Tim Draper: in five years, cryptocurrency will take the place of fiat money

In five years, the use of state currencies will come to naught, since they will be replaced by cryptocurrencies. 

This is considered by the venture investor Tim Draper, who has large amounts in cryptocurrencies. At the Internet summit in Portugal, Draper spoke with Forbes, during the conversation he expressed his opinion about the future of the cryptocurrency market: "In five years, if you try to use fiat currency they will laugh at you. Bitcoin and other cryptocurriences will be so relevant … there will be no reason to have the fiat currencies. "

Tim Draper is the founder of American investment company Draper Fisher Jurvetson (DFJ) and investor in Twitter, Skype and Tesla. Four years ago he drew attention to crypto-currency.

This is evident by the fact that he purchased 30,000 bitcoins during a government auction of assets seized from online darknet Silk Road in 2014. At the time, those coins were worth $20 million. Today, they are valued at over $214 million.

Bitcoin has experienced unprecedented heights during 2017. In the last few weeks, alone, the currency has surged to above $7,000. It was within touching distance of the $8,000 barrier yesterday at the news that the SegWit2x upgrade protocol had been suspended.

Remaining confident in the future of cryptocurrencies, Draper believes that the fiat system will eventually disappear as people look toward coins like bitcoin or ethereum. According to him, they remain reliable stores of value compared to the fiat system. His reasoning behind this is the fact that fiat currencies are bound by country borders. As an example, he cites the Nigerian Naira, which drops 30 percent when a person crosses the border.

While this may be the case, there are a significant number of altcoins in the market. CoinMarketCap puts that figure at 986 which have a market value. New ones are continually being created, all of which are claiming to provide a new solution to how we conduct our day-to-day lives. Despite this, though, the large number of cryptocurrencies in the market isn't worrying Draper. In fact, he thinks that they will eventually all work together at some stage. 

"They're all going to interrelate … and there will be exchange rates for all of them. My guess is that it will centralize around a wallet that you have, and when you pay for that Starbucks, your wallet will optimize to whichever currency has most value."

It remains to be seen if and when that happens, but from someone who has led investments in prosperous companies such as Twitter, Skype and Tesla, Draper may be on to something.