Bill Gates has described the phenomenon of NFTs and cryptocurrencies as “100% based on the biggest fool theory”.
Businessman, billionaire and Microsoft founder Bill Gates said NFTs and cryptocurrencies are based on a system known as the Greatest Fool’s Theory, or “Greater Fool Theory.”
He made these comments in the context of the current crypto winter and the dramatic decline in popularity of non-replaceable tokens.
Bill Gates recently spoke at a TechCrunch conference on climate change. In particular, the billionaire co-founder of Microsoft described the NFT and crypto phenomenon as “100% based on the theory of the greatest madman”.
This is a theory that overvalued assets will rise in price if there are enough investors willing to pay more for them.
Bill Gates and the Famous Digital Monkeys
Sarcastically, Bill Gates also said that “expensive digital images of monkeys” would “make the world a lot better”. This was, of course, a reference to Bored Ape Yacht Club’s famous NFT collection. The billionaire also hinted at the crypto market, saying he is “not involved in that”.
Mr. Gates emphasized that he prefers to invest in assets with tangible results, such as farms, factories or in the manufacture of products.
The biggest fool theory
What is this “craziest theory” that Bill Gates is talking about?
From the English “Greater Fool’s Theory” or “The Dumbest Theory”, it is the theory according to which financial bubbles are formed by 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 believes lack intrinsic value. The billionaire also applies it to cryptocurrencies, for which there are always enthusiastic buyers, even if the asset is overvalued. In his view, this phenomenon creates nothing more than creating a structure in which the first buyer tries to sell his worthless asset to someone crazier (or dumber) than him in order to avoid losses.
The process repeats, almost like a loop, until the system collapses. The last layer of bishops (the “dumbest”) is then completely affected. This system has several similarities to 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 by no means separate from the current context. Indeed, both NFTs and cryptocurrencies are not recovering from their respective all-time highs.
The non-fungible tokens (NFT) of the very famous Bored Ape Yacht Club (BAYC) lost 78% from April. At the time, they cost about $429,000, while their price now hovers around $80,000. Likewise, the buzz for BAYC on Google Trends has also taken a serious downturn.
When it comes to digital currencies, the crypto winter has well and truly started, with Bitcoin (BTC) and Ethereum (ETH) suffering steep drops in their respective prices.
In this situation, many argue that the best strategy is to buy more cryptocurrencies, hoping that their value will increase in the future. From Bill Gates’ point of view, this would be exactly the crypto market’s pitfall.
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