When the government auctioned nearly 30,000 Bitcoins on Friday 27th June 2014, many bidders were looking for a bargain, hoping to buy the virtual currency at a discount and flip it later for a short term profit.
But the winner, the venture capitalist Tim Draper, is not seeking a quick hit. Instead, through a partnership with the Bitcoin exchange start up Vaurum, Mr. Draper intends to make the coins available for use in emerging markets.
“With the help of Vaurum and this newly purchased Bitcoin, we expect to be able to create new services that can provide liquidity and confidence to markets that have been hamstrung by weak currencies,” Mr. Draper said in a statement through Vaurum.
The United States Marshals Service, which organized the auction of the coins seized from the now defunct market Silk Road, confirmed on Wednesday that Mr. Draper won the auction. The Marshals Service announced on Tuesday that one bidder had won all the coins, but it did not identify the winner or disclose the winning bid.
Avish Bhama, the co-founder and chief executive of Vaurum, said the goal was not to dump the 30,000 coins on the open market.
Rather, he said that he and Mr. Draper hoped to expand Bitcoin’s use in areas of the world where access to the currency is difficult, including India, South America and parts of Asia.
“This is a very long-term thesis that we have where we want to increase the supply and facilitate the usage of Bitcoin in emerging economies,” Mr. Bhama said.
Mr. Draper was part of a group that invested $4 million in Vaurum in May. The company participated in a start up accelerator program, Boost VC, run by Mr. Draper’s son Adam Draper.
The Marshals Service said on Monday that 45 registered bidders had taken part in the auction and that the agency had received 63 bids. Interest in the auction is the latest indication that Bitcoin is gaining popularity. When it first appeared online in 2009, Bitcoin, created by an anonymous computer programmer, or group of programmers, appealed mostly to an anti establishment following that wanted to avoid the banking system and government regulation.
Like Mr. Draper, many entrepreneurs now see an opportunity, particularly in making financial transactions easier.
The Marshals Service said on Wednesday that it did not publicly discuss its internal auction processes. Regardless, experts said the fact that one participant bid high enough to take home all the coins was evidence that the auction had been a success.
Winner of Silk Road Bitcoin auction Tim Draper