Crypto

Crypto, NFTs based on greater fool theory, says Bill Gates

Co-founder of Microsoft, Bill Gates said investing in cryptocurrencies like nonfungible tokens is based on the greater fool theory.

Speaking at a TechCrunch talk on climate change Tuesday, the billionaire expressed doubt about the expensive digital images of monkeys, which are projected to improve the world.

Meanwhile, Gates took a defensive position, backing digital banking by supporting them through his philanthropic foundations, adding that they are a hundred times better and more efficient than cryptocurrencies.

The greater fool theory argues that prices go up because people can sell overpriced securities to a greater fool whether or not they are overvalued – until there are no fools left.

The theory implies that investors are most likely to ignore valuations, earnings reports and all other data as well as the fundamentals that involve understanding and company ownership when investing in an asset.

Gates has always maintained a position as someone that likes investing in things with valuable output.

Gates characterized cryptocurrencies and NFTs as market-driven by sentiment. “As an asset class, it’s 100% based on the greater fool theory—that somebody’s going to pay more for it than I do”, he said.

The billionaire has also warned severely against crypto investment as well as about the environmental impact of crypto.

Sharing his thoughts about bitcoin and cryptocurrency, he had said, “I don’t own any. 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 so not adding to society like other investments.”

Gates had also waned those entering the crypto market to be wary of buying the crypto boom especially because Elon Musk is tolling that path.

“I do think people get bought into these manias, who may not have as much money to spare, so I’m not bullish on Bitcoin, and my general thought would be that, if you have less money than Elon (Musk), you should probably watch out,” Gates said.

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