Bill Gates has invested millions of dollars in all kinds of businesses and start-ups. The technology mogul, however, admits to holding zero cryptocurrencies. Notwithstanding the collaboration between Bill and Melinda Gates and Ripple to support the unbanked, Bill Gates dismissed Bitcoin and other digital assets as speculative risks. All based on the “greater fool theory” type of investment.
Gates admitted to owning some bitcoins after receiving them as a birthday gift during an interview with Bloomberg. The billionaire also noted that he had sold them a while back. During a number of comments, Bill Gates exchanged different perspectives on emerging technology.
Gates said he would bet against Bitcoin in 2018. He said that if there was an easy way to get a bitcoin short, he would do it. While speaking to Squawk Box, he found out that speculation about earning anything from the asset class should be proportionate to a certain amount of productive input.
“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 ‘the greater fool theory’ type of investment,”
Warren Buffett, a consistently ranking business mogul in the Forbes list of billionaire explained the above phenomena in an interview with Yahoo Finance. Buffet said :
“You’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more.”
The greater fool theory amusingly denotes the following:
“Yes, I am a fool for buying this asset right now, but I’m convinced i’ll find a greater fool to sell it to later on for more”
Well, the speculative part of this theory could work but its only an investment vehicle on assets with no intrinsic value.
“Bitcoin and ICOs, I believe completely [they’re some] of the crazier, speculative things”
The Microsoft founder also pointed out the role of Bitcoin and other digital assets in driving criminal syndicates. He said that bitcoin was once used in a global fentanyl ring, an epidemic that has triggered overdoses in the US and other countries.
In 2017 for instance, the United States Department of Justice listed several deaths related to fentanyl. At the same time, the department of justice promised to shut down AlphaBay, a darknet market.
When a commentator told Bill Gates that the US physical dollar is also used in global trade deals; he suggested that anonymous cryptocurrencies make such criminal dealings more efficient and difficult for authorities to track.
“Yes – anonymous cash is used for these kinds of things but you have to be physically present to transfer it which makes things like kidnapping payments more difficult”
Meanwhile, Gates has a point about these criminal dealings. For instance, Bitcoin makes it easy for criminals to collect ransom anonymously. They don’t have to physically or virtually represent their identity. Hackers are also penetrating into exchanges and crypto wallets only to get away with massive amounts of money. Of course, all these represent the downsides of cryptocurrencies just as there are downsides with other technologies.
Gates’s only bitcoin problem and its effect is the privacy that technology offers. In 2014, Gates posted a bitcoin-based optimist outlook. He referred to the digital asset as a better currency you can trade-in without actually being in the same place.
“Bitcoin is better than currency in that you don’t have to be physically in the same place and, of course, for large transactions, currency can get pretty inconvenient,”
Nonetheless, most people find anonymity as Bitcoin’s dynamics of financial freedom, decentralization, and control against dystopic policies. Bitcoin’s value proposition highly contributes to a cashless society and the potential of a decentralized future.
Meanwhile, Gate remains enthusiastic about Blockchain technology rather than cryptocurrencies. The Bill & Melinda Gates Foundation awarded a $100,000 grant to Bitsoko back in 2015. Furthermore, the foundation’s partnership with Ripple is implementing the blockchain to provide banking solutions to the unbanked.
Gates remains interested in the blockchain technology behind bitcoin, the digital ledger where transactions are confirmed and recorded. Gates said:
“There’s some really good technology in terms of sharing databases and verifying transactions that is talked about as blockchain, that is a good thing,”