Crypto's naysayers dismiss the currencies' social impact
During a recent Reddit “Ask Me Anything” session, Bill Gates stated that cryptocurrencies have contributed to human death “in a fairly direct way.”
Gates isn’t the first billionaire to disparage cryptocurrencies. Warren Buffett once called bitcoin a “joke.” His partner Charlie Munger took a similar stance, referring to it as "noxious poison" that the government should wipe out. The comments from Gates are especially disappointing, given that he built his fortune in technology.
However, a cursory glance through Gates’ past comments on the subject reveals an optimism that contradicts last week’s criticisms of digital currencies. Gates has previously referred to the bitcoin protocol as a “technological tour de force” and argued that bitcoin is “better than currency.” To be sure, cryptocurrencies have been used by unscrupulous actors at one point or another throughout their short history, but as the economy has matured, cryptocurrencies have already made a “sharp progression away from ‘sin’ and toward legitimate enterprises,” as one study notes.
Cryptocurrencies are uniquely anonymous, and this is an asset. The cypherpunks that started this movement understood that there is a significant difference between secrecy and privacy. In any free society, it is absolutely imperative that privacy is treated as a human right. Gates’ comments treat all market participants as potential criminals and all governments as fair and just arbitrators, when in fact this view is too dichotomous.
When weighing the societal value of cryptocurrencies, it’s only fair that we consider the range of economic and social challenges that blockchain technology is beginning to address.
The Silk Road (an online black market where transactions were made exclusively in bitcoin) may have been what captured the media’s attention in the past, but the bitcoin protocol’s first real killer app was the creation of an accessible and universal currency that was not subject to the will of any individual government or institution. Digital currencies with these decentralized traits are already becoming incredibly important for those who live in areas with poor financial infrastructure and extreme economic uncertainty.
Take, for example, the case of Venezuela. Over the last year, the bolivar has inflated by more than 4,000%, making it next to worthless when it comes to day-to-day transactions.
As Venezuela’s currency tanked, more and more citizens have used cryptocurrencies as a means not to speculate, but to take refuge. Bitcoin has let many Venezuelans make critical purchases, like medicine and food, where the bolivar has failed them. We saw this same phenomenon occur in Zimbabwe where, after the fall of Robert Mugabe, Zimbabwean bitcoin exchanges were flooded with purchases.
Beyond international politics, one does not have to look far to start believing in crypto use cases that transcend dark markets. The cryptocurrency phenomenon is growing at a breakneck pace and we are already seeing blockchain solutions emerge in nearly every industry, including advertising, healthcare, supply chain, remittance, and many more.
To take Gates’ comments at face value is to dismiss out of hand a $500 billion cryptocurrency market and the thousands of traders, scientists, engineers, academics, businesspeople and media professionals it employs. Crypto entrepreneurs have already pulled in over $2.5 billion in venture capital and $9 billion in crowdfunding, which indicates that important stakeholders believe in the disruptive potential of cryptocurrencies, even if Gates does not.
While it is much too early to say which use cases will prevail, these experiments are poised to change society for the better. It’s time to acknowledge that this field represents access to financial freedom to those who have been sidelined by the global economy for far too long. It’s only when this industry is treated as a long-term force that cryptocurrencies can be properly and fairly critiqued.