Love it or hate it, Microsoft co-founder Bill Gates has come out with a statement that most hard-working Americans and investors will agree with – cryptocurrency is based on the Greater Fool Theory, much like other respected investors have been saying for years.
Speaking on Tuesday at TechCrunch on climate change, the 66-year-old billionaire said he believes cryptocurrencies and NFTs are “100%” based on the greater fool theory.
Gates’ view is similar to that of legendary billionaire Warren Buffet. In April, Buffett said in an interview that he would not take bitcoins if they were offered to him at $25 per bitcoin. Buffett added that bitcoin has no intrinsic value and that cryptocurrency “doesn’t produce anything.”
Gates described the crypto and NFT phenomenon as something “100% based on the greater fool theory,” referring to the idea that you can make money during a market bubble by buying overvalued assets and later selling them at a profit sold because it will always be possible to find someone (The Greater Fool) willing to pay a higher price.
Gates even joked that “expensive digital images of monkeys” would “improve the world immensely,” referring to the much-hyped Bored Ape Yacht Club NFT collection.
NFTs are tokens that cannot be exchanged for one another. They are often touted as a way to prove ownership of digital assets such as art or sports collectibles. “I’m used to asset classes … like a farm where they produce or like a company where they make products,” Gates said.
As for crypto, “I’m not involved in that,” Gates added. “I’m neither long nor short on any of these things.”
Gates is not alone. Late last year, the Gravel Institute made a documentary about Bitcoin and called it “a scam,” akin to a Ponzi scheme. In the video, narrated by Doug Henwood, a Wall Street writer, economist and author, Henwood compared Bitcoin to an Italian scammer and scammer named Charles Ponzi.
Today, Ponzi has become synonymous with an investment scam that promises significant returns to investors. The operators of the Ponzi scheme keep their scam going by attracting new customers. Once new investors put their money into the program, the money is collected and used to pay the original investors as “returns”.
Henwood describes Bitcoin as a digital token with no physical or government backing, run by a global decentralized network of computers. Henwood said everything you hear about “peer-to-peer technology” and “blockchain” really just explains how bitcoin works as a currency.
“But despite the name, bitcoin is not used much as a currency at all. When people buy bitcoin, they rarely use it to buy goods and services. You are really buying access to a Ponzi scheme. Trade transactions account for just 1.3 percent of Bitcoin’s economic activity. The rest is speculation – people are buying it just because they think it will go up.”
Meanwhile, the price of the world’s most popular cryptocurrency fell as low as $20,111 in early trading today before bouncing back later in the afternoon.
Below is Doug Henwood’s Bitcoin Truth video.