Draper: Governments should not try to compete with Bitcoin

Tim Draper sends an open letter to Prime Minister Modi and the Indian government. The 1,027-word letter, which was published on Wednesday, gives Draper’s formula for promoting prosperity in the country without restricting the freedom of citizens.

The billionaire and venture capitalist writes (freely translated):

“There is a simple formula for the wealth of a nation. It is: Liberty, fairness and smoothness. Each of these teachings exposes and works to its full potential when it is not restricted – freedom is maximised when there is a minimum of regulation; fairness without government bias and smoothness without trade barriers.”

In line with these three values, Draper calls for three steps by the Indian government, one of which was the restriction of the currency Bitcoin

“Bitcoin, the Blockchain and smart contracts have the potential to transform some of the world’s largest industries and the next 40 years will be determined by what happens today. Governments that mess with technological advances like Bitcoin risk falling by the wayside.

Imagine what would happen to countries that don’t allow the Internet. Bitcoin promises to be 10 times the size of the Internet.”

In April 2018, the Reserve Bank of India banned companies and citizens from participating in Bitcoin or other crypto-currencies. The country is also considering a bill that would provide a 10-year prison sentence for anyone caught mining, producing, possessing, selling, transferring, issuing, trading or disposing of crypto-currencies. While India has an extreme aversion to crypto-currencies, other countries are working hard to create regulatory frameworks to drive the emerging industry.

Venture capitalist Draper, who loves to invest in start-ups that have revolutionized the industry such as Skype, Tesla, SpaceX and Robinhood, points out that he has had his finger on the pulse of change throughout his career.

“I tend to be a pioneer for VCs, as I was the first Silicon Valley VC to invest in China, and many VCs followed my example after Baidu’s successful IPO.”

Despite his appreciation for India and the connections he has built there through his father, who invested venture capital in the country’s local companies, Draper warns that the world’s second most populous country will fall behind if the government doesn’t think ahead and instead chooses to overlook the powerful blockchain technology.

“If you want your people to thrive, create simple, fair rules for everyone and then let them go. Freedom is a big thing for venture capital. More rules and restrictions create more corruption, more friction. Whereas fewer restrictions allow people to innovate and create.”

Draper plans to be in India in early March for his networking event, where he will review startups and meet with Modi to discuss his plans for the country.