World’s fourth-richest person and possibly, your next best friend Bill Gates, has never been a fan of cryptocurrencies or NFTs. Speaking at a TechCrunch conference on Tuesday, the crypto atheist has extended his criticism of cryptocurrencies, and dismissed tech such as NFTs.
Whether he is right or wrong is for each one of us to decide, but Gate’s views seem to be quite similar to the ones, his best friend Warren Buffet has. The latter individual has been extremely dismissive of everything crypto, which is understandable given that his favourite investment strategy is to hold an asset for 100 years and then reap the 10% rewards.
The crypto non-believer
During the conference, Bill Gates said that Non-Fungible tokens (NFT) work on ‘greater fool theory’. In financial terms, the greater fool theory refers to the inflated valuation of assets whether that be stocks, real estate or indeed NFTs, distributed between the hands of foolish willing participants. He thinks such assets are crafted to evade tax and Government rules. During the interview, the tech billionaire threw a lot of shade on the new-gen asset that captures the zeitgeist of the Web3 generation. In his recent remarks, he shared that cryptocurrencies only increased in price when enough investors were willing to buy. “As an asset class, it’s 100% based on the greater fool theory – that somebody’s going to pay more for it than I do,” Mr Gates said.
And this is absolutely fine, because it is exactly how precious metals are valued.
Gates also slammed non-fungible tokens (NFTs), referring to Ape-themed collectibles such as the Bored Ape Yacht Club (BAYC) collection. “Obviously, expensive digital images of monkeys are going to improve the world immensely,” he said sarcastically.
BAYC is one of the popular and most expensive NFT collections, that has managed to attract billions of dollars. The Bored Ape collection has also been purchased by celebrities. Gates states that speculative overvalued assets are great until you can find another person to bid for them, though if there is no one to bid higher, the asset is as good as worthless. He went on to clarify that he is not involved in the space, and isn’t long or short on NFTs.
The recent market turmoil has not spared NFTs. The BAYC collection has seen a notable downfall in prices. For the first time in nearly a year, the price dropped below $100k. BAYC’s reached an all-time high price of $429,000 worth of ETH on April 29, but the price has dropped drastically, with the current floor price being around $83,000.
Bill Gates vs Elon Musk
Bill Gates has been vocal about the risk that comes alongside investing in the cryptocurrency space. Back in 2021, Gates criticized fellow billionaire and Tesla founder Elon Musk for promoting different crypto projects to retail investors who don’t understand the risks. When Elon Musk’s Dogecoin mania was in full swing, Bill Gates said, “I do think that people get bought into these manias specifically when they may not have much money to spare”. He also added, “My general thought would be that if you have less money than Elon, you should probably watch out.”
But his stance appears more pertinent, especially with the crypto sector facing criticism over failed projects like the Terra (LUNA) ecosystem crash, which saw millions of investors lose significant amounts of money.
Notably, Gates has backed the digital banking space, where he is an investor, stating that the sector is better than cryptocurrencies.
The traditional route of tangible investments
Gates stated that he is comfortable with his way of investing, which has clearly worked out for him over the years. “I’m used to farm-like asset classes, where they have output, or like a company where they make products,” he said.
Gates’s comment comes at a time when financial markets globally are in turmoil, and Bitcoin, which was born out of the 2008 recession, is faring no differently. The biggest cryptocurrency in the world is trading 69% below its all-time-high price achieved on November the 10th, 2021.
As he doubted, the crypto market crashed and is far below its heydays. So, this makes it clear where Bill Gates stands in the case of such financial products, ideas, and systems.