Billionaires have a lot to do with the future of Bitcoin

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When Bitcoin (CRYPTO: BTC) returned to the scene at the end of 2020, it was largely driven by a new generation of retail traders. Coinbase Global (NASDAQ: COIN) gained popularity, Square (NYSE: SQ) added Bitcoin trading, and even Tesla (NASDAQ: TSLA) started accepting Bitcoin for vehicle orders.

There are many stories of small investors earning hundreds of thousands of dollars, if not millions, in Bitcoin. But some of the very large sums of money are earned by investors who were already extremely wealthy and got into Bitcoin before most people ever heard of it. And they continue to tout Bitcoin (called “talking about their own book”). Here are some of the billionaires who are making even more billions with Bitcoin.

Image source: Getty Images.

Billionaires bet early on Bitcoin

Going back to the early days of Bitcoin, it was the technology that attracted a lot of attention from early investors. Whether they see Bitcoin as a way to store value in digital form rather than gold (Peter Thiel), or see it as better transaction technology, the big names in Silicon Valley and of Wall Street were the first investors.

Chamath Palihapitiya, who initially made most of his money working on Facebook (NASDAQ: FB) and now runs investment firm Social Capital, said he bought 100,000 Bitcoin tokens for around $ 100 each around 2011 and said he would invest more since. It is not known how much he still holds, but a 100,000 Bitcoin stake would be worth around $ 3.4 billion today. Cameron and Tyler Winklevoss have been touting Bitcoin since 2012, and while they haven’t officially said how much they hold, reports put the number at around 100,000 – again, worth around 3.4 billion dollars. dollars today. Tim Draper bought 30,000 Bitcoin units for $ 19 million, or $ 633 per coin, in 2014 and has been one of the fiercest bulls this year. He co-founded Draper Fisher Jurvetson in 1985 and is a well-known $ 1.5 billion venture capitalist, according to Forbes.

Notable mentions in the premier Bitcoin investor network are Peter Thiel; Dan Morehead of Pantera Capital; and Michael Novogratz, formerly of Fortress Investment Group. These were already successful and already very wealthy investors who were making even more money with Bitcoin.

Bitcoin infrastructure funders

As much money as Bitcoin brings directly to early investors, the companies behind Bitcoin, other cryptocurrencies, and the blockchain could make them even more money. And again, it’s not the retail investors who get rich, it’s the wealthy venture capitalists who make billions in crypto investments.

Venture capital firm Andreessen Horowitz has invested in Coinbase’s $ 25 million Series B funding round. According to an analysis by CNBC, this round brought in 381 times the initial investment at its starting price on the Nasdaq. Andreessen Horowitz had a $ 9.7 billion stake in the company, and that’s not all she invests in crypto. The company has invested in more than two dozen crypto-related start-ups and recently launched the $ 2.2 billion Crypto Fund III.

Founders Fund, a venture capital firm led by Thiel, has invested in companies like Bullish, which just agreed to a $ 9 billion PSPC deal, and BitDAO with its recent $ 230 million funding round, in no more investing in Bitcoin itself.

Michael Saylor quickly turned MicroStrategy (NASDAQ: MSTR) into a bet on Bitcoin, with the company now holding more than 105,000 tokens. Saylor was one of Bitcoin’s strongest supporters in 2021.

Here are some of the other notable venture capital investments in crypto start-ups that could generate billions in additional profits:

Pantera Capital has invested in Bakkt (CRYPTO: BTM), which is valued at $ 2.1 billion. Sequoia Capital has invested in Binance, a well-known company in the blockchain ecosystem. BlockFi, which is currently valued at $ 3 billion, counts Tiger Global Management, Bain Capital Ventures and Winklevoss Capital among its long list of investors. Circle, which issues the digital stablecoin USDC dollar (CRYPTO: USDC), is a crypto-finance platform last valued at $ 3.9 billion in an investment cycle of $ 440 million over earlier this year, Pantera Capital counts as one of its largest funders.

There is a lot of money going into cryptocurrencies and the infrastructure around them. And the big investors came in before most of us had heard of crypto.

Build a Bitcoin mining platform. Image source: Getty Images.

Why big bettors matter

Small investors need to know what they are getting into with cryptocurrencies like Bitcoin. For better or for worse, billionaires have had their prime and they are likely to take action that will protect their wealth in the crypto space. Here are a few factors to keep in mind:

The regulations are coming. The big players in venture capital and Wall Street have the power to write the rules by which they play. That’s why you’ve seen big names oppose some of the crypto regulations and tax proposals currently before Congress. If it hurts their bottom line, they will make lobbyists push back taxes and regulations. Billionaires can build confidence in a new currency. Bitcoin has been touted as a decentralized currency. But what really gives crypto validity is the centralization of power and influence in names like Palihapitiya, Elon Musk, the Winklevoss twins, Jack Dorsey, Thiel, Andreessen Horowitz and others who can do believe people in crypto and create the confidence that it will. be a real store of value or a real currency. Bitcoin only has the value people think it has, and these names can build trust better than almost any individual or media institution. Talk about their book. What to take with a huge grain of salt is what investors are saying about Bitcoin if it has a big impact on their net worth. If Michael Saylor or Andreessen Horowitz tout Bitcoin or the investments around Bitcoin, I view these comments with skepticism because they have a BIG financial interest in the success of the cryptocurrency. So beware of investor incentives if they talk about an investment like Bitcoin.

Whether you are a bull or a Bitcoin bear, this will be an interesting space to watch over the next decade. There are billions of dollars at stake, and some of the biggest names in investing will have a lot to say about the future of the industry.

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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of its CEO, Mark Zuckerberg, is a member of the board of directors of The Motley Fool. Travis Hoium owns shares of Square and has the following options: Long March 2023 $ 250 sale on Tesla. The Motley Fool owns shares and recommends Bitcoin, Facebook, Square, Tesla, and Twitter. The Motley Fool recommends MicroStrategy. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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