Why Bill Gates Is Blasting Crypto… Again

Gates got real about his thoughts on cryptocurrency at a recent event.

Co-founder of Microsoft, Bill Gates, shared negative comments regarding cryptocurrency on June 14 at a climate change event hosted by TechCrunch in Berkeley, California. Although this is not the first time he's voiced disapproval for crypto, his most recent criticism included claims of some well-known crypto projects, such as NFTs, or non-fungible tokens, being "100% based on greater fool theory." 

Gates used sarcasm when referring to Bored Ape Yacht Club NFTs stating, "Obviously, expensive digital images of monkeys are going to improve the world immensely." He also made comments supporting more tangible asset classes rather than crypto and aligned with oppositional crypto statements made by Berkshire Hathaway's CEO and chairman Warren Buffett. 

The greater fool theory

The greater fool theory, related to the "market bubble," attempts to explain why prices of specific assets rise dramatically and increase much beyond their actual value. The theory states that during a market bubble, investors can purchase overvalued assets and sell them for a higher price later, making them a profit. Some recognizable examples of significant market bubbles include real estate and tech stock. 

The name of the theory comes from the idea that one can always make money by finding a "greater fool" who is willing to pay a higher price for an asset, disregarding its true fundamental value. Gates made his stance on the theory and crypto clear, saying, "I'm not involved in that, I'm not long or short any of those things."

Past crypto criticism 

Audiences have heard Gates criticize cryptocurrency before. Last year he referenced Tesla CEO Elon Musk's very public support for crypto, cautioning investors to be aware of crypto's volatile price and not to invest based on Musk's influence. "My general thought would be that if you have less money than Elon, you should probably watch out," Gates said about buying cryptocurrency. In 2018, he also boldly accused crypto of being appealing to criminals and used to buy drugs in a Reddit AMA.

The bottom line

Cryptocurrency is a subject of high opinion for many billionaires. Some, like Musk, are huge fans. But others align more with the opinions of an older generation of investors, such as Warren Buffett and his business partner Charlie Munger who called it a "venereal disease" at a February Daily Journal Corporation shareholders meeting. As for Gates, he's taken a clear supportive stance with billionaires like Buffett, communicating skepticism for crypto and preferences for tangible output and products.