The co-founder of Microsoft gave his vision of bitcoin, cryptocurrencies and fundraising in this sector (ICO) on Tuesday, February 27 during an AMA session (“Ask Me Anything”, or “ask me anything” ) on the Reddit social network. In his comments, Bill Gates mainly attacked the “anonymity” offered by cryptocurrencies and delivered a very negative view of this technology.
Here is what he said: “The main problem with cryptocurrencies is their anonymity,” he explains. “I don’t think that’s a good thing. It is positive that governments are hunting down money laundering, tax evasion and the financing of terrorism. Currently, virtual currencies are mostly used to procure fentanyl and other drugs. From a certain point of view, one can think this technology kills. I think speculation around ICOs and cryptocurrencies is very risky.”
Why it’s imprecise on anonymity
It is said of bitcoin, wrongly, that it allows anonymous transactions. This is incorrect because they are freely available on the blockchain (the online ledger). But you will not see any name there because the traces of the transactions refer to encrypted addresses, themselves linked to individuals or companies. A bit like leaving your account number lying around on the Internet. On these addresses we find all sorts of interesting information: amount of transactions, cryptographic key of the recipient of the funds, etc. We will therefore not say that bitcoin is anonymous but pseudonymous. An expert will be able to trace the transactions. Monero or Zcash, on the other hand, are cryptocurrencies that offer a very high level of confidentiality.
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Why it’s imprecise about drug trafficking
If Bill Gates talks about fentanyl, it’s because this opioid substance is responsible for a wave of overdoses in the United States. It can be found on some darknet platforms where payments are made with cryptocurrencies, but not only. The largest, AlphaBay, was shut down in July 2017. This comment by Bill Gates is criticized by a Reddit user who reports that the dollar is also used in drug trafficking. Here is what the billionaire replies: “Yes, cash is used for this type of thing but you must be physically present to carry out the transaction. This is not the case for cryptocurrencies and it makes interceptions more difficult for law enforcement.”
In fact, Bill Gates is not totally wrong. Yes, it is possible to carry out fraud with bitcoin and it tends to facilitate it compared to cash. Nevertheless, this type of fraud is more broadly symptomatic of the digital world. Even before the creation of bitcoin, it was possible to hack bank cards on the Internet and buy illegal products. Should the Internet be banned?
Why It’s Wrong About Terrorism
A british treasury study dated October 2015 qualifies as “relatively low” the risks of using cryptocurrencies in the financing of terrorism and in money laundering. Early 2016, a report drawn up by Europol, a structure for the exchange of information between the European criminal police, already stipulated that “the use of bitcoin for terrorist activities is not confirmed by the police”, in particular with regard to the financing of the group. Islamic State. Overall, according to Europol, exchanges linked to illegal trade do not represent more than 3% to 6% of the total volume of transactions carried out in bitcoins. Cash is a much more suitable instrument for illegal transactions: INSEE indicated on February 1 that drug trafficking represented 0.1% of French GDP (i.e. 2 to 3 billion euros) and that it was mainly carried out in cash.
Bill Gates is not alone in making this type of statement. Before him, the Minister of Finance Bruno Le Maire had stated a series of factual errors on cryptocurrencies.