Microsoft founder Bill Gates said that cryptocurrencies and non-fungible tokens (NFTs) are “100 percent based on greater fool theory.”
The theory means that people can make money by purchasing assets that are overvalued and later selling them at a profit.
Gates spoke at the Tech Crunch conference during the week.
He said that he is not involved in cryptocurrency as he is used to asset classes such as “a farm, where they have output, or a company, where they make products.”
He said that NFTs and cryptocurrencies are 100 percent based on “sort of greater fool theory that somebody’s going to pay more for it than I do.”
According to Gates, at the heart of the crypto and NFT movement is an anonymity allowing buyers to avoid taxation or government rules about “kidnapping fees or things.”
The billionaire also took aim at the “Bored Apes” collection of ethereum NFTs, jokingly adding that “digital images of monkeys are going to improve the world immensely.”
Cryptocurrencies gained popularity during the pandemic and have been integrated into more asset portfolios, with banks and brokers now offering purchasing and custody services.
Various celebrities have also offered celebrity endorsements for cryptocurrencies and a number of them, including former first lady Melania Trump, have entered into the world of NFTs.
Gates’s comments come after bitcoin plunged nearly 23 percent over the weekend, hitting its lowest point since late last year. Ethereum, the second most popular cryptocurrency, dropped 32 percent as well.
The total crypto market cap dropped below $1 trillion for the first time since January as investors unloaded their digital coins.
On Saturday, Bitcoin tumbled more than 13% at one point, crashing below the closely watched $20,000 level to its weakest level in 18 months.
Its extended slide coincides with investor worries about growing troubles in the industry and the general pull-back from riskier assets.
The digital currency sector was pummeled after cryptocurrency lending company Celsius froze withdrawals and transfers between accounts.
Crypto companies also started laying off employees. There also were reports that a cryptocurrency hedge fund had run into trouble.