Bill Gates has described the phenomenon of NFTs and cryptocurrencies as being “100% based on the biggest fool theory.”
Billionaire businessman, founder of Microsoft, Bill Gates stated that NFTs and cryptocurrencies are based on a system known as the dumbest theory. This statement was made in the context of the crypto winter and the resounding drop in popularity of NFTs.
Gates recently participated in a TechCrunch talk on climate change. The billionaire Microsoft co-founder described the phenomenon of NFTs and cryptocurrencies as something that is “100% based on the theory of the greatest fool.”
This is the idea that overvalued assets will rise in price when there are enough willing investors to pay more for them.
Bill Gates and Digital Monkeys
Gates sarcastically said that “expensive digital images of monkeys” would surely “improve the world immensely.” This was, of course, a reference to the Bored Ape Yacht Club’s famous NFT collection. The billionaire also made mention of the crypto market, saying that he is “not involved in any of that.”
Gates stressed that he would prefer to invest in assets with tangible results, such as farms, factories, or in the manufacture of products.
Dumbest Theory
What is “the dumbest theory” that Bill Gates talks about?
The dumbest theory posits that financial bubbles occur due to the dogmatically optimistic behavior of market participants (called the dumbest). They buy overvalued assets in anticipation of their sale to speculators.
Gates applies this phenomenon to the case of NFTs, which according to him lack intrinsic value. Gates also applies this to cryptocurrencies, in which there are always greedy buyers even when the asset is overvalued. This does nothing more than create a structure in which the first sucker tries to sell the worthless asset he purchased to a dumber one in order to avoid loss.
The process repeats itself, almost like a loop, until the system collapses. The last layer of fools (the dumbest) are completely affected. This scheme reflects several similarities with a Ponzi scheme. Stock markets, property markets, and other assets have also been accused of being a Ponzi-like scheme.
The decline of NFTs and the crypto winter
Bill Gates’ statements are by no means isolated from the current context. Both NFTs and cryptocurrencies are failing to recover from their all-time highs.
The iconic and popular Bored Ape Yacht Club (BAYC) non-fungible tokens (NFT) are down 78% from April. Back then, they cost around $429,000. The price now hovers around $80,000. And the craze for BAYC on Google Trends has also suffered a serious reduction.
Regarding cryptocurrencies, the crypto winter has well and truly set in. Bitcoin (BTC) and Ethereum (ETH) are going through a series of falls.
In this situation, many claim that the best strategy is to buy more cryptocurrencies, hoping that their value will increase in the future. From the point of view of Bill Gates, this would be exactly the trap of the crypto market.
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