Bill Gates calls out cryptos & NFTs, says asset class is ‘100% based on the greater fool theory’

Microsoft Co-Founder Bill Gates has reinforced his position as a crypto atheist. At the recently conducted ‘TechCrunch Sessions: Climate 2022’, the billionaire took a dig at cryptocurrencies and NFTs, unequivocally expressing his lack of faith in the asset class.

Gates described cryptocurrencies as “100 percent based on some sort of Greater Fool Theory.” The Greater Fool Theory states that the market will always have investors foolish enough to shell out money for an overvalued investment.

“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, so not adding to society like other investments,” he explained.

Bill Gates also tore into the Bored Ape Yacht Club (BAYC) while conversing about the exorbitant pricing of Non-Fungible Tokens (NFTs). “Obviously, expensive digital images of monkeys are going to improve the world immensely,” he said sarcastically.

The billionaire added that he is familiar with traditional asset classes and investments, citing the example of a “farm where they have output” or a “company where they make products”.

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But when asked about cryptocurrencies, he confirmed that he is not involved with the asset class. “I don’t own any. I like investing in things that have valuable output,” he said. His statements echoed the sentiments of Berkshire Hathaway boss and ace investor Warren Buffett, who is of a similar disposition.

Buffett, often referred to as the Oracle of Omaha, recently stated that he wouldn’t buy the entire supply of Bitcoin, even if it was offered to him for a throwaway price of $25. “It doesn’t produce anything,” said Buffett. “What would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything,” he added.

This is not the first time that Gates has used similar words to describe crypto. He has been a vocal critic of the asset class for a long time now. In 2018, when CNBC interviewed him, along with Buffett and Charlie Munger, Gates said, “As an asset class, you’re not producing anything, and so you shouldn’t expect it to go up. It’s kind of a pure ‘greater fool theory’ type of investment. I would short it if there was an easy way to do it.”

At the time, Gates was also asked, “What’s the one tech innovation the world would be better off without?” He promptly responded, “The way cryptocurrency works today allows for certain criminal activities. It’d be good to get rid of that.”

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However, it must be noted that the Microsoft boss is not against the underlying blockchain technology. In May 2020, Microsoft patented a crypto-mining technology that harnesses the energy expended in physical activities, brain waves, and even body heat in executing online tasks such as searches or communicating with a chatbot. “A user can solve the computationally difficult problem unconsciously,” the patent read.

Bill Gates has been issuing subtle warnings to cryptocurrency investors as well. In an online interview with Bloomberg in February 2021, Gates was asked to share his thoughts on crypto price movements based on Elon Musk’s tweets. To that, Gates explicitly responded with, “Elon has tons of money, and he’s very sophisticated, so I don’t worry that his bitcoin will randomly go up or down. People get bought into these manias, who may not have as much money to spare. If you have less money than Elon, you should probably watch out,” he had warned then.