Why Bill Gates Is Wrong About Cryptocurrencies

By Rob Viglione of ZenCash

Bill Gates' recent criticisms of cryptocurrencies — in which he suggested that blockchain technology facilitates financial crime and drug dealing, and has directly caused people harm — are extremely disappointing. Still, Gates is not the only billionaire who has come out as strongly opposed to the new technology. Warren Buffett has called bitcoin a "joke," while his partner Charlie Munger referred to it as "noxious poison" that the government should wipe out.

In this instance, the common thread between Buffett and Munger is their condemnation of a new technology they might not fully understand. While their perspective is predictable — both Buffett and Munger have made their fortunes largely without embracing the new economy — one might expect that Bill Gates, who earned his billions in the tech industry, would be a bit more open-minded.

Gates claims that cryptocurrencies only have value in dark markets, that they facilitate drug purchases that lead to human death. What he fails to understand is that that the entire cryptocurrency movement originated from a handful of cypherpunks advocating the need for privacy. These cypherpunks understood that there is a difference between secrecy and privacy, and that in any free society, the latter should be treated as a human right.

It is imperative to consider the scope of the social and economic challenges that are being tackled through the adoption of blockchain technology. The facilitation of drug sales was not bitcoin’s first killer app, but rather the real innovation was its creation of a universal currency that does not recognize borders or discriminate access to those less fortunate. This capacity of cryptocurrencies is particularly critical to those who live in regions like that are plagued by financial instability.

In Venezuela, for instance, the bolivar has inflated by more than 4,000% over the last year, according to the country’s National Assembly, making it nearly impossible for citizens to use it to purchase basic necessities like food and toilet paper. The benefits of cryptocurrency adoption are clear in places like Venezuela where the national currency has become devalued and can no longer be used as a reliable means of transaction nor as a store of value.

The cryptocurrency industry is exploding, turning into a rapid incubator for new ideas, some of them marginal improvements using the new tech, while others are ambitious attempts to disrupt old industries and add value to countless lives around the world. This movement has grown into a $500 billion industry that employs tens of thousands of bright scientists, engineers, academics, business people, marketers, media and public relations professionals, and many other supporting roles. Entrepreneurs in the space have received over $2.5 billion of venture capital and $9 billion in crowdfunding.

These numbers signal that where critics like Gates, Buffett, and Munger see criminals and scammers, other influential stakeholders see cryptocurrencies with genuine value propositions.

Cryptocurrencies and tokenized blockchain platforms have the potential to radically change the economics behind a range of business models and social paradigms. For those paying attention, these are exciting times.

As Naval Ravikant, founder of Angel List, recently noted, “Young Bill Gates would be building a blockchain company right now."

It’s too early to tell which ventures will succeed, but society will invariably benefit from these experiments. Innovation often comes from what appears to be chaos to those who aren’t paying attention to the details. It’s time we lay these claims to rest and acknowledge that cryptocurrencies can offer a significantly improved level of financial freedom to those in the world who need it most.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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