Trump's Favorite VC Is Long Bitcoin


At last year’s Future Investment Initiative conference in Riyadh, Saudi Arabia, Peter Thielwarned that investors were “underestimating” bitcoin. “It’s like a reserve form of money, it’s like gold—it’s just a store of value,” he said. “If bitcoin ends up being the cyber equivalent of gold, it has a great potential left.” Fast-forward two months, and Thiel’s cryptocurrency predictions have proven about as adept as his political ones—the “euphoric mania” surrounding bitcoin has catapulted it more than 1,300 percent in the past year, and Thiel’s venture-capital firm Founders Fund has cashed in on its investments. According to The Wall Street Journal, the firm is telling investors that it put between $15 million and $20 million into bitcoin, which is now worth hundreds of millions of dollars.

It’s not clear when Founders Fund purchased its bitcoin, nor is it clear whether it has sold off any of its investments. What is clear is that Thiel and his people consider bitcoin to be about as safe as the rest of the tech market, but with far greater potential:

The representatives have told firm backers that a cascade of cash into technology companies has stretched their valuations to historic highs, making stakes in start-ups as dangerous a risk as ever. Bitcoin, on the other hand, could multiply several times over in the coming years.

To hear the firm’s representatives tell it, a bitcoin investment may be a safer way to get returns than, say, investing their limited partners’ money into start-ups. In other words, a cryptocurrency so volatile that a beverage manufacturer saw its value soar after changing its name to “Long Blockchain” is considered to be a safer bet than most tech companies, which in recent months have seen their valuations balloon, but which could be facing an existential threat that could call their very business models into question.

Despite Thiel’s optimism, most mainstream institutions remain skeptical about bitcoin given its extreme volatility; its price can swing dramatically in a number of hours, influenced by any externality. There is perhaps no better proof of this than the aftermath of the Journal report about Thiel and his bitcoin investments: after opening on Tuesday at $13,509.87, its price jumped 12 percent to $15,098.57.

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