broadcast today, a pioneering entrepreneur, founder of Draper Associates and the Draper Venture Network.

Full disclosure he is also a generous benefactor of many educational enterprises, including our programing here.

Tim, a great honor and pleasure to be with you today.

Thank you for your insight in advance.

Terrific.

Great to be here on The Open Mind.

I'm trying to open my mind.

Tim, you've really seen generations of fiscal and financial innovation and have become now a leading voice on both AI and crypto and the race to compete with China in AI.

You know, as we analyze this in 2025 now, how do you see America competing against other nations in the AI race?

Well, I think, the current administration is very much in favor of progress.

And I think that that's terrific.

And they're very much a capitalist group.

And so the US has a real advantage there.

China, looked like they had an enormous advantage under Deng Xiaoping and all the people that followed him, except this most recent guy.

And now they have a dictator, socialist, you know, communist guy.

And he's taking away all the incentives for people to innovate and try things.

And so he's creating sort of a culture of trying to steal a culture of people who are living in fear.

And so I don't even think there's a contest.

I think it's all US and all the other free nations, who are going to really benefit from this new revolution in bitcoin and AI and space travel and everything else that comes forward in our creative minds.

When you think of the foundations, like the rudimentary foundations of crypto and blockchain.

What's most important to you as an investor in securing the technologies, and ensuring their future reliability, consistency, growth.

What are you assessing from your perch and your perspective?

I leave a lot of that up to the entrepreneurs.

Entrepreneurs look, and they see problems, and they fill them.

They know who their customers are.

They love their customers.

They improve the lives of their customers.

And in almost, all industries, it's the entrepreneur who has filled the gap.

The politician often finds a problem, identifies a problem, speaks about a problem.

But the solutions generally come from the entrepreneurs and the entrepreneurs, use those solutions, to build businesses.

And that is the beauty of capitalism.

So recently, you predicted by the end of 2025.

And we're recording this, so our viewers will see your assessment play out over the course of this year.

You said you thought bitcoin would hit 250k by the end of 2025.

And in your words, will become the dominant currency of the world.

And I'm not misquoting you, right?

No.

And it might happen by the end of this week.

I've got my bitcoin tie on.

Yeah, no, I'm a big believer now.

I didn't realize when I, I actually predicted okay, we'll go back to my two predictions.

My two predictions were in 2014.

I said that by the end of 2017, bitcoin in 2014 was down around $180.

And I was on Fox business.

And I said that bitcoin would hit $10,000 by 2017.

Turns out it hit $10,000 almost to the day, three years from when I, predicted it.

So I thought, wow!

And I had great hubris.

And I thought, oh, well, then I know what I"m going to do.

And bitcoin fell then to about 4000 in 2018.

And I said that bitcoin would hit 250,000 by 2022.

And what I didn't expect is that we were going to have such an abrasive government that was so anti-business.

Coming after bitcoin and cryptocurrencies, instead of embracing new technology, improving the world, they were stymieing it.

And, fortunately they're gone.

And now I think, my prediction will be right on.

I think, by the end of this year, we'll hit 250,000.

And from there, it's the sky's the limit.

I think we've got, now it's a global currency and, you know, if you don't hold bitcoin as an individual or as a corporation or as a government, you are putting your entity at risk.

So let me explain.

When Silicon Valley Bank went out of business, I got about 15 calls from entrepreneurs who said all our money's in Silicon Valley Bank and we can't get it out.

And we got to make payroll on Monday, and that was Thursday.

So I, you know, made offers to people somewhat draconian, but I made offers, and we all started thinking after that, will the government bail them out?

And so all of my companies had their money back, but there was almost a domino effect and we almost lost all the banks.

And if you lose all the banks and you're still responsible for payroll for at least two weeks, if not four, you got to have some currency to pay your people with.

And so if you're a corporation and you have a treasurer responsibility.

If you don't have bitcoin, you're making a huge mistake and you're taking a huge risk for your company.

Now, I'll tell you another story.

My dad came to me and he gave me a million dollar bill.

And I said, whoa, a million dollars is so awesome.

What can I do with it?

And he's laughing at me.

And he said nothing.

I said, what do you mean, nothing?

A million dollars.

He said, that's a million Confederate dollars.

The Confederates lost the war to the unions.

Nobody takes Confederate money anymore.

We may run into a situation like that where people don't want fiat money anymore.

They don't want pesos.

They don't want dollars.

They don't want naira, they want bitcoin.

And if that happens, there will be a run on the banks.

If there's a run on the banks, the banks get into trouble.

And if you're trying to take care of your family and you don't have bitcoin as a backup there, you're not acting responsibly and the same now you're seeing it is true of governments.

Trump administration is now holding bitcoin in Treasury.

The Bukele administration has a bunch of bitcoin.

Most governments that haven't had their heads in the sand are recognizing that they've got to hold some bitcoin because their own currency may not last forever.

And they need to be responsible for all their constituents.

And so it's a fait accompli.

It's coming.

And it's just a better currency when there's a new technology and it's better, people use it.

People aren't using, Nokia phones or Blackberries anymore because the technology is better on the Apple iPhone.

And there will be a time when we don't use fiat currencies because bitcoin and other cryptocurrencies are better.

So you're foreseeing a day when you say it will be the dominant currency, eventually.

Whether that's next week or next year.

You're foreseeing a day where commerce and transactions are occurring in bitcoin, as opposed to US dollars.

Yeah, I've already had many transactions in bitcoin.

When I can do food, clothing, shelter, and pay my taxes all in bitcoin, I will sell all my dollars and buy bitcoin with them.

But, you're foreseeing a day where that is a consensus, out of convenience.

And the majority of the American public, if not the global public, would engage in commerce that way.

Absolutely.

I don't know if you've made a transaction in bitcoin, but it's a snap.

-It is!

-It's so easy.

You would berate me.

If I told you the amount, in my reserves.

But it has gone up, $50.

And of course, this episode is educating us about maybe the utility of that.

But that's the point that I was going to ask you.

You know, often when speculators have, dominated the attention of the crypto world, it's been this question of people being victim of schemers, in having a challenge in transitioning, right, transferring the digital currency to dollars because the digital currency was no more.

But you're actually painting a picture that at some point, the opposite scenario will be true of people wanting to convert their dollars into, digital currency, to be able to transact and have savings and not being able to.

But that was the one scenario that I'm still left not as educated about what when it comes to, bitcoin transactions and the ease with which you can transfer the digital currency into cash as or if needed.

Sure.

Well, look.

you know, the bitcoin blockchain has never been hacked.

Knock on wood.

But my bank got hacked, and I lost money.

-Banks are much easier to hack.

-Right.

So, I don't know why people somehow feel like their fiat currency is safer.

It's not, period, it just isn't.

Now, it might be safer than putting it into some obscure cryptocurrency, but it's not safer than bitcoin.

Bitcoin is, I mean, I think it's the safest currency in the world.

And I continue to and people continue to gravitate toward it.

Bitcoin used to have a 40% market share.

Then it went to 50% on the next boom bust.

And now it's at 61%.

I think there will be an ongoing gravitational pull there.

So... Yeah.

I've been, you know, this conversation is motivating.

Good, I want people to see, you know, sure, they're the innovators in the early adopters -and all that stuff.

-Right.

And they already know about bitcoin.

They already have it.

They're already spending it.

They're already investing it.

They're already, you know, whatever they're doing with it, holding it, HODLing it.

But the rest of the population, has to know that this is coming.

And you don't want to be stuck when there's a big run on the bank.

You don't want to be, you want to be smiling and saying, okay, I'm fine.

Yeah.

I mean, I think it will probably be as drastic as that and as quick as that.

Sure.

So, I would be concerned, I don't know when.

I guess we've lived, Tim.

Under maybe the illusion that that run on the bank, that we're protected from it.

And you're saying maybe not.

You don't think that the big four, I guess that what we call them are impenetrable.

Well, I tell my entrepreneurs put some of your money in a big bank, and then go, uh huh.

Some in a small bank, and they say, why?

And I say because the US government can bail out a small bank, but they can't afford to bail out JP Morgan.

JP Morgan goes under.

It's under.

-I'm really glad, though, -Yeah.

that the US government has said okay, the bankers now can hold your, fiat and they can hold your crypto, because if they hold your bitcoin too then the run on the banks is just a transfer over from fiat to crypto.

It's not clawing at the bank to get your money out.

So, I see the argument of, you know, essentially diversifying in those three buckets, that you're describing.

Big bank, small bank, crypto.

Yeah, if these treasuries that are only in fiat currency and sometimes only in one fiat currency, I think they are irresponsible.

I think their shareholders will have a case against them if they don't hold some bitcoin.

And your concern about the wild west of, meme coins.

You don't really seem to be emphasizing as much the emergence of new coins as much as the, safe, secure technologies that are supporting bitcoin and if you want to call them the big crypto, if you will.

Yeah.

No, I look, I think I love that people are innovating.

I mean, I remember when software was young and people were innovating and they did all sorts of things.

And whenever anything became really interesting, Microsoft would adopt it.

So like, WordPerfect was a huge business.

And then Microsoft created Word and they went out of business.

So what's happening now is there's a lot of great experimentation in cryptocurrencies, and I want it to continue.

Because actually the crypto economy, bitcoin generally, bitcoin economy is going to be much more, flexible, frictionless, open, transparent, global.

It's going to keep perfect records and it's going to be a better economy.

People will become wealthier because we'll have a bitcoin economy.

So I want that innovation to keep happening.

What happens is though, if something becomes important like smart contracts, DeFi now what's called ordinals, which used to be NFTs, they will then be brought over to the bitcoin blockchain and so we'll all be able to benefit from them.

Meme coins can be used in many different ways.

I know Trump did a meme coin and also the president of Argentina, Milei, did a meme coin.

I think they should follow up with them.

I think they should, encourage people to, you know, whatever.

Like here, if you used to be a government worker and we laid you off, and you start paying taxes, we give you extra meme coins, you know, that kind of thing, like, show the proper incentives those could be actually kind of like the equivalent of political favors or political coins that encourage good behavior or whatever.

I'd rather have that than a tax system that has so many lines of code that if you have to print it on five point paper, it fills, I don't know, 15 rooms, fills the White House.

So, I'd rather have like meme coins create those incentives instead of, I mean I think taxes should just be simple.

It should be like 10, 20, 30.

10% of your first million dollars, 20% of your next 10 million, 30% of everything after that.

Just something like that.

Then everybody knows that.

Everybody pays it.

There are no loopholes, no nothing.

And you don't have a huge tax code and you don't, you know, have this huge accounting business, industry that has really taken over, a lot of businesses lives, like all of April is taken over by accountants.

It doesn't have to be, 10, 20, 30, be done.

And then if politicians want to incentivize certain things.

Give Trump coins to people who I don't know, whatever you want to encourage people to do.

And I think that would be much more positive than, you know, having it be one of the more obscure lines of the tax code.

Well, you read my mind.

Because if there's one output of DOGE that I think could be generationally respected and, like you said, just logical it would be reform of the tax code.

I understand the idea of exposing fraud and also commitments that are antithetical to American, capital or richness.

If that is the natural output of the DOGE effort, simplifying the tax code in the way you just described.

-That would be a huge, -Be a home run.

nonpartisan, non-ideological, I mean, win.

Is it clear to you that that's Musk's ultimate intention here?

Because I know the administration came in with an aspiration to possibly abolish the IRS or much of the code as we know it.

I mean, would it not make sense for the renewal of the Trump tax program?

Whether you agree with it or not.

I think all those people who don't agree with the renewal of the Trump tax code would agree with the idea of, the most emphatic, simplification ever.

Yeah, I mean, right now, they're just trying to make sure that they get their own house in order.

I think, the tax code will probably come next, I hope.

I mean, I had a good conversation with Trump and with a lot of his advisors and, I also said the same thing to the other party.

And I think everybody liked the idea of a tax code that was 10, 20, 30.

It was just like, hey, wouldn't that solve everything?

And it solves the schadenfreude that people have about people becoming too successful.

They say, hey, oh, yeah, well, he's paying.

You know, Jeff Bezos is paying 30%.

He's not only that, I get a toothbrush in four hours from him and he pays all this extra money into taxes for a better government.

We should bow down at his feet.

So I think there is something there now, Trump comes out of real estate and there are all sorts of weird real estate tax laws, and it might be a little too mindblowing for somebody in the real estate business.

But sure would be simpler.

When you say to mind blowing, you mean, as a result of real estate... Well, if you've been in the real estate business for a long time, you know about, what do they call them?

The rollovers, where you can, sell one property, roll it to another, sell another property.

This would not be as good for a real estate guy, maybe.

-Right.

-Also, in real estate, their mortgages and their deductible.

Tax deductible.

If you had a simple tax code, you wouldn't have anything deductible.

We're a long way from there.

But I think we could get there.

If anybody can do it's this bold new government.

Right.

Yeah.

I thought that's what you were alluding to, certain eccentricities of the code as it resides right now that, a real estate mogul enjoys the certain... Some of it, but they also have huge tax, accounting issues.

-They have huge issues.

-Right.

They got so many little incremental regulations that people that various government officials and politicians have put into that tax code have made it really kind of miserable for real estate guys, even though some of it, does benefit them.

Do you have any, backers within the administration or allies, presuming this would require an act of Congress, the 10, 20, 30 model that you articulate, does it have support?

Because it is pretty sensible.

[laughs] I think that, you know, that might be one of the biggest flaws in it.

Yeah.

Well... It's too sensible for anybody to want to talk about.

Yeah.

I mean, it's sensible and imaginative at the same time, which is the best kind of reform.

When you deploy common sense and that's viewed as imagination.

It's also a bit disconcerting.

You had expressed concerns about the past administration in the regulatory, sort of design of what they were doing, as it related to for profit nonprofit administration.

Do you feel as though this is beginning to be corrected now?

There were particular aspects of the previous administrations behavior around this that concerned you.

Is it being corrected in your mind?

Well, I'm.

Yeah.

I'm relieved that the SEC was regulating by enforcement.

The rest of the government all had their own, like, ways of slapping innovative people down.

And I think they were, nearsighted in their thinking.

I mean, people who feel like they have to tell other people what to do are kind of weak minded.

The freer the government, the freer the people, the more you free and trust the people.

And set very clear ground rules, the bigger the economy can grow.

I mean, we could grow so much faster if the people were freed of regulations and trusted a lot more than they are today.

You say that you know, the ultimate thesis for bitcoin and crypto is that it is unhackable in the way that conventional banks can be.

Oh, I didn't say that, it has not been hacked.

Okay.

Okay.

Bitcoin blockchain has not been hacked.

Other blockchains have been hacked.

All sorts of weird stuff has happened with other blockchains.

The theory is that it is theoretically or virtually unhackable.

No, that isn't really true.

No.

People are showing how you know, with successful quantum computing, people could, potentially, get in there and hack it.

But what they aren't seeing is that the first quantum computers are being used to secure the blockchain and a hacker trying to hack into the blockchain will not make it as long as the first of the people are going in there to secure the blockchain.

So if you use quantum computers to secure the blockchain you can't use, you won't be able to hack the blockchain with quantum computers.

So yeah, there are theoretically there are ways to hack the blockchain, but it won't be hacked as long as.

And everybody's incentive is to keep the blockchain going the way it is.

All the miners, their incentive is to secure it.

And if somehow it got hacked, that would be, a chain that went astray and, those chains can be closed off.

it seems pretty good.

It's a lot better than your bank is.

-By like four nines, -Yeah.

what do they say, you know, you need five nines of certainty on something like a telephone call or whatever.

I think you could add four more nines, of certainty with the blockchain.

Is there anything like FDIC protection that ought to exist for crypto?

See, since with crypto.

Well, look, if the bank's holding it for you, then sure.

But if you hold your own, why bother?

-And I think longterm -Right.

we'll all hold our own money, and it'll actually be not even in a ledger.

I mean, right now it's a ledger.

And those things are great, but, long term, it'll be in your eyeball and your fingerprint and your face and your body movements and your whatever else.

Or you know, they always say something you know, something you have, something you are.

And those are the three ways they've gone about protecting ownership of something.

But I think we're going to get so good that you'll.

I mean, you'll be able to go into a restaurant and you will only be charged with your, I don't know, fingerprint, eyeball.

You won't even have to carry anything around.

And so you're not subject to a bank.

The banks and the way they're set up means that the individual customer needs the security of the FDIC.

The way crypto is set up, you don't need that.

You don't have like with banks, you put your money on deposit.

They use that money, they go invest that money, they go do stuff with that money and then just hope that and you just hope that that money will still be there after they've done all their investing.

And they're usually very conservative about it and it usually works out.

But if it doesn't, you've got the FDIC saying, okay, well we'll print more money to guarantee you your $250,000.

With crypto, you don't have anybody doing that to you.

You don't have a bank taking your money and investing it in whatever they want to invest it in.

You don't have the government overregulating it, so you don't need the insurance policy.

You already have it because you have the money with you.

Fair enough.

That makes sense.

Tim Draper, of course, innovative thought leader, on all things crypto and the economy, the founder of Draper Associates and the Draper Venture Network.

Tim, thank you so much for your insight today.

My pleasure.

Thanks for having me on your show, Alex.

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