Bill Gates has described the phenomenon of NFTs and cryptocurrencies as being “100% based on the biggest fool theory”.
Microsoft businessman, billionaire and founder Bill Gates said that NFTs and cryptocurrencies are based on a system known as the Greater Fool theory.
He made these remarks in connection with the current cryptocurrency winter and the dramatic decline in popularity of non-fungible tokens.
Bill Gates recently spoke at a TechCrunch conference on climate change. The billionaire’s co-founder of Microsoft in particular described the NFT and crypto phenomenon as being “100% based on the theory of the biggest maniac”.
This is a theory that overvalued assets will see their price rise when there are enough investors willing to pay more for them.
Bill Gates and the famous digital monkeys
Sarcastic, Bill Gates also said that “expensive digital images of monkeys” would “make the world a lot better”. This was, of course, a reference to the Bored Ape Yacht Club’s famous NFT collection. The billionaire also alluded to the crypto market, saying he “is not involved in it.”
Mr. Gates stressed that he prefers to invest in assets with tangible results, such as farms, factories or in the manufacture of products.
The greatest fool theory
What is this “craziest theory” that Bill Gates is talking about?
From English “Greater Fool’s Theory” or “The Dumbest Theory” it is the theory that financial bubbles are formed due to the blindly optimistic behavior of market participants (called the most foolish). The latter thus buy overvalued assets in anticipation of their sale to speculators.
Bill Gates applies this phenomenon to the case of NFTs, which he says lack intrinsic value. The billionaire also applies it to cryptocurrencies, which there are always eager buyers for, even when the asset is overvalued. According to him, this phenomenon does nothing but create a structure where the first buyer tries to sell his worthless asset to someone who is crazier (or stupider) than him to avoid losses.
The process repeats itself, almost like a loop, until the system collapses. The last layer of bishops (the “dumbest”) is so completely affected. This system has several similarities with a Ponzi scheme. Stock markets, real estate markets and other assets have also been accused of being a Ponzi scheme.
Decline in NFTs and crypto winter
Bill Gates’ statements are in no way isolated from the current context. In fact, both NFTs and cryptocurrencies fail to recover from their respective records.
The non-fungible tokens (NFT) from the very famous Bored Ape Yacht Club (BAYC) lost 78% compared to April. Back then, they cost about $ 429,000, while their price is now around $ 80,000. Similarly, the buzz for BAYC on Google Trends has also suffered a severe downturn.
When it comes to digital currencies, the cryptocurrency winter is well and truly set in, with Bitcoin (BTC) and Ethereum (ETH) having suffered sharp declines in their respective prices.
In this situation, many argue that the best strategy is to buy more cryptocurrencies in the hope that their value will increase in the future. From Bill Gates’ point of view, this would be precisely the trap of the crypto market.
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