Founders Fund, the venture-capital firm co-founded by Peter Thiel, has amassed hundreds of millions of dollars of the volatile cryptocurrency, people familiar with the matter said. The bet has been spread across several of the firm’s most recent funds, the people said, including one that began investing in mid-2017 and made bitcoin one of its first investments, reports The Wall Street Journal.
According to WSJ, Founders bought around $15 million to $20 million in bitcoin, and it has told investors the firm’s haul is now worth hundreds of millions of dollars after the digital currency’s recent spike higher.
But get this.
WSJ continues:
By buying bitcoin outright, as opposed to backing other companies doing business in the space, Founders would seem to be breaking with its investing tradition, an investor said. But in communications with investors, Founders representatives have sought to cast the investment as a high-risk, high-reward wager similar to its other venture bets, the people familiar with the matter said.
The representatives have told firm backers that a cascade of cash into technology companies has stretched their valuations to historic highs, making stakes in startups as dangerous a risk as ever.
Say what? Tech startups are overvalued so you put your money into an e-currency fueled by the same Janet Yellen money printing that has caused the startups to be overvalued but you think an electronic currency that does not reflect any kind of product, and has too expensive of a transaction cost to ever be a daily medium of exchange (current transaction cost to but a cup of Starbucks coffee, or anything else, is $55.00), has real value?
Who is leaking this story to WSJ and why?
-RW
Improvements are coming to the Bitcoin network that will reduce transaction costs and times. That said, bitcoin is the reserve cryptocurrency that all other cryptos are priced in. Think of it like gold. How much would it cost to ship 100,000 in gold bullion around the world? I'd wager it would cost more than $55.
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