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The Almighty Buck Bitcoin Businesses Social Networks

Bill Gates Questions Societal Value of 'GameStop' Mania, Argues It'd Be 'Good to Get Rid of' Bitcoin (cnbc.com) 166

Posted by EditorDavid from the money-makers dept.
The price of bitcoin — now over $57,000 — has nearly doubled in the last 7 weeks. Even Elon Musk tweeted that its price seems high — though one analyst tells Bloomberg that Tesla has already made a profit of nearly $1 billion from its recent Bitcoin investment, more than it earned selling electric cars in all of 2020.

Yet speaking about bitcoin, Bill Gates said "It'd be good to get rid of that" in a recent interview with the Wall Street Journal, arguing that cryptocurrency "allows for certain criminal activities."

And the world's third-wealthiest man also seemed dubious about the significance of GameStop's stock surge: Bill Gates told CNBC the Reddit-fueled trading mania in GameStop and other stocks was reminiscent of betting at a casino and not investing. "People enjoy gambling. Sadly, it's a zero-sum game," the billionaire philanthropist told CNBC's Andrew Ross Sorkin in an interview that aired Thursday on Squawk Box. "The idea that you drive a valuation way, way beyond what is rational, it's hard to see that societally as a good use of time," Gates added. "And, you know, the people who get in it early get a windfall. The people who get in late feel like suckers...."

Gates expressed concern about the role social media played in the GameStop saga and its potential implications for the U.S. equity market. "Reddit forums where people have a reason to kind of push something and get out at those high prices, you know, the SEC has got to look at this because we don't think of the stock market as just performing a casino-like role," said Gates, the third-wealthiest person in the world. "We have restrictions on gambling activities...."

Some have said the GameStop craze carried populist characteristics, with smaller investors trying to stick it to hedge funds and big Wall Street firms. Gates said if that really were the aim of individual investors, it will not end well. "If the general public investor is pitted against the hedge funds, over time, the hedge funds will come out ahead," said Gates. "I'm sure there'll be lots of stories of people who got caught up in the frenzy, which really served no societal purpose."
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Bill Gates Questions Societal Value of 'GameStop' Mania, Argues It'd Be 'Good to Get Rid of' Bitcoin More

Bill Gates Questions Societal Value of 'GameStop' Mania, Argues It'd Be 'Good to Get Rid of' Bitcoin

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  • Well... (Score:5, Insightful)

    by war4peace ( 1628283 ) on Saturday February 20, 2021 @05:41PM (#61084196)

    Bill Gates told CNBC the Reddit-fueled trading mania in GameStop and other stocks was reminiscent of betting at a casino and not investing.

    Doesn't this apply for most of financial trading?

    • It was undeniable investing. The entire "movement" was a tale of people investing their hard earned money into screwing over some hedge funds that were so significantly and grossly over-shorting a stock.

      If the active shorts account for over 100% of a stock, then this is clear investing, not even a damn gamble.

      • If the active shorts account for over 100% of a stock, then this is clear investing, not even a damn gamble.

        Buying the stock was not a gamble. Knowing when to get out was.

        But as long as they are gambling with their own money, it is no concern of mine.

        • Pretty sure WSB had the approximate dates that all the various shorts came due. Had Robinhood et al not covered for their hedge fund buddies and halted buying that wouldn't have been much of a gamble.

      • It wasn't an investment. They were betting they would catch the hedge fund with their pants down and should have known they would protect themselves.

        Some will truly hold onto the stock but most have sold and moved on to the next meme.

        • They were betting they would catch the hedge fund with their pants down

          No, they had already caught them with their pants down, having shorted over 100% of the existing stock. PAST TENSE.

          You do understand that it was the public knowledge of this fact that kicked this all off, yes? The very first reddit posts were about this very thing. They had ALREADY caught the hedge funds with their pants down. But here you are, arguing that they hadnt, because... you didnt know... or you just posted the first fucking contrary thing you thought of because your vilify-that-group religion

      • Except the smart hedges got our early and reshorted at $300 a share and rode it back down.

        They could of made a Killing and redditoes are dumb enough to think it was their idea

    • Re:Well... (Score:5, Interesting)

      by Daemonik ( 171801 ) on Saturday February 20, 2021 @06:57PM (#61084454) Homepage

      Then it's time to admit that Wall Street as a whole is a big casino and stocks are not actually investing in a piece of a company then. Which would put stock "winnings" at casino tax rates.

      We already know that stocks have very little to do with actual company performance and are just a token to be exchanged by competing hedge funds, the only people who really seem interested in long term holding (and I'm putting 1 month at "long term" here lol) are the so called "dumb money" investors at the bottom of the pyramids. Hedge funds get special rules to gamble by and can have the entire market shut down if they lose too much.. this is not the stock market that helped build this nation.

      As far as Bitcoin helping criminal activities, so do fiat currency, so do stocks, bonds or anything else that can be bought, bartered and sold. Criminals would trade frozen orange juice futures if that's what it took. His statement here isn't really very helpful or of value, tbh.

      • Gates is really showing his ass if the only negative thing he can think to say about Bitcoin is that it might help criminals.

    • No. It does apply to most day trading perhaps. But you can also invest and hold. Go back a few decades and the big value companies were the ones who paid dividends; that meant that they were stable and reliable. Then things flipped a bit and companies care more about stock value growth, not based on sales but based on perceptions of analysts.

      • Investing for dividends involves a lengthy ROI, especially if there's a risk of the stock zeroing out (which also tends to eliminate dividend payments since that goes along with the business failing). Imagine you invested in CBL for its formerly-nice dividends:

        https://www.bizjournals.com/ho... [bizjournals.com]

        CBL hasn't paid dividends out for awhile. A company owning that much commercial real estate should have been nearly invincible. They weren't. Amazon and COVID-19 butchered that company like a hog.

        The long-term best

    • Re: (Score:2)

      by dasunt ( 249686 )

      Bill Gates told CNBC the Reddit-fueled trading mania in GameStop and other stocks was reminiscent of betting at a casino and not investing.

      Doesn't this apply for most of financial trading?

      For individual investors with active management, it's more of a grift. Active management, in aggregate, must have underperforming returns compared to average, and individually, most successful actively managed funds return to mean. Recommending actively managed funds to clients is more about enriching financial planne

    • The presence of risk does not make it gambling.

      • So why would crypto trading be considered gamble, then?

        • Is it? Is it meant literally or figuratively?

          It's speculation - "investment in stocks, property, or other ventures in the hope of gain but with the risk of loss." It is not gambling as in, "play games of chance for money; bet." It is 'a gamble' in the sense of, "take risky action in the hope of a desired result."

          Legal restrictions on "gambling" are directed at the "games of chance for money" meaning of the term.

  • I agree. (Score:5, Insightful)

    by Gravis Zero ( 934156 ) on Saturday February 20, 2021 @05:45PM (#61084218)

    I would also agree if he included getting rid of hedge funds and high frequency trading. Hell, I'd be in favor of limiting stock trading to 1 minute increments because there is no business value in anything less... unless your business is trading stock.

    Honestly, there's a fuckload of shit in society that we should get rid of but cannot because billionaires like himself have ensured that they cannot be removed.

    • Re:I agree. (Score:5, Interesting)

      by Phydeaux314 ( 866996 ) on Saturday February 20, 2021 @05:58PM (#61084270)

      Put a one penny fee on all canceled (that is, not fulfilled) trades. HFT works by spamming trade offers and retracting them if price isn't where they want. A one cent fee on cancelled trades would be unnoticeable to pretty much everyone except HFT, and it would wreck their whole universe.

      • Why not just make orders not cancelable but with a lifetime submitted with the order? What's the benefit of allowing them yo cancel an order.

        • Why not just make orders not cancelable but with a lifetime submitted with the order? What's the benefit of allowing them (t)o cancel an order.

          If the market-makers (essentially all of whom are HF trading) were not allowed to cancel orders, then bid-offer spreads would widen considerably. That would not be a big deal to large institutional traders like hedge funds, whose position changes are so big they move the market anyway, but it would have outsize costs for the "little guy".

          It's totally feasible -- that spread structure resembles what equity trading looked like in the days of the NYSE floor brokers before electronic trading came along. Wheth

          • Why would the bid/ask spreads widen considerably? And why would I care? The only reason I can see the bids tightening is because HFTs are taking the delta between them, and I would literally rather that money going to the exchange or being burned in a fire. It's not like I am going to get that benefit.

            • Why would the bid/ask spreads widen considerably? And why would I care?

              You might well not care. It is a matter of opinion, and dependent on what you do. Bid-offer spreads and HFT only matter to individuals and institutions who trade frequently.

              ...It's not like I am going to get that benefit.

              Well, previously, these spreads were regulated to be a minimum of 0.125/share, so everyone paid a "tax" of over 6 cents per share to the floor brokers. Present spreads are 0.01/share for most securities, so the "tax" a small-quantity trader pays is consequently less than one-sixth as large.

              You may have liked the old floor broker syste

              • Bid-offer spreads and HFT only matter to individuals and institutions who trade frequently

                You're missing my point, either because I'm making it poorly or intentionally. It's probably my fault. Let me try again

                I understand why a smaller bid-offer spread all other things being equal means less money lost to the financial system, more money in my pocket, and more frictionless trading in general. My point was it seems that the bid-offer spreads shrinking because of HFTs is not "all things being equal." Ins

    • Yeah, as long as there are some people (institutions) gambling on the stock market, it doesn't hurt to have other people (individuals coordinated on reddit) gambling on the stock market. It's just different, not worse.

    • There is no need for high frequency trading, it's creating more problems than it helps. People say its for market regulation, all it does is siphon dollars off of every trade and turn trading into a see who can shoot first match.

    • Hear, hear!

  • So if he is so worried about illegal activity, Cashless/card/ credits based system is the way to go.

    -No more illicit deals. it will end all drug, prostitution, and illegal gun transactions.
    -No more counterfeit bills
    -No more getting paid under the table to avoid taxes; the man always gets his cut.
    -,gov and the powers that be know exactly who owns what, and who is paying whom.
    -.gov can automatically take your taxes; no more tax filing because they already know what you made, how you made it, and how much you

    • -.gov can automatically take your taxes; no more tax filing because they already know what you made, how you made it, and how much you spent.

      In most cases they already do automatically take your taxes. You have to file for nonsense reasons.

      • In most cases they already do automatically take your taxes. You have to file for nonsense reasons.

        Getting the money back that you overpaid because they want you to is not nonsense.
        That they pretty much force everyone to overpay? Yeah that's nonsense.

    • "No more illicit deals. it will end all drug, prostitution, and illegal gun transactions."

      You're kidding, right? These things will exist until barter ceases to function. Money's convenient. Not essential.

      • Yes, that was totally tongue in cheek. But I know of people who would drool at the chance to do that to us. Its all about control.

        Oh, and they would indeed think my sarcastic ideas were actually good ideas that would work.

  • Pro's and con's of cryptocurrency? (Score:5, Insightful)

    by Tablizer ( 95088 ) on Saturday February 20, 2021 @05:54PM (#61084246) Journal

    I wanted a strong discussion on the pro's and con's of cryptocurrency on Slashdot [slashdot.org], but it didn't go anywhere. Cryptocurrency wastes energy and enables crooks. Other than "we need a backup to slippery gov't", I didn't see any decent case given to allow them.

    • I'm honestly less worried about value transfers being used for nefarious purposes and more worried about people being duped into cryptocurrency investments or the environmental and market damage (see: the latest GPU crisis) stemming from the production of cryptocurrencies.

    • The reason bitcoin was created was so that the government cannot stop anyone from paying anyone they like. Consider the case of Wikileaks, the government cut off their donation pathways, except one.

    • 1) High energy use is not an inherent property of cryptocurrency; only of first-gen versions of it like bitcoin, eth 1.0.
      2) So you must live in a world where any new innovative way of doing something is by default disallowed by some authoritarian government until, for example, sufficient bribery or other convincing gets it grudgingly allowed. Many of us don't live in that world. Governments should only regulate/prohibit what is proven significantly more dangerous than its value, and cryptocurrency certainly

    • Re: (Score:2)

      by Whibla ( 210729 )

      For the record, I too think bitcoin should die. Not because of any fear of 'illegal' stuff, but simply that it's an energy sink. There are better, or at least less wasteful, ways to achieve the same result.

      I wanted a strong discussion on the pro's and con's of cryptocurrency ... but ... I didn't see any decent case given to allow them.

      This, however, is an interesting perspective.

      Do you see a decent case to ban them, or make them illegal?

      In general, should a society ban everything it doesn't explicitly allow, or allow everything it doesn't explicitly ban? Or, to put it another way, do 'you' want to explicitly control what people can do,

    • Cryptocurrency wastes energy and enables crooks. [...], I didn't see any decent case given to allow them.

      There is no decent case to allow $500k supercars, skydiving, casinos, or a myriad of other things and activities. That doesn't mean you get the right to "allow" others to own/partake those items that have no redeeming value to society.

    • It seems so, but still he has more rational opinions on topics than most news stories and commentators. I'd rather listen to him than anyone on cable news.

      • It seems so, but still he has more rational opinions on topics than most news stories and commentators. I'd rather listen to him than anyone on cable news.

        He sounds to me very much like someone that watches cable news and regurgitates what it told him.

        • Yup. He's just more articulate than the typical mouth breathing knuckle dragger who tries to do the same thing.

    • Bill Gates monopolized the computer industry. No matter what your feelings about whether it was good or bad, it was an impressive performance of his job.

  • "more than it earned selling electric cars" (Score:5, Informative)

    by Rei ( 128717 ) on Saturday February 20, 2021 @05:57PM (#61084264) Homepage

    "more than it earned selling electric cars in all of 2020."

    Tesla earned $7B selling cars (on $27,2B revenue), vs. $1B unrealized gains on Bitcoin.

    They're of course referring not to EBITDA, not to non-GAAP, but to GAAP, the only measure by which they can make the claim that Tesla "earned less", even though that $1B "gain" wouldn't be recognized on GAAP either. But of course, even ignoring that issue, it's still wrong. Tesla earned $7B selling cars, and then spent most of that on a wide variety of operations that are not part of the cost of goods sold, and then got taxed down to under their - again, unrealized, untaxed - bitcoin gains.

    It's worth mentioning that it's in Tesla's interest to keep GAAP down (if they earn too much in GAAP profits, they'll start having to pay taxes, and face increasing demands for dividends or stock buybacks), and it's also the least applicable measure for a growth company (which is the very reason why non-GAAP / EBITDA measures exist, to neutralize the GAAP profit-reducing effects of rapid growth)

  • He's a real Renaissance man.

  • I agree with quoted summary, except for this part: "If the general public investor is pitted against the hedge funds, over time, the hedge funds will come out ahead,"

    No - not really. If a significant portion of the general public get together, they can devastate any hedge fund. Remember, the funds are meant to serve the public (however indirectly or imperfectly), and draw their power from the public. Not the other way around. Thankfully, we're not at that stage yet.

    Bill is right - Bitcoin and its fellows sh

    • I agree with quoted summary, except for this part: "If the general public investor is pitted against the hedge funds, over time, the hedge funds will come out ahead,"
      No - not really. If a significant portion of the general public get together,

      If they're coordinating among themselves, it's not "individual vs. hedge fund". They'll lose that battle. That's "mob vs. hedge fund." See also why a single revolutionary has no chance of overthrowing King Louis, but an armed group might.

  • Once every Bitcoin has been minded, transaction processing will collapse and that will be the end of Bitcoin.

    • Even speaking as a Bitcoin skeptic, I do not think it will work that way.

      If you want your transaction to be processed in a timely fashion, you need to offer a bounty as part of your transaction. That has been true for years, already. What will happen is miners will only work for you if they can get access to an attraction enough piles of bounty folded into the transactions.

      What will keep the ecosystem alive is a consistent flow of enough transactions offering enough bounties. That is not implausible. I

      • X questions:
        Transactions are handled as part of the mining. When there are no more bitcoins to be mined, what incentive is there to running a huge number of mining servers?

        Once the number of mining servers go down significantly, the time to process transactions will go up. How long are you willing to wait for your transaction to clear?

        If you want your transaction to be processed in a timely fashion, you need to offer a bounty as part of your transaction. That has been true for years, already. What will happen is miners will only work for you if they can get access to an attraction enough piles of bounty folded into the transactions.

        The cost per transaction will go up. How much will the bounties have to be to keep existing miners on line? How long until the cost of the transaction is more than the tran

        • It may well be that getting your transaction onto the official blockchain may cost 10 or 20 or 30 dollars. Is that high enough to kill Bitcoin? I do not know, to be honest. It is not prohibitive for large transactions and many cross border transactions.

          It sure makes your Big Bank credit card look like a good deal, for the small stuff. At the retail level, using the protocol to get your transaction onto the blockchain is completely hopeless, because of the time lag, even assuming the cost is free. There

  • early bitcoin investor/miner (Score:5, Interesting)

    by FeelGood314 ( 2516288 ) on Saturday February 20, 2021 @07:29PM (#61084512)
    When I invested in Bitcoin long ago the idea was to replace banks, the hope was that Bitcoin would have a stable value and be used for actual transactions. Bitcoin is still limited to about 6 transactions a second (4000 transactions per block, 1 block every 10 minutes) and miners charge over $20 for a transaction. It will never scale to the 15,000 per second that VISA can do. None of the other coins yet invented are ready either. Monero is the closest, its stable and provides privacy and is the only currency actually primarily used for real world transactions, but the transactions are computationally difficult to verify and its privacy means it will be the first currency banned by governments.

    As far as the stock market goes, Gates is dead on. The stock market is there to serve the companies that want to raise capital. If you have a start up it is far far easier to raise capital in the USA than anywhere else in the world and the US capital markets make that possible. The high frequency traders provide liquidity which is usually good although they do seem to be skimming more off the top than the value of their service. This is changing though as more and more funds start creating their own dark exchanges. Shorts, options and other derivatives are all valuable when used correctly. So while some gamble on the stock market, the stock market is not zero sum. It helps finance companies and when those companies do well they pay dividends back into the market.

    • Monero is the closest, its stable and provides privacy and is the only currency actually primarily used for real world transactions, but the transactions are computationally difficult to verify and its privacy means it will be the first currency banned by governments.

      Over the past few weeks I started looking at the various cryptos because of all the buzz. I was initially interested in Monero because they said it was still possible to mine, so I started downloading the blockchain, which was taking a while

  • Of course Gates objects.

  • Claiming otherwise doesnâ(TM)t change the fact.

    It has all the hallmarks of the late stages of a bubble and people are using it as a quasi casino.

  • For some reason Gates gets press any time he opens his mouth. I've got a "Gates Filter" turned on now.

  • No matter how bad you think Bitcoin is, until I see the method you propose to get rid of it, I'm going to assume that getting rid of it will be even worse.

    Complaining is easy. Fixing is hard.

  • Its valuation makes no sense, there's no real point to it, and I can't get a damn video card because they're all being sucked up by miners who don't care if they're paying scalper prices.

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