by Joseph Young
On CNBC’s Closing Bell, billionaire investor Tim Draper, who has funded some of the most successful technology companies to date such as SpaceX, Tesla, and Uber, stated that bitcoin is the most secure place to store money due in part to the gaps in security of banking systems which major financial institutions have failed to fill.
Most Secure Money
Throughout the past decade, many of the major banks and financial institution fell victim to large-scale hacking attacks due to the hundreds of billions of dollars stored in systems that still leverage outdated infrastructures.
In December 2017, merely five months ago, a newly discovered hacking group known as MoneyTaker stole millions of dollars from 20 major banks in the US, UK, and Russia by conducting fraudulent transactions, withdrawing cash from clients, and extracting sensitive corporate data.
Group-IB, a cybersecurity firm, told ZDNet that the hacking group was able to gain access to the core systems of banks for more than two years, stealing funds and information from companies in California, Utah, Oklahoma, Colorado, Illinois, Missouri, South Carolina, North Carolina, Virginia, and Florida.
“MoneyTaker uses publicly available tools, which makes the attribution and investigation process a non-trivial exercise. In addition, incidents occur in different regions worldwide and at least one of the US banks targeted had documents successfully exfiltrated from their networks, twice,” Group-IB head of intelligence said in December 2017.
Investors in bitcoin and decentralized financial networks like Tim Draper, Peter Thiel, and Twitter CEO Jack Dorsey have expressed their concerns regarding centralized financial systems and their hackable nature. These features create an unsafe ecosystem for both individuals and businesses to store their money.
Draper emphasized that hackers have been creating holes in security and IT infrastructures of banks over the past few years and the inability of banks to fill the gaps in their security, as seen in the case of MoneyTaker attacks, will lead to the loss of fiat money owned by their clients and investors.
“It is a far better currency that the fiat currency. I mean right now, your banks are being attacked all the time. The hackers are poking holes in your banks and going after your fiat money. The bankers are pounding away trying to keep the hacks away from they’re being hacked all the time. No one has ever hacked the bitcoin blockchain. It is the most secure place to put your money,” Draper said.
Draper Responds to Critics
Throughout the past week, influential figures and billionaire investors in the industry of finance and technology including, Microsoft chairman Bill Gates and Berkshire Hathaway CEO Warren Buffett have strongly criticized bitcoin. Their most significant claims are that it is overvalued and it cannot be considered as an emerging asset class.
Gates publicly stated he would short the value of bitcoin if he could and Buffett said bitcoin is “worse than rat poison squared.”
In response to the strong criticism, Draper explained that investors who possess large amounts of fiat money or US dollars will naturally become defensive against any positive claims or arguments on the side of bitcoin or any other decentralized financial network. Draper added:
“Those are people who have lots of fiat dollars, all of them have lots of fiat dollars. They are very happy with their fiat dollars. They’re not thinking, ‘hey, there is a major revolution taking place that is now allowing for a better currency, one that is more secure, that is decentralized, that is more effective, more useful, it’s global, it’s open to everyone, it banks the unbanked, it allows people to send their money to their families in the Philippines or Mexico without any big friction.’”