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Bill Gates: Crypto and NFTs are based on the “Greater Fool Theory”

 


Bill Gates thinks crypto is an asset class that is “100% based on the Greater Fool Theory.”


Businessman and Microsoft founder Bill Gates recently attended a TechCrunch talk about climate change. Gates said that NFTs and cryptocurrencies are based on the "Greater Fool Theory." The billionaire made the statement in the context of the current crypto winter and the popular Bored Ape Yacht NFT collection .

Bill Gates and digital NFT monkeys

According to the Greater Fool Theory, overvalued assets will appreciate in price when someone is willing to pay the price for them.


Gates sarcastically stated that "expensive digital images of monkeys" would surely "improve the world immensely." This was of course a nod to the famous Bored Ape Yacht Club NFT collection. The billionaire also mentioned the crypto market but said he was "not involved in any of it."


Gates emphasized that he would prefer to invest in assets with tangible results, such as manufacturing products.


What is the Greater Fool Theory?

The theory states that financial bubbles are caused by the dogmatically optimistic behavior of market participants (the dumbest ones). They buy overvalued assets with the expectation that they will be sold to speculators.


Gates associates this phenomenon with NFTs , which he believes have no intrinsic value. According to Gates, there are always greedy buyers in crypto markets, even if assets are overvalued. It just creates a structure in which the first fool tries to sell the worthless asset they bought to a dumber one.


The process repeats itself, almost like a loop, until the system crashes. The last row of fools (the dumbest) take the most damage - like a Ponzi scheme.


Bloodbath in the NFT and crypto markets

Both the crypto and NFT markets have seen heavy sell-offs over the past few months.

The price of the popular Bored Ape Yacht Club NFT ( BAYC ) collection to which Bill Gates alluded has fallen 78% since April. At that time the price was around 429,000 US dollars, the current price is 80,000 US dollars. In addition, Google searches are also declining sharply.


From the looks of it, we are indeed in for a strong crypto winter . Both the Bitcoin course and the Ethereum course have repeatedly reached new lows in recent weeks.


Many experts claim that with the prices low, it might be worthwhile to keep buying crypto as prices are set to rise again in the future. From Bill Gates' point of view, this is exactly the trap that many participants in the crypto market could fall for.


Disclaimer

All information contained on our website has been researched to the best of our knowledge and belief. The journalistic contributions are for general information purposes only. Any action that the reader takes based on the information found on our website is entirely at their own risk.

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