Speaking from Omaha, Nebraska, during Berkshire Hathaway’s annual shareholders’ meeting, Bill Gates called Bitcoin and other cryptocurrencies an investment that is subject to the ‘greater fool theory’.
The term is used to describe an asset that is resembling a game of hot potato. The investors that manage to cash in on such a type of investment are the ones who end up cashing out on time. The statement from the Board member of Warren Buffet’s Berkshire Hathaway comes as the total market cap of cryptocurrencies dropped from over $813 billion to about 438 billion as of today.
Bill Gates’ opinion closely resembles that of his colleagues on the company’s board, Warren Buffet and Charles Munger. The old-school duo called Bitcoin “rat poison” and “turd” earlier during the event.
Gates Would Short Bitcoin
Even after Bitcoin tanked in recent months and is currently trading lower by over 50 percent from the top, Bill Gates stated that he would short the cryptocurrency. He elaborated that he was gifted some bitcoin for his birthday, but sold it a couple of years later.
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“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,” Gates shared speaking during CNBC’s show “Squawk Box.”
Aside from Bitcoin, Gates also singled out ICOs as some of the riskiest and speculative bets available to the public. The opinion shared by the founder of Microsoft is not very surprising considering he shared a negative opinion on Reddit that was widely discussed in February.
Blockchain Has Potential
While Bill Gates shares the disregard for cryptocurrencies, he did add that blockchain technology is valuable. The elimination of the need for an intermediary is opening the door for applications in supply chain management, trading, and other areas.