Bitcoin bull and billionaire investor Tim Draper has made headlines again with an interesting take on the future of cryptocurrency and fiat. On the same day that Bitcoin (BTC) nearly crested $4000, with the rest of the crypto markets experiencing a wave of green, the vocal investor made the claim that fiat is trending towards primarily criminal use.
Draper, who has made high-profile claims before and is transparent in his support for Bitcoin as an investor in the digital asset, believes that BTC will be the predominant currency in five years. Compared to the common mainstream narrative that cryptocurrency is primarily used by criminals, stemming from the storied past of The Silk Road, Draper believes that fiat will transition to the sphere of sole use by criminals.
As noted by a U.S. Drug Enforcement Administration (DEA) agent in August 2018, the organization is beginning to prefer criminals use cryptocurrency over fiat due to the ease of tracking through blockchain. While typical blockchain based currencies such as Bitcoin may offer a level of anonymity in the ability to transact, the movement of capital is contained within a public ledger that can be traced for legal purposes. In the case of the DEA–and by extension Draper’s comment–blockchain provides a simultaneous security and honest-keeping record over traditional fiat.
Speaking in an interview on Feb. 18 with financial news outlet Fox Business, Draper reiterated his position that Bitcoin is superior to traditional fiat, and predicted that in five years cryptocurrency will be the supreme form of currency with the latter being proven obsolete and relegated to the use of criminals.
Draper also went on to state his belief that fiat in banks is less security than the value he stores through digital assets such as Bitcoin, claiming, “My bank is constantly under a hack attack,” while noting that no one has been able to hack or manipulate BTC backed by blockchain. This led Draper to go a step further, claiming that Bitcoin is substantially more secure than fiat, and generally represents a superior form of money. At one point, Draper compared exchanging Bitcoin to fiat as akin to trading gold for sea shells–an ode to the advancement that digital currencies have made in the face of their stagnant counterpart.
While Draper presents an interesting scenario over criminal fiat use, the rise of Monero (XMR) and other privacy coins may disrupt that narrative. Not only do these currencies afford users the security and trust of blockchain-based transactions, but they also allow transactions to occur with complete anonymity. Some analysts have predicted that the need for privacy coins may drive the price of Monero and their like higher over the next decade, as digital assets for routine transactions such as buying a coffee become less sensationalized.
However, Draper’s point to the outdated nature of fiat may have been partly represented in last week’s announcement by JPMorgan Chase to develop the JPMCoin. While JPMorgan’s new coin will not re-invent the crypto wheel, it does seek to offer an improvement in transaction speed and cost over the industry standard relying upon traditional money systems.