In early 2020, a single bitcoin would cost you around $10,000. As of this writing, the cost of one bitcoin is around $92,000. If you went back to 2014, you could have bought a single Bitcoin for around $400. Why do we mention 2014 specifically? Because that's when investor Tim Draper bought a big batch of Bitcoins at auction. The auction was being held by the U.S. Marshals Service. The bitcoins had been confiscated from Silk Road founder Ross Ulbricht. How has that investment turned out for Mr. Draper? I would say, pretty…pretty…pretty well!
Tim Draper is the founder of Draper Fisher Jurvetson, a venture capital firm based in California. He is actually a third-generation venture capitalist. His father, William Henry Draper III, better known as Bill Draper, founded the Draper & Johnson Investment Company in 1962 and was chairman and president of the Export-Import Bank of the United States. Bill was an early investor in Skype, which eventually sold to eBay for $4.1 billion.
Some of Tim's venture successes include investments in Hotmail, Baidu, and Tesla. He was also a very early adopter of cryptocurrency. At one point he bought around 41,000 bitcoins when they cost just $6. That set him back $250,000. If he still held those coins today, they'd be worth a little more than $3.8 BILLION. Tragically, Tim lost that entire investment in 2014 when the bitcoin exchange Mt. Gox collapsed, taking with it an enormous electronic fortune held by thousands of investors. Somehow, he wasn't deterred. In fact, he jumped right back into the bitcoin game.
Ross Ulbricht/Silk Road
Have you heard of Ross Ulbricht? He's the guy who was arrested by the FBI in October 2013 and eventually convicted of being the mastermind of Silk Road, the dark web drug and other illicit services market. At the time, he was 29 years old. Today, he is serving a life without parole at a federal prison in Arizona.
As the creator of Silk Road, Ross took a small cut of every transaction that occurred on his site. Be it a drug sale, a weapons purchase, or an alleged murder-for-hire, Ross took a little slice as the middleman.
During its time operating, the Silk Road reportedly processed $9 billion worth of transactions. Along the way, Ross built up an impressive little collection of bitcoin, 144,000 bitcoins to be exact. At the time of his arrest (October 2013), a single Bitcoin was trading for around $180. So Ross's Bitcoin stash was worth roughly $25 million.
In mid-2014, the U.S. Marshals Service auctioned 30,000 bitcoins that formerly belonged to Ulbricht. Tim Draper was one of 45 people bidding on the confiscated bitcoin during the 12-hour auction. The bitcoins were auctioned off in nine blocks of 3,000 bitcoins and one block of 2,657 bitcoins. Draper was the ultimate winner of all ten blocks of the auction. In total, he paid $19 million for 29,657 bitcoins. That turned out to be… a wise decision.
Frederick M. Brown/Getty Images
Draper still owns those coins today. Thanks to renewed optimism for digital currency coming thanks to Donald Trump's election, bitcoin is at a new all-time high. As I type this article, a single Bitcoin would cost you $92,700. So today, Draper's 29,657 coins are worth…
$2,749,203,900
Not bad for a $19 million investment 🙂
