Add Bill Gates to the list of skeptics when it comes to cryptocurrencies.
During his sixth Reddit “Ask Me Anything” session, the co-founder of Microsoft Corp. (MSFT) and one of the richest men in the world, was asked about his opinion on cryptocurrencies. His response: "The speculative wave around ICOs and cryptocurrencies is super risky for those who go long."
Gates isn’t the first high profile person to express doubts about cryptocurrencies, which began garnering a huge amount of interest last year. In 2017, bitcoin started out trading around $1,000 and by December had surpassed $20,000.
One of the allures of cryptocurrencies is that they are anonymous and unregulated. But that anonymity has piqued the interest of regulators around the globe. With more governments around the world looking at regulating the market, the price has been pressured this year.
“The main feature of crypto currencies is their anonymity. I don't think this is a good thing,” Gates said during the Reddit session. “The government's ability to find money laundering and tax evasion and terrorist funding is a good thing. Right now cryptocurrencies are used for buying fentanyl and other drugs so it is a rare technology that has caused deaths in a fairly direct way.”
While Gates acknowledged a user’s argument that cash can also be used to purchase illegal drugs, he said cryptocurrencies make it easier. "Yes — anonymous cash is used for these kinds of things, but you have to be physically present to transfer it, which makes things like kidnapping payments more difficult," Gates wrote. (See also: Steve Wozniak: Bitcoin Scammer Stole My Cryptocurrency)
Gates isn’t the only one to warn about the risks and dangers associated with virtual currencies. Take Vanguard, one of the world’s largest fund companies, for another example. Its global chief economist, Joe Davis, predicted in a recent blog post that bitcoin is headed for zero. The way Davis sees it, calling bitcoin and other cryptocurrencies an actual currency is a bit of a stretch. On the one hand, these instruments qualify as a legitimate currency in that they are a unit of account and a medium of exchange, even though the number of vendors that currently accept cryptocurrencies is limited. But Davis said that bitcoin is not a store of value because of its volatility. Few vendors can accept a currency when the value is moving dramatically either up or down on any given day or even hour, hurting adoption and acceptance. "Even if cryptocurrencies qualify for niche purposes, their prospects seem dubious," wrote Davis in the post.
Economist Mohamed El-Erian said in December that he does not see bitcoins "attracting the amount of adoption that is implicit in the price today," according to CNBC.
JPMorgan Chase (JMP) Chief Executive Jamie Dimon made headlines last year when he called bitcoin a “fraud." Since then he has said he regretted making that statement and praised blockchain, but a closer look at his words revealed he did not actually reverse his stance.
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