Bitcoin, Litecoin, Ethereum, and all the other cryptocurrencies are often described as part of a get-rich-quick fad, a diversion for wealthy or clueless investors. But none other than Bill Gates recently said that digital currencies have the potential to transform the lives of the world’s poorest.
In a video message for a forum on cryptocurrency, the Microsoft founder said that 2.5 billion around the world lack access to financial services, which deepens their poverty and prevents them from pursuing opportunities and growing their potential.
He said that expanding digital financial access should be a global humanitarian priority.
“If we were building a financial system from scratch today, we’d do it on a digital platform,” Gates said. “Digital can lower the cost of a range of transactions by as much as 90%, providing nearly universal access to innovative financial products and services.”
“Unfortunately, we don’t have that luxury of starting from scratch, so we have to show not only the vision to plan for this better digital future, but also the wisdom to manage a secure transition from the current system,” he said.
Gates went on to compare the potential of universal financial access to vaccines and high yielding crops, which have helped billions of people around the world.
Greater access to financial services would allow people to build up credit, accumulate savings, access loans to expand business operations, purchase insurance to protect against crop loss, and more. Research has shown that access to a bank account improves a family’s ability to pay for education, health care, food, and more.
Further, inclusion in formal financial systems can allow people to receive better government services, and obtain payments for work more reliably.
“Poor people do have assets — their intellect, their labor, their savings,” he said. “The problem is they don’t have the financial tools to capitalize on these resources.”
“They’re trapped in an inefficient cash economy that robs them of opportunities to insure themselves against risk to invest in there prolixity and to ultimately lift them out of poverty,” he added.
Over the past few decades, Gates has worked to end extreme poverty around the world through the Bill and Melinda Gates Foundation. The organization has disbursed $40 billion toward causes such as ending malaria, expanding girls’ education, and improving drinking water quality.
In the past, Gates’ has dismissed cryptocurrencies as a “bad investment,” but while the philanthropist may not think bBitcoin will overtake national currencies, he does see value in its digital foundation, which can be cheap and scaled around the world.
“Transforming the underlying economics of financial systems through digital currency will help those in poverty directly, and it will also support a host of other development actives, including health and agriculture,” he said.
“I see two priorities for the immediate future,” he added. “First to drive the policy changes to make sure that poor can get engaged at this level, and second we need a measurement system that tracks the progress toward drawing people in, not just to have accounts, but also to really benefit from financial activity.”
Disclosure: Bill Gates is the co-founder of the Bill and Melinda Gates Foundation, a funding partner of Global Citizen.
Editor's note: This piece has been updated to include a disclosure that the Bill and Melinda Gates Foundation is a funding partner of Global Citizen. We regret the oversight.