Published on: 16/06/2022
Cryptocurrencies, NFTs based on ‘greater fool theory’, Bill Gates says
Speaking at the 2022 TechCrunch Disrupt on Tuesday in Berkeley, Bill Gates said that cryptocurrencies and non-fungible tokens (NFTs) are “100 percent based on the Greater Fool Theory”, the idea that one can profit from purchasing an overvalued asset by selling them later during a market bubble.
Due to that fact, cryptocurrencies and NFTs will certainly become worthless assets for investors when no one is willing to pay a higher price. Earlier in 2018, Warren Buffet also expressed skepticism toward cryptocurrencies, saying that Bitcoin was “probably rat poised squared”.
The Microsoft founder insisted during the climate conference that he had nothing to do with cryptocurrency, adding that he preferred tangible asset classes, including “a farm, where they have output, or a company, where they make products”.
“I’m not involved in that,” Gates said “I’m not long or short in any of those things. I like investing in things that have valuable output.
“The value of companies is based on how they make great products. The value of crypto is just what some other person decides someone else will pay for it, not adding to society like other investments.”
Gates’ net worth is currently $122.1 billion, making the philanthropist the fourth-richest person in the world. He further stressed that both cryptocurrencies and NFTs are centered around giving people, especially the rich, anonymity to avoid taxation or government rules about “kidnapping fees or things”.
The multi-billionaire also used the opportunity to criticize the Bored Apes Ethereum NFT collection, while saying that NFTs were particularly speculative.
“Obviously expensive digital images of monkeys are going to improve the world immensely,” Gates said.
Gates also discussed the current situation of the global economy, insisting that things were “changing probably as rapidly as I’ve ever seen in his lifetime”.
“We’re going to go into a winter period of a lot of these things,” he said.
Cryptocurrencies, NFTs in decline
Cryptocurrencies and NFTs became popular during the COVID-19 pandemic. The technologies have now been included in portfolios. Many brokers offer purchasing and custody services to accommodate cryptocurrency and NFT enthusiasts.
Many celebrities have also entered the world of NFTs and cryptocurrencies, with many of them offering endorsement services to many NFT and cryptocurrency providers. These include former first lady Melania Trump, who now sells “breathtaking watercolor art” of her eyes.
Gates made his comments amid the plunge in cryptocurrency and NFT prices. As recently as last weekend, Bitcoin’s price dropped by almost 23 percent. This was its lowest since last year. The second most popular cryptocurrency, Ethereum, also recorded a decrease in its price by as much as 32 percent.
For the first time since January, the entirety of the crypto market experienced a massive drop, decreasing to below $1 trillion, prompting investors to unload their digital coins.|
On Tuesday, the floor price of the Bored Ape Yacht Club (BAYC) dropped below $100,000, the lowest since April 2021. The floor price of an NFT is the cheapest amount one can invest in the collection. Previously in April, entry-level Bored Ape NFTs recorded an all-time high price of 153.582 ETH, but the number dripped to 79.266 ETH, according to NFT Price Floor.