“The Biggest Fool Theory”: Bill Gates Tears Down NFTs

The billionaire and philanthropist assured that he had “nothing to do” with NFTs, these unique virtual images which are exchanged at a price of gold, but whose usefulness is increasingly disputed.

Of course, digital images of monkeys will greatly improve the state of the world. “, sarcastically launched Bill Gates on the TechCrunch stage on June 15, 2022. The billionaire, known for his sharp analyzes, was asked about NFTs (non-fungible tokens), these unique virtual objects which are exchanged at a price of gold with cryptocurrencies.

According to him, these NFTs would only be a ” asset class that exists on the principle of the biggest fool theory “, which means ” someone will pay more money [pour cet actif] that I spent to acquire it. ” I have nothing to do with it concluded Bill Gates.

The Biggest Fool Theory, or the greatest fool, is not a scientifically constructed concept, but it is a precept that comes up more and more in the economic and financial spheres in the era of crypto-currencies. This idea is that a buyer would be ready to buy an asset for an amount higher than its real value, because he is convinced that he can resell it even more expensively, to someone who will himself be persuaded to can sell it for more…

Bill Gates rails against speculation surrounding NFTs

For anyone familiar with the mechanics of the stock market, it is difficult not to underline the irony of such a statement, because this theory could apply to very many stock market actors, in the current neoliberal system which governs the Western world. Many investors, who might be called “short-term investors”, buy stocks only to get a higher value for sale. Some even bet on falling stocks to get rich, without developing any interest in the intrinsic value of the asset in question.

However, there is a difference between speculating on real estate or companies and speculating on NFTs. This is the one that Bill Gates mentions: I’m more used to companies that create things or products. Like farms, for example! he simplified, to explain the concrete absence of any intrinsic value to virtual images.

An NFT is a visual considered unique: it is an image that has a virtual seal of authenticity. This “seal” is a sequence of numbers that corresponds to its registration in the blockchain, a virtual public register that is maintained by millions of computers in a decentralized manner.

The “Bored Apes Yacht Club” NFTs for sale on OpenSea // Source: OpenSea

The (temporary?) end of recess for cryptos

The “biggest fool” theory has been used for several years to talk about the phenomenal rise in the value of bitcoin, the most popular crypto-currency whose price soared for the first time in 2017, then again in 2021. If some praise the intrinsic qualities of this crypto-asset ( based on a decentralized protocol that allows transactions that are both anonymous, but public), the majority of investors in bitcoin have seen it above all as a way to get rich, seeing its price increase. By buying cryptos, they pulled their virtual value ever higher.

After months of dramatic increases, 2022 has heralded the end of playtime: the crypto market has entered a bear market (a sharp and lasting descent), and bitcoin’s tumble is likely to last for a while. Some believers, however, see it as a positive sign: a kind of “purge” of short-term investors who were only there for the get-rich-quick, leaving only bitcoin owners who truly believe in the technology and its potentials.

On the NFT side, the debacle is for the moment less obvious, even if certain signals are beginning to emerge. The entrepreneur who had bought the NFT of the first tweet for 2.9 million dollars, for example, tried to resell it less than a year later, for 15 times its price, but the bids flopped. Even if it is too early to say that this is the end of NFTs, these virtual objects are understood and acclaimed only by restricted communities with various motivations. Opposed to them are many skeptics, including Bill Gates, who criticize both the speculative ecosystem, but also the disproportionate ecological impact of the mining of crypto-currencies, which are necessary to exchange NFTs.

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“The Biggest Fool Theory”: Bill Gates Tears Down NFTs

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