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Bitcoin Betting, Tycoon Style

PayPal co-founder Peter Thiel made headlines this week when it was announced that his venture capital firm, Founders Fund, purchased somewhere between USD$15 and $20 million in Bitcoin. The disclosure carries some weight, given that Thiel, along with his co-founders, had the foresight to start a digital payments service two decades ago.

A man of strong Libertarian leanings, Thiel has said in the past that he failed to realize his ambition to turn PayPal into a “new world currency” – which of course is what Bitcoin and other cryptocurrencies are fast becoming. After all, many merchants routinely accept cryptocurrency payments easily and cheaply across borders these days.

Thiel is not alone in this regret. Nathaniel Popper, a New York Times technology and business reporter and author of the 2015 book Digital Gold, said digital currency was seen as an “unfulfilled dream of Silicon Valley.” There was a time when people scoffed at the notion of invisible money, maintained by its users, free from the iron grip of central banks. Society has come a long way.

Bitcoin Betting and the Boom

Thiel’s news set the Bitcoin price back on its dizzying upward trajectory, following a slight dip around the holidays. Specifically, the digital currency rose 13% to $15,392 (based on the Coindesk price index) in the 24 hours following the news of Founders Fund’s buy-in. The momentum continues. As of this writing, the Bitcoin price is hovering over $16,000.

Bitcoin betting has certainly worked out for Thiel. Founders Fund has told investors that its investment is now worth hundreds of millions of dollars, thanks to the cryptocurrency’s stellar performance in the past year. It is not known whether the firm has sold any of its holdings yet. What we do know is that the bet has been spread across several of its recent funds, including one that started investing in mid-2017. Bitcoin was one of its first investments.

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