SAN FRANCISCO (AP) — Silicon Valley venture capitalist Tim Draper is betting that bitcoins will bring more financial stability to countries with shaky economies, even though the digital currency faces an uncertain future itself.
The financier revealed Wednesday that he snapped up nearly 30,000 bitcoins in a recent U.S. government auction and plans to trade them on a platform catering to markets looking for alternatives to their own volatile currencies.
Unlike most forms of money, bitcoins aren't backed by any government. Bitcoins also provide their owners with anonymity and enable transactions that can be completed over the Internet without the involvement of banks. That has turned bitcoins into a financial vehicle for money laundering and illegal drug sales, too.
The bitcoins that Draper bought were auctioned off after the U.S. government seized them last year in a crackdown on Silk Road, a website that stockpiled the currency while selling illegal drugs.
Draper prevailed over 44 other bidders registered for the auction, according to the U.S. Marshals Service. The price he paid isn't being revealed, but the bitcoins currently have a market value of about $19 million.
Pouring millions into risky investments is something that Draper has been doing in his nearly 30 years as one of the best-known venture capitalists in Silicon Valley.
Enough of Draper's hunches have paid off to enrich him and the people who entrust money with his venture capital firm, Draper Associates, in Menlo Park, California.