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Warren Buffet, Charlie Munger and Bill Gates all have one thing in common – except for being three of the wealthiest people alive, they all three proclaim that Bitcoin and other cryptocurrencies are “rat poison”.
During the Berkshire Hathaway annual shareholders’ meeting, the founder of Microsoft Corporation, Bill Gates expressed his clearly negative comments on Bitcoin and other digital currencies. He said that investing in such assets is simply because of the “greater fool theory”.
The Greater Fool Theory is used to describe a particular investment whose price is driven up not by the real value it holds, but is boosted by the beliefs and irrational expectations of the market. It is more or less used to portray how emotions and irrationality play out in the market and how investors who get in on the game early and manage to profit “fool” others that the asset in question will go up and others will profit too. In a sense, the more people are willing to pay a higher price for Bitcoin, the more valuable it becomes.
Both Warren Buffet and Charlie Munger have also expressed their sceptical attitude towards Bitcoin and cryptocurrencies. On their annual meeting at Omaha, they referred to Bitcoin as “rat poison”. This is not the first time Warren Buffet has commented on the eventual crash of the people’s currency. He has said multiple times that since Bitcoin is not backed up by something real, like the earnings of a company, in the case of stocks, it has no intrinsic value and is essentially worthless.
William Gates said that he would short Bitcoin. He also shared that he was given some Bitcoin for his birthday, but he sold it eventually.
FinanceMagnets reported the words of Mr. Gates:
“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.”
Like many other opponents to Bitcoin, William Gates believes in the value of blockchain. For example, his foundation, The Bill and Melinda Gates Foundation, is already working on some blockchain initiatives for their social causes. He also commented on the potential benefits of blockchain on certain industries that may be opening opportunities for improvements and blockchain application such as supply chain management and trading.