Billionaire Bill Gates dismissed cryptocurrencies and NFTs as speculative instruments that rely on the “greater-fool theory” for their previous price jumps during a TechCrunch climate conference on Tuesday.
Amid a crashing market that has seen bitcoin fall more than 50 percent year to date, the philanthropist, founder of Microsoft MSFT , and long-time crypto critic called cryptocurrencies an asset class that is based on the belief that “someone is going to pay more for it than I do.” The greater-fool theory stipulates that one can still make money off an asset as long as others are willing to pay more.
The danger? When no one is willing to pay a higher price, leading investors with worthless assets.
With the crypto markets in decline and Bitcoin’s BTC price falling to its lowest values since December 2020, Gates’ assertion could be shared by many.
“I’m not involved in that,” Gates said “I’m not long or short in any of those things.”
Gates, the fourth-richest person in the world with a net worth of $122.1 billion, said that he prefers investing in assets with tangible outputs, like a farm, or one where they make products, like a company.Gates is also generally skeptical of the anonymity prevalent within the crypto space, one where “at its heart” you “avoid taxation or any kind of government rules,” he told listeners of the TechCrunch climate summit.
Gates joins billionaire and crypto skeptic Warren Buffet, who claimed Bitcoin is “probably rat poised squared” in 2018 , in the movement of high-powered individuals not buying into the crypto hype.
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“I like investing in things that have valuable output.The value of companies is based on how they make great products.The value of crypto is just what some other person decides someone else will pay for it, not adding to society like other investments,” he said.
In the talk, Gates singled out non-fungible tokens (NFTs) as particularly speculative.When asked about the Bored Ape Yacht Club (BAYC), one of the leading NFT collections, Gates turned to mockery.“Obviously expensive digital images of monkeys are going to improve the world immensely,” he said sarcastically.
The floor price for a BAYC, seen as a leader in the NFT markets, fell below $100,000 on Tuesday, levels not seen since April 2021.The floor price for an NFT collection represents the cheapest amount one can pay to buy an asset in the series.The price for entry-level Bored Ape NFTs dropped to 79.266 ETH ETH ($96,552 as of writing) from an all-time high of 153.582 ETH ($429,274 as of writing) in late April, according to data from NFT Price Floor .
Gates also addressed the current economic reality during his talk, saying that things are “changing probably as rapidly as [he’s] ever seen in his lifetime.” The markets await the Federal Reserve’s public meeting today, where they are expected to increase interest rates.
“We’re going to go into a winter period of a lot of these things,” he predicts.
Maria Gracia Santillana Linares.