“It’s a pure ‘greater fool theory’ type of investment” – Bill Gates
Bill Gates’ is a name known to millions around the world. He is the co-founder of Microsoft and a tech Moghul in his own right. When today the world is trading in Bitcoins, Gates seems to be really averse to the concept of cryptocurrency. He told CNBC’s Squawk Box in an interview recently, “As an asset class, you’re not producing anything and so you shouldn’t expect it to go up,” he said. “It’s kind of a pure ‘greater fool theory’ type of investment.” What he means is that cryptocurrency is not a tangible asset but a digital code. According to this theory in economics, there are some good whose price isn’t determined based on its value but instead, the collective opinions and beliefs of the people trading in the stock market.
What Gates is hinting at is the instability of this thing. Due to its dependence on people’s opinions in the market, it can fluctuate at any time. His only experience with cryptocurrency was when he received it as a birthday present. He, however, decided to sell it soon after. He said, “Bitcoin and ICOs, I believe completely [they’re some] of the crazier, speculative things.” It is evident that Gates is strongly against Bitcoins but he has acknowledged that the Blockchain technology is quite useful and can actually be of some benefit. It is a kind of technology that provides a secure two-way connection allowing for transactions to be completed and effectively eliminating the need for a bank. A digital revolution of this manner can topple over the existing system and thus it is completely understandable why Gates seems apprehensive about the entire thing.