Billionaire venture capitalist and bitcoin investor Tim Draper is sticking by his prediction that bitcoin will reach $250,000 by the end of 2022 or early 2023 despite the cryptocurrency’s wild swings in value and the turmoil around its environmentally unfriendly energy usage.
“I think I’m going to be right on this one,” Draper tells CNBC Make It.
Draper first made the bold price prediction back in 2018, at which time bitcoin was trading around $8,000, according to Coinbase.
“I’m either going to be really right or really wrong [but] I’m pretty sure that it’s going in that direction,” Draper says.
That’s because Draper believes the currency is going to be “much more in use by then.”
“Give it about a year and a half and retailers will all be on Opennode [a bitcoin payment processor], so everybody will accept bitcoin,” Draper predicts.
Currently only a few major companies accept bitcoin directly or indirectly through a third-party digital wallet app, including Microsoft, PayPal, Overstock, Whole Foods, Starbucks and Home Depot. And many experts see bitcoin as a store of value, like gold, rather than a currency.
“Then beyond that, I think [bitcoin] continues up because there are only 21 million of them,” says Draper. By virtue of its code, only 21 million bitcoin can be “mined.” So far, more than 18 million bitcoin are already in circulation.
Draper, 63, who built his fortune by making early investments in Twitter, Skype, Tesla and SpaceX (to name a few), wouldn’t share how much bitcoin he holds or whether he has invested in other cryptocurrencies.
“There must be something to dogecoin because it makes us all smile but no engineers are working on it,” Drapers says. (Though, Elon Musk tweeted in May he was working with “Doge devs to improve system transaction efficiency. Potentially promising.”)
“I tend to focus on the ones where people are dedicating their lives to improving the currency.”
Draper says most engineers are working on improving bitcoin right now. Last week, bitcoin got its first upgrade in four years, called Taproot. Due to take effect in November, the change will reportedly mean greater transaction privacy and efficiency. It is also meant to unlock the potential for smart contracts on the bitcoin blockchain, CNBC reported.
Bitcoin “is sort of like Microsoft [in] the software world or Amazon [in] the e-commerce world,” Draper says. He believes bitcoin will be the center of all financial activity for the next two to three decades.
However, bitcoin’s value is volatile, and there are concerns over its enormous energy usage. For this and other reasons, experts recommend only investing as much money in bitcoin as you can afford to lose.
Hundreds of billions of dollars were wiped off of the cryptocurrency after Elon Musk tweeted in May that he was suspending bitcoin purchases at Tesla over environmental concerns.
On Sunday, Musk tweeted that Tesla would accept bitcoin again when at least half of it can be mined using clean energy.
“Elon, first of all, is one of the most brilliant men in the world…maybe the most brilliant, [but] he got this one wrong,” Draper says. (A Tesla spokesperson did not immediately respond to CNBC Make It’s request for comment.)
Draper points out that big banks have their own environmental issues.
Bitcoin rose more than 7%, nearing $40,000 on Monday, according to Coinbase. In April, it hit an all-time high of $64,829 before hitting a low of $30,000 in May following a 30% intraday crash, according to CNBC.
It’s not the first time, Draper has predicted the rise of the price of bitcoin. In 2014, when bitcoin was trading at around $500, he said bitcoin would top $10,000 within three years. In December 2017, bitcoin reached over $10,000, ballooning to a high of more than $18,900 that Dec. 19 before sliding back down to a low of $7,270 in early 2018, according to Coindesk.
In 2014, Draper purchased nearly 30,000 bitcoins seized by the U.S. Marshals Services from the now-defunct online black market Silk Road.