on the crypto
Microsoft co-founder Bill Gates made negative comments about cryptocurrencies on June 14 at a TechCrunch climate change event in Berkeley, California. While this is not the first time he has expressed disapproval of cryptocurrencies, his most recent criticism included claims of some well-known cryptocurrency projects, such as NFTs, or non-fungible tokens, which are "100% based on the greater fool theory. ".
Gates used sarcasm when referring to Bored Ape Yacht Club's NFTs by stating, "Obviously, expensive digital monkey images will improve the world immensely." He also made comments in support of more tangible asset classes rather than cryptocurrencies and aligned himself with anti-cryptocurrency claims made by Berkshire Hathaway CEO and President Warren Buffett.
“Greater fool”: the theory
The “greater fool” theory, linked to the “market bubble”, attempts to explain why the prices of certain assets soar, far exceeding their actual value. The theory states that, during a market bubble, investors can buy overvalued assets and then resell them at a higher price, making a profit. Some recognizable examples of significant market bubbles are real estate and technology stocks.
The name of the theory derives from the idea that you can always make money by finding a "big fool" willing to pay a higher price for a good, while ignoring its true fundamental value. Gates clarified his position on theory and cryptocurrencies, stating, "I'm not involved, I'm not long or short on any of these things."
Criticism of cryptocurrencies in the past
The public has already heard Gates criticize cryptocurrencies in the past. Last year he referred to Tesla CEO Elon Musk's public support for cryptocurrencies, warning investors to be aware of the volatility of cryptocurrency prices and not to invest based on Musk's influence. “My general thinking is that if you have less money than Elon, you should probably be careful,” Gates said of buying cryptocurrencies. In 2018, in an AMA on Reddit, he also boldly accused cryptocurrencies of being attractive to criminals and being used to buy drugs.
Conclusions
Cryptocurrencies are a topic of great interest to many billionaires. Some, like Musk, are big fans. But others align more closely with the views of an older generation of investors, such as Warren Buffett and his business partner Charlie Munger, who called them a "venereal disease" at the February Daily Journal Corporation shareholder meeting. As for Gates, he has taken a position of clear support for billionaires like Buffett, communicating skepticism towards cryptocurrencies and preferring tangible products.
