Billionaire businessman Tim Draper tells businesses to hold onto Bitcoin after SVB. Draper states that cryptocurrencies are a good option for holding excess cash, as they should be a long-term asset that can be easily sold in times of crisis.
“The leading cryptocurrency Bitcoin is a protection tool”
Billionaire venture capitalist Tim Draper believes businesses should hold ‘at least two payrolls’ worth of cash’ in Bitcoin (BTC) and other cryptocurrencies. Draper does not specify the percentage allocated to Bitcoin versus altcoins. However, he describes BTC as a hedge against worsening economic conditions.
Draper says the collapse of banks like Silicon Valley Bank (SVB) and Silvergate Bank demonstrates the need for contingency plans to ensure a business always has cash to sustain itself and its employees. Cryptokoin.com’ As you’ve followed on from , the bank crashes resulted in the intervention of the governments. Draper adds that governments over-regulate the banking industry and only micro-manage it, harming its long-term health.
Draper also says that businesses need to diversify and localize in order to remain sustainable in the current economic conditions. He says such bank failures will become more likely if governments continue to overprint money and whip the interest rate to combat the resulting inflation. Draper states that government takeovers and lender bailouts predispose governments to bankruptcy, and that Bitcoin offers a potential solution. In this context, he makes the following statement:
Bitcoin is a countermeasure against a domino on banks and weak over-controlling governance. Cryptocurrencies are a great option for holding excess cash, as they are a long-term asset that can be easily sold in times of crisis.
Recommendations for cash management from Draper
Keeping excess cash in crypto was one of many recommendations Draper has shared on cash management for businesses struggling with the bankruptcy of multiple US banks in recent weeks. Draper advises businesses to diversify their risks and keep their short-term cash in two banks, one local and one global. He says the amount should be enough to sustain the business for at least six months.
Additionally, he advises businesses to include returns and capital gains in their plans, as interest rates and inflation are also high at the moment. That’s why returns on a company’s cash assets can be ‘mission critical,’ he says. Starting from this, he records:
Normally the purpose of a company’s treasury department is mostly to protect money. But these are not normal times.
He also recommends that businesses ensure that the customers and suppliers they work with are healthy and not causing unforeseen problems. Draper also recommends having ‘candid and honest’ talks with interested parties. Other recommendations include protocol tips on being wary of hacking and phishing, and what to do if this happens. Draper also adds to his advice for businesses to adopt decentralization and move away from the corporate ladder by creating layoffs to ensure decisions are made efficiently.