Bill Gates has recently come under fire for calling crypto and NFTs a “fool” investment. Speaking at the TechCrunch Sessions: Climate 2022 conference, he said that blue-chip NFT projects, such as Bored Ape Yacht Club NFTs, are not going “to improve the world immensely.”
Why is Bill Gates denouncing crypto and NFTs?
According to Bill Gates, non-fungible tokens and crypto are based on the greater fool theory. In finance, the greater fool theory is based on the assumption that someone can make money by buying overvalued assets and then selling them to an even “greater fool” to make a profit. The billionaire cemented his feeling by saying that the rapid and volatile rise and fall of these assets depend on whether one investor is willing to pay more than the other.
In a Reddit question-and-answer session, Bill Gates commented: “The value of crypto is just what some other person decides someone else will pay for it, so not adding to society like other investments.” Bill Gates went on to support the digital banking efforts he donated to. In fact, he claimed that they are “hundreds of times more efficient” than crypto and NFTS.
Debunking the greater fool theory
The greater fool theory is based on the assumption that the selling price of the items is greater than its intrinsic value. We can compare crypto and NFTs to crude oil in the US. Before the 1850s, crude oil was seen as a nuisance. When George Bissell realized that crude oil can be processed and used as a machine lubricant, things changed drastically. Very few people saw the potential early on. However, those who did ended up making a lot of money when demand skyrocketed.
Crypto and NFTs are the crude oil of the 21st century. At the moment, their real-world use cases are limited. However, as the world becomes more digitized, digital assets such as crypto and NFTs will become commonplace. Consequently, buying crypto and NFTs today is similar to buying crude oil before the 1850s; you can wisely invest and store these digital assets and bid your time until demand increases.
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All investment/financial opinions expressed by NFTevening.com are not recommendations.
This article is educational material.
As always, make your own research prior to making any kind of investment.
