Drapers belief in Bitcoins potential to have a strong and positive impact on the world economy also illustrates the significant attention he has paid to how governments interact with cryptocurrency and blockchain technology. Given his long career of finding business opportunities by improving upon inefficient and costly government projects like rockets, it is only natural that he is attracted to opportunities to use the blockchain as a way to reduce government spending. Draper was the second e-resident of Estonias blockchain – based e-Residency program — the first blockchain use case for virtual governance. Important things that can be done through virtual governance are healthcare, social security, pension, welfare and workers compensation, to name a few. Furthermore. Draper believes Estonias program will be a model other nations will follow. “Today, a lot of what governments actually do is virtual. Some of it is land based like border protection but I think thats getting less and less important although someone might create a war just to make people believe it is important.” Where Draper sees less of a need for central governing bodies, he recognizes more need at the local level of government within towns and cities, where leaders can focus on individual citizens within their areas.
For Draper, the consequences of Estonias virtual governance is a major breakthrough in world politics. “It means governments can now reach across borders to compete for virtual citizens. In the next five to ten years were going to see governments move from buyside to sellside. Governments will move from thinking they control all that they purvey to strategizing how they can get more people to become citizens of their country.” By Drapers account, just as companies have to provide competitive service to their customers, governments too will
Need to provide competitive service to their constituents.
However, he is doubtful of government-backed cryptocurrencies (GBCs). GBCs are different from a government blockchain ecosystem such as Estonias in that they are the cryptocurrency equivalent of a national or fiat currency, while Estonias estcoin is simply a transaction token for government – issued services. China. Russia and Venezuela have all announced plans to create or at least experiment with their own cryptocurrency. Draper draws a hard line on the economic use for a GBC to compete with bitcoin and other cryptocurrencies in that they do not possess the fundamental value of cross-border transactions. “If a government can still confiscate a currency. I dont see it offering any real value for the consumer.”
Draper pointed to Japan as the model for how governments should work with, instead of against, cryptocurrency.
In April 2017. the Japanese government enacted the Virtual Currency Act as an amendment to their Payment Services Act. In it. regulators clarified that bitcoin is an asset and payment method that will be regulated by Japans Financial Services Agency (FSA). A few months later, the country opened markets internationally by removing a consumption tax for foreign investors.
To a large extent. Drapers views on cryptocurrency rely on what his accumulated failures and successes throughout his business career have shown him.
“Its all about the customer.” Draper said. “This is true for every industry, including government. Those companies and governments that provide good service to their customers, such that the customers become the salesforce. are the
Ones that do well. The key is to have your customers so delighted with a product that they go out and promote it to all of their friends.”
Overall. Draper believes countries will do a lot better economically if they treat bitcoin as a currency that people can use.
“Governments should not be thinking of cryptocurrency as a threat to their existence.” he explained. “Overall, a country will do a lot better financially if it recognizes bitcoin as a currency that can open entrepreneurial opportunities and prevent brain drain.”
Draper suggested that the current U. S. policy of having to report capital gains on every bitcoin purchase over $200 is a grave error that is preventing economic growth. However, along with lauding smaller governments such as those in Singapore. Estonia and Malta. Draper was complimentary on how the U. S. Securities and Exchange Commission (SEC) has handled cryptocurrency. Particularly, how the SEC has held off going after ICOs except under the most obvious cases of fraud.
“This is a good idea because nobody can be sure where [the cryptocurrency and blockchain technology space] is going from here.” he said.