Bill Gates has described the phenomenon of NFTs and cryptocurrencies as being “100% based on the biggest fool theory”.
Businessman, billionaire and founder of Microsoft Bill Gates said that NFTs and cryptocurrencies are based on a system known as the theory of the greatest fool, or “Greater fool theory”.
He made these remarks in the context of the current crypto winter and the dramatic fall in popularity of non-fungible tokens.
Bill Gates recently spoke at a TechCrunch conference on climate change. The billionaire co-founder of Microsoft described in particular the NFT and crypto phenomenon as being “100% based on the theory of the greatest madman”.
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
Sarcastically, Bill Gates also said that “expensive digital images of monkeys” would “make the world a whole lot better”. This was, of course, a reference to Bored Ape Yacht Club’s famous NFT collection. The billionaire also alluded to the crypto market, saying he is “not involved in that.”
Mr. Gates stressed 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 talks about?
From English “Greater Fool’s Theory” or “The Dumbest Theory”, it is the theory according to which 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 according to him lack intrinsic value. The billionaire also applies it to cryptocurrencies, for which there are always eager buyers even when the asset is overvalued. According to him, this phenomenon does nothing but create 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 itself, almost like a loop, until the system collapses. The last layer of bishops (the “stupidest”) is then 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 of NFTs and crypto winter
Bill Gates’ statements are by no means isolated from the current context. Indeed, both NFTs and cryptocurrencies fail to recover from their respective all-time highs.
The non-fungible tokens (NFT) of the very famous Bored Ape Yacht Club (BAYC) lost 78% compared to April. Back then, they cost around $429,000, while their price now hovers around $80,000. Similarly, the buzz for BAYC on Google Trends has also suffered a serious downturn.
When it comes to digital currencies, the crypto winter has well and truly set in, with Bitcoin (BTC) and Ethereum (ETH) having suffered steep declines in their respective prices.
In this situation, many argue that the best strategy is to buy more cryptocurrencies, hoping that their value will go up in the future. From Bill Gates’ point of view, this would be exactly the trap of the crypto market.
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Bill Gates: Crypto and NFTs Are Built on the “Biggest Madman Theory” – BeinCrypto
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