Business

The 5 Rules for Investing in Bitcoin Billionaire Tim Draper’s Success

By Hannah perez

The Bitcoin advocate and reputable venture capitalist has provided some advice based on his own investment experience. We summarize the 5 most important rules in this article.

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Venture capitalist Tim Draper is widely known for the success of many of his investments. In fact, his visionary mind has led him to invest in some of the projects that have led to the most innovative advancements of our time: Hotmail, Bitcoin, Tesla, Twitter and Coinbase are some of them.

The reputed Silicon Valley entrepreneur has a portfolio made up of several dozen unicorn companies, as well as a handful of various digital currencies. Some startups Famous people in which he has put his capital include Baidu, Skype, SpaceX, as well as some cryptocurrency firms like Ledger and Robin Hood.

But it has not always been successful. Draper was also an early investor in Theranos, a company dedicated to blood testing that generated high expectations in the industry but ended up being a resounding failure; although even in that case it must be admitted that the venture capitalist has always leaned towards the most flashy projects.

An advocate for Bitcoin Long-standing, Draper is also known in the digital currency community for his crypto wealth. In 2014, it acquired a total of 30,000 bitcoins that were part of the funds seized after the closure of the illicit market Silk road; a fortune he still has and is currently valued at around $ 1.7 billion.

Draper’s 5 investment rules

There is no doubt that the billionaire knows a thing or two when it comes to investing, and, in general, Draper has not been suspicious of sharing the lessons that his vast investment experience has taught him. In a recent interview for Magazine from CointelegraphHe pointed out some of the rules that he takes into consideration when investing. Also last year the businessman had shared part of this advice with Zain Jaffer in an interview for his YouTube channel.

Next, DailyBitcoin collects some of the top tips Draper gave during these two interviews. It should be noted that, broadly speaking, the capitalist referred primarily to investment in startups -especially for the 2020 interview-; However, we believe that these lessons can be taken into account for the investment of any project, including crypto.

1. Get to know the company or project well

One of Draper’s main rules when investing in a project or startup might seem obvious, although sometimes it goes unnoticed: it is important to do the due diligence of studying a project in depth before putting money into it. Also, during this analysis period, it is important to verify that the project meets some standards.

During his recent encounter with Magazine, the billionaire mentioned some characteristics that he likes to keep in mind when evaluating. First of all, he said that the trust is the key to a successful company, not only that it provides trust to its users but also that its leaders have security in it.

Along these lines, he said that part of knowing a project is also knowing who is behind it. He stressed that it is crucial that the members have a good relationship with each other. In Draper’s view, there should only be one person in charge of making the important decisions and there should be no rivalry between the co-founders, as this can be a crucial risk factor for a company.

Likewise, he drew attention to the regulatory scenario or the policies that govern the market for projects or startups. He stressed that success largely depends on companies being able to operate freely, without excessive restrictions or regulations.

If the US government had regulated the Internet in the 1990s, we would not have had the same success[…] Companies must feel free to innovate.

2. Don’t invest too much money too fast

When it comes to investing in a start-up company, Draper admitted to Jaffer that one of the most frequent mistakes he has seen is that investors put in a lot of capital too early. In this regard, he said that it is best to go little by little, since the most probable thing with a new project is that it will require several other capital injections; especially if you are looking to be successful.

Better to build a long track when it comes to seeking financing, rather than running out of half“, Commented in this context to Magazine. The capitalist recognized that When an entrepreneur reaches launch number 25, they already take it into account in terms of their business, the competition and the market. In the end, he says he prefers see that release 25 instead of the first.

On the other hand, he recalled one of the main investment rules: don’t put all your eggs in one basket. That is to say: diversify. He told Jaffer that the question of how much to put into each project will depend on the investment strategy pursued, but that, deep down, he always prefers to have a versatile and varied portfolio. That, he assured, is the “discipline”Of the good investor.

The discipline consists of distributing the capital in a wide variety.

3. Think long term, with a horizon of 5 to 10 years

Immersed in a fast-paced world, technologically advancing faster and faster, many less experienced investors may lose track of the game in the long run. This is common in the market for digital currencies, where many traders go for the sometimes wildest projects hoping to make a quick profit. However, the opposite side can also be unprofitable, because the specific result could be lost from sight.

When asked by Jaffer about the time horizon that an investor should consider, Draper told the story of an investment that would take at least 15 years before there was anything tangible and cautioned against that. What I wouldn’t do is think too much … I think you should start thinking in 5-10 year increments“.

To keep a cool head and focus on the game during that time, the businessman also advised investors to focus on a mission and not money. Draper believes that investors should avoid focusing on how much profit you think they will makeespecially if you are investing in an early stage project.

In this regard, he said that he prefers to think about how that company in which he is investing can change the world. “I like the world as it will be because of this mission“He commented by way of example. Undoubtedly, a rule that he himself has known how to maintain (look at his bitcoins).

4. Rarity is a good indicator, but be careful

Draper commented to Magazine that eccentricity is good for business and provided examples of startupsOutside the Box”In which you have invested, such as Hotmail or Tesla. The underlying argument for this rule is that successful projects are often those that dare to innovate, and that can sometimes make them look strange, at least at first.

Many of the winners are usually a bit strange. Their ideas sometimes stay in the center and often I say: what are you doing?

But this investment advice should also be taken with caution, always keeping a business outlook in mind. Last year Draper told Jaffer that to invest successfully you sometimes have to ignore natural business biasEspecially if you have already had successful investments. The idea that some entrepreneurs may have innovative, visionary or even eccentric ideas like us, does not mean that they have commercial attitudes or even enough to drive a large project.

You believe that everyone is like you and that everyone can do exactly what you did. But that is not really true. You should sit down and think if you think that this person is really capable of making all the sacrifices that you made to get where you are, to achieve the success that you achieved.”, He commented.

5. Use fear as an incentive

On different occasions, Draper has highlighted the place that emotions when investing and one that he considers valuable is fear. After years of experience, the entrepreneur has discovered that fear can be a crucial driver of innovation. In an interview with Jaffer gave an example of how fear of an outlook can drive innovative solutions.

I look and say, “Climate change? Excellent. Let’s see if we can make an entrepreneur discover a business model that can help us solve climate change. “

“Another difference is in my perspective. Other investors ask what can go wrong. I ask what if this works? What if it works and something really extraordinary happens to humanity and society? Then it would be worth a try ”, commented on this line to Magazine, where he added that emotions such as passion are also important to him when evaluating a project.

However, he does not lose sight of the fact that in order to be a successful venture capitalist he has also learned to deal with other types of fear, for example: the fear that the tirade about whether to walk away from a project when it is not working can provoke. In his view, a good investor must be willing to walk away, as well as admit defeat when things do not go well, even though this may cause fear, or even affect spirits. This lesson is in turn part of a bigger one: knowing how to accept change.

A visionary advocate for Bitcoin

During his recent encounter with the medium Magazine, Draper reiterated his conviction for Bitcoin. “I’ve always been bullish on Bitcoin, for me it represents freedom, cross-border freedom. I also love the confidence element – freedom and confidence are a great combination.He told the portal.

He also applauded El Salvador’s decision to adopt the flagship cryptocurrency as its legal tender, something that he had already predicted in the past. In 2020, he said he would do the same if he were president of the United States for at least one day. Likewise, he had challenged the former president of Argentina, Mauricio Macri (when he was still serving his mandate), to decree Bitcoin as legal currency in that country. On this occasion, Draper admitted that the news of the adoption of Bitcoin all over the world they have encouraged it.

In general, he was enthusiastic about all the developments that the emergence of Bitcoin and its underlying technology. Mentioned that Blockchain, smart contracts, second layer solutions and tokens non-expendable (NFT), among others, are all “great innovations“. Although he admitted that his great passion is and will always be Bitcoin, “since it is totally decentralized”.

The visionary, who has previously predicted that the largest digital asset could reach a price of $ 250,000 by 2022, shared his vision of a world without borders. Said to Magazine who believes that nationalism and borders will be a thing of the past in about five years, a world where everyone can choose the government they want to belong to. Faced with this scenario, anticipate that Bitcoin It will be the currency of the new decentralized world and you are not planning on exchanging your bitcoins for fiat cash for nothing.

Would I exchange my euro for drachmas or French francs? Hell no. Instead, I’m looking forward to the day when I can buy my food, my clothes, and my shelter with Bitcoin. And when I can do that, why the hell would I have dollars?


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Article by Hannah Estefanía Pérez / DailyBitcoin

Unsplash image edited in Canva

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HELEN HERNANDEZ

Helen Hernandez is our best writer. Helen writes about social news and celebrity gossip. She loves watching movies since childhood. Email: Helen@oicanadian.com Phone : +1 281-333-2229

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