Bill Gates has high hopes for digital currency as an important banking tool for the poor. But Bitcoin isn't one of those currencies, he said in a Reddit AMA today. At least not in its current form.

Gates extolled the value of digital currency in his AMA last year as well, explaining that since many poor people in developing countries don't have access to traditional banking, it's not financially worth it for banks to put branches in areas where the amounts stored and transferred are so small, leaving the poor at a huge disadvantage when it comes to exchanging, saving, and accessing money.

Mobile banking costs almost nothing to process, so it actually is worthwhile for banks to provide the service. That means digital money offers an opportunity for mobile banking, and hence the Bill and Melinda Gates Foundation is so gung-ho about giving people more ways to store their money.

So why not Bitcoin? The billionaire philanthropist and redditor called it "an exciting new technology" in today's AMA, but he doesn't think it's a very good tool to make banking easier in emerging markets because it's so volatile and because it's anonymous:

We don't use bitcoin specifically for two reasons. One is that the poor shouldn't have a currency whose value goes up and down a lot compared to their local currency. Second is that if a mistake is made in who you pay then you need to be able to reverse it so anonymity wouldn't work.
Bitcoin has been touted as a potentially revolutionary banking tool for the poor, and it's likely Gates' remarks will rankle the community. But he did offer an alternative, highlighting the uses of local digital currency like Kenya's M-Pesa over anonymous cryptocurrencies:

The foundation is involved in digital money but unlike Bitcoin it would not be anonymous digital money. In Kenya M-pesa is being used for almost half of all transactions. Digital money has low transaction costs which is great for the poor because they need to do financial transactions with small amounts of money. Over the next 5 years I think digital money will catch on in India and parts of Africa and help the poorest a lot.
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Kate Knibbs’s Discussions
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borabored
Kate Knibbs
1/28/15 4:06pm
I'm excited to learn from the comments how this latest news is "actually good for Bitcoin."
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Jon
borabored
1/28/15 4:25pm
Here's why it is good for Bitcoin:

The two reasons Bill states are

1) anonymity

2) volatility

However, both of these are non-issues. Let me explain.

Bitcoin is not anonymous, but rather pseudo-anonymous. That is to say, it is anonymous, until you can attach a name to a wallet (public address). Once you do that, it's quite the opposite of anonymous; All of your transactions can be viewed in the blockchain. In fact, Coinbase and others are already making these associations. So, refunds are possible (though it would be a different procedure than the tradition system).

Second, and this point is more of my opinion, the current volatility that Bitcoin is experiencing is a function of market speculators. I'm talking about investors, Wall Street traders, and yes even Bitcoin enthusiasts like myself. Since more of these individuals exist in the market, rather than people that actually use Bitcoin to buy and sell things (65% of Americans have no idea what Bitcoin is), you see the "value" of Bitcoin fluctuate tremendously. Bitcoin is in its infancy, and guess what, volatility is a part of growing up.

If those two reasons are the only ones Bill can think of, Bitcoin is in fine shape.
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Holdencannan
Jon
1/28/15 5:04pm
seriously when the gawker family sinks their teeth in something and say they hate it there is no letting up. Don't waste your time defending bitcoin. If they bought it at a dollar they wouldn't be bashing it. Also, they conviently leave out the, equally, bright people who love the future of bitcoin.
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Kate Knibbs
Holdencannan
1/29/15 8:59am
(I don't hate Bitcoin)
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Holdencannan
Kate Knibbs
1/29/15 11:10am
It's just an observation, I only see snarky, negative posts about bitcoin. Personally, I would still be living life paycheck to paycheck without it so I am very thankful for it. And I think the idea of it is very.. Grand. If bitcoin ultimately fails, crypto currency as a whole will not go away. The success it has had so far is very impressive and should be applauded. And, yes, I do realize there is good and bad that goes along with its success.
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