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I'm sure that never. The Bitcoin revolution is only beginning

Tim Draper is a founding member of Draper Associates and president of Draper University.

For more information on bitcoin's tenth anniversary, take a look at our new interactive Bitcoin At 10 feature.

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It was not 10 years ago, but more than 15, when I saw the potential for a digital currency for the first time. I passed some highs and lows in bitcoin. But today, I am more certain than ever that the bitcoin revolution is coming.

In 2004, I learned from a rich Korean industrialist that people were paying real money for digital objects such as weapons for use in massively multiplayer video games. The game was "Lineage", which was conquering Seoul.

It made me think that there was an incredible business in the virtual goods industry.

Later, Joel Yarmon introduced me for the first time in Bitcoin in 2011. He brought Peter Vincennes and his company Coinlab to plant us. Bitcoin was a new currency that could be used to store value and pay for anything, not just for progress in a video game.

I quickly absorbed the basics of bitcoin: miners, wallets and so on. The decreasing number of bitcoins available to be mined over time meant that the price of a bitcoin would increase in value as less bitcoins were extracted and use increased. In fact, with the diffusion of bitcoins and their use, it is probable that the currency will become more precious.

Coinlab would become an innovator and a miner focused on bitcoins. We have made a small investment in the company. My son Adam started an accelerator called Boost VC, dedicated to bitcoin (and blockchain) companies. He was the first investor in Coinbase.

At that time, I asked Peter if I could buy 250,000 dollars worth of bitcoins. He bought a little for me at around $ 6 each and stored them in mt. Gox, the biggest bitcoin exchange at the moment. He said he would also buy a high-speed mining chip from Butterfly Labs to get even cheaper bitcoins. Both these efforts went south.

First, the mining chip was delayed. Rather than sending it to Peter as ordered, Butterfly Labs used the chip to extract the bitcoins themselves. When Peter received the ASIC chips, the mining sector had dramatically increased in difficulty. In the meantime, the bitcoin I had bought was "lost" from the Mount. Gox.

Bitcoin resilience

But something important happened with the failure of Mt. Gox. Bitcoin prices fell only 20% and the currency continued to trade on other exchanges. I was amazed and fascinated.

I realized that the demand for this new digital currency was so strong that even a massive theft would not prevent bitcoins from creating a new way for us to make transactions, store and move money. Since the financial crisis, people were losing their confidence in government or "fiat" currencies. I continued with several bitcoin companies of Boost VC and, while I was discovering more and more uses, an enormous opportunity arose.

And something happened that gave me another chance to get involved in the bitcoin opportunity. The US Marshall office has confiscated the bitcoins owned by Silk Road, an online drug market, and nearly 30,000 bitcoins have been auctioned. I considered this as an opportunity to regain the bitcoins I lost.

The market price was therefore $ 618 per bitcoin. At the last minute, I decided to make an offer higher than the market price. I offered $ 632 and won all the bitcoins!

After the inevitable remorse of the buyer for paying a higher price than anyone else was willing to pay, I thought about how I could get a positive use for these bitcoins with a spoiled past. I decided that I would use them to support bitcoin proliferation through the markets of emerging countries where people did not trust their currencies.

Many people in these countries are not "bankable". Banks lose money for people who do not have enough to assert all the necessary papers. The bank regulations established to protect the youngster effectively prevented the child from participating in the economy – almost as a guarantee that he will remain "the little man". There are billions of "unbanked".

Avish Bhama, a Boost entrepreneur with a company called Mirror helped me to understand a good plan to spread the currency in the markets of emerging countries. The idea was to allow people from developing countries to invest in anything (even to go short against their currency) using bitcoins as "rails", the trade channel.

Mirror later changed his business model, but the companies I supported later – BitPa in Africa, Bitpagos in Latin America and CoinHako in Southeast Asia – are making the emerging market their market.

The great potential of Bitcoin

I am struck by the possibilities of bitcoin and blockchain. Bitcoin is a currency that is accepted everywhere without any government friction or interference, a solution of memorized value that does not require a holder to keep a room full of metals and art and a frictionless currency that can move automatically based on a contract, without the usual resistance that comes from regulations and accounting rules.

But there are many other uses.

A bitcoin wallet can also be used as a commitment to a transitional contract, such as redistribution of a property or as a transfer agent to distribute payments, dividends or inventory. Blockchains can keep track of money, data, inventory, contracts, etc. And "smart" contracts can be designed in such a way as to anticipate the eventualities and automatically distribute the funds appropriately. Corporations can use the blockchain to automatically pay their salaries and benefits to employees, pay their dividends to shareholders and pay their interest and principal payments to bondholders, all with precise precision and automated accounting.

The blockchain can easily handle three-way transfers, and will eventually handle retail transactions without credit or debit cards. Insurance companies can use it to manage their requests and automate their collections. Real estate assets and securities can be made quickly and easily between buyer and seller. Drugs and food can be authenticated by the blockchain to guarantee their origin.

And the US government can manage social security, welfare, Medicare, employees, disability, and all their verification data of citizens and businesses with bitcoins and blockchains, since blockchain is the perfect government employee.

It is honest, incorruptible, safe and just.

Change is coming

Many industries will have to go through fundamental changes to adapt to the advent of this new way of thinking. People will have to learn that the bank, being the third party trusted for centuries, will soon be replaced by computers that now control their holdings through the blockchain. Banking will be simpler, safer and easier than relying on people to do the monotonous work in a brick and mortar facility.

It is noteworthy that countries, now recognizing that they are in competition with each other, are trying to make sure that they win bitcoin economics. The smartest of these are allowing bitcoins to thrive or recognize that they need a light touch in bitcoin regulation to attract all the creativity, money and startups that are invading the field.

The United States was wise to leave the Internet free and regulated because all Internet entrepreneurs have created startups in their own country and the Internet economy has blossomed. Keeping his clear regulatory hands should help innovators stay in the United States.

There are many parallels between bitcoins and the Internet in 1994. In 1994 the Internet was only for hobbyists and hackers. I remember when I used the Internet for the first time, the only things I could do were buy diamonds and try to penetrate into NORAD. There were very few uses. It took many years for the Internet to become mainstream, but when it did, it turned the industries.

The long-term vision of bitcoin is to give the world economic emancipation. The potential if the bitcoin is limited only by the imagination of the entrepreneurs who work to drive this new virtual economy. To control it and keep it honest, I think the user community will eventually regulate itself, perhaps eclipsing or obviating the need for various governments to regulate the cryptic world.

I've gone through highs and lows with bitcoins, and I'm sure it's safer than the bitcoin revolution is coming.

It is here to cash the unbanked, to democratize the economic opportunity and re-evaluate the governance. I expect everything will change, from banks and the financial system to health care, to democracy, even to the government.

Tim Draper image through CoinDesk archives

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