“The Biggest Fool Theory”: Bill Gates Takes Down NFTs

The billionaire and philanthropist assured that he had “nothing to do” with NFTs, those unique virtual images that are exchanged at the price of gold, but whose usefulness is increasingly questioned.

Of course, digital images of monkeys will greatly improve the state of the world. “, Bill Gates sarcastically launched on stage at TechCrunch, on June 15, 2022. The billionaire, known for his sharp analysis, was asked about the NFT (non-fungible tokens)these unique virtual items that are exchanged at gold prices with cryptocurrencies.

According to him, these NFTs would be just a ” asset class that exists on the principle of the biggest fool theory “, that is ” someone will pay more money [pour cet actif] what happened to acquire it. ” I have nothing to do with it Bill Gates concluded.

The biggest fool theory, or the biggest fool, is not a scientifically constructed concept, but it is a precept that is emerging more and more in the economic and financial field in the age of cryptocurrencies. This idea is that a buyer would be willing to buy an asset for more than its real value, because he is convinced that he can resell it even more expensive, to someone who will be persuaded to sell it for more. .

Bill Gates criticizes speculation around NFTs

For anyone who is familiar with the mechanics of the stock market, it is difficult not to underline the irony of such a statement, because this theory could be applied to many stock market players, in the current neoliberal system that governs the Western world. Many investors, who might be called “short-term investors,” buy stocks just to get a higher selling value. Some even bet on falling stocks to enrich themselves, without developing any interest in the intrinsic value of the asset in question.

However, there is a difference between speculating in real estate or companies and speculating in NFTs. This is the one Bill Gates mentions: I’m more used to companies that create things or products. Like farms, for example! simplified, to explain the concrete absence of any intrinsic value to virtual images.

An NFT is a visual considered unique: it is an image that has a virtual stamp of authenticity. This “seal” is a sequence of numbers that corresponds to its registration in the blockchain, a virtual public registry that is maintained by millions of computers in a decentralized manner.

The “Bored Apes Yacht Club” NFTs for sale at OpenSea // Source: Open sea

The (temporary?) end of the recess for cryptocurrencies

The “biggest fool” theory has been used for several years. to talk about the phenomenal rise in value of bitcoin, the most popular cryptocurrency whose price first skyrocketed in 2017, then again in 2021. While some praise the intrinsic qualities of this crypto asset (based on a decentralized protocol that allows both anonymous and public transactions), most bitcoin investors have seen it above all as a way to get rich, seeing its course rise. By buying cryptos, they increased their virtual value more and more.

After months of dramatic increases, 2022 has marked the end of the recess: the crypto market has entered a bear market (a brutal and lasting decline), and Bitcoin’s crash is likely to last a while. However, some believers see it as a positive sign: a kind of “purge” of short-term investors that they were only there to get rich quick, only to leave bitcoin owners who truly believe in the technology and its potential.

On the NFT side, the debacle is for the moment less obvious, even if certain signs are beginning to emerge. The businessman who had bought the NFT from the first tweet for $2.9 million, for example, tried to resell it less than a year later, for 15 times its price, but the auctions failed. Even if it’s too early to say this is the end of NFTs, these virtual objects are understood and acclaimed only by restricted communities with various motivations. They are opposed by many skeptics, including Bill Gates, who criticize both the speculative ecosystem and the disproportionate ecological impact cryptocurrency mining, which is required to trade NFTs.

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