3 - 5 minute read
The recent banking crisis of early 2023 has been the largest since the financial meltdown of 2008. This has led to growing distrust in once-solid banks, with significant withdrawals from Silicon Valley Bank, First Republic Bank, and Deutsche Bank coming under scrutiny. Amid this climate of uncertainty and distrust of the banking system, renowned investor Tim Draper sees a lesson in the crisis. In an interview with BeInCrypto, Draper stated that the banking crisis is a wake-up call to buy Bitcoin. He recommends that all CFOs have at least two payrolls worth of Bitcoin as a hedge against bank or government failures to avoid catastrophic failure.
Draper views Bitcoin as a hedge against the current antiquated and over-regulated banking system and as a hedge against bad governments with too many regulations. In recent weeks, depositors have moved assets to “too big to fail” banks as they have questioned the viability of smaller institutions. Unlike traditional banks, which have intermediaries, DeFi can provide financial services to anyone with an internet connection, with recorded transactions on a public ledger. Some people have particularly appreciated the benefit of increased accountability.
Draper believes that crypto adoption rates and motivations vary widely between developed and underdeveloped countries and those with stable and unstable currencies. He stated that Bitcoin is loved by the people from countries with weak currencies. It gives the people a chance to build and store value without the risk of government over-printing and devaluing their work. Draper believes that the US seems to be heading down that inflationary, high-interest-rate path, and he believes that more and more people will be using Bitcoin to store value now.
Draper’s thesis on economics is equally libertarian—not unlike many crypto enthusiasts. He believes that great leaders trust their people and set them free. That trust and freedom build great economies, encourages rapid adoption of new and improved products and services, and creates a happy, wealthy society. Weak leaders control and regulate their people, creating a fearful, unproductive, impoverished society.
The current banking crisis seems to have fizzled out, for now. However, Draper is convinced that without regulators bringing crypto into the tent, there is more turbulence to come. If regulators persist in keeping banks out of the lucrative crypto market, more banks will fail, as more and more of the economy goes crypto. If they embrace the change, banks will be able to adapt, and they will thrive in the new Bitcoin economy.
Draper’s relentless enthusiasm for the crypto market will inevitably be a welcome tonic to some investors. The best way to ensure the future health of crypto is for the market to ultimately arbitrate the best outcome. FTX was a clear signal that centralized authority of any money supply is not as good as a decentralized system like the Bitcoin blockchain. Companies in the Bitcoin world that held their fiat in SVB but also held Bitcoin were not in panic mode. Since they knew they could always make payroll in Bitcoin.
The recent banking crisis has led to growing distrust in once-solid banks. Tim Draper sees a lesson in the crisis that the banking crisis is a wake-up call to buy Bitcoin. He recommends that all CFOs have at least two payrolls worth of Bitcoin as a hedge against bank or government failures to avoid catastrophic failure. Draper believes that crypto adoption rates and motivations vary widely between developed and underdeveloped countries and those with stable and unstable currencies. He stated that Bitcoin is loved by the people from countries with weak currencies. It gives the people a chance to build and store value without the risk of government over-printing and devaluing their work.
