‘The Fool’s Theory’: Bill Gates’ harsh criticism of cryptocurrencies and NFTs – 06/17/2022

The Microsoft founder says he prefers to invest in companies that create real products, rather than services like bitcoin, whose “anonymity is used for tax evasion”.

In finance, the “craziest theory” starts with an investor doing something stupid in the hopes that someone will later decide to do something even crazier.

The first buyer pays an inflated sum of money for a property that he will soon put up for sale at an even more exorbitant price in an attempt to find someone even more “dumb” to buy it.

In this dangerous game, what is traded may be tulips – as happened during the first great financial bubble in world history in the first half of the 17th century – or, according to the latest statements by Bill Gates, bitcoins.

The Microsoft founder told a conference in Berkeley, California that the cryptocurrency and NFT (digital token) market is “100%” based on the craziest theory.

Indeed, according to this theory, it is possible for an investor to make a profit by buying at a high price and then selling to another investor.

This whole cycle works without anyone stopping to think about the real value of the asset – and according to experts, many investors fall into this trap, probably without knowing it.

The price of gasoline may go higher and higher, but oil is still supported by its utility. It’s good for something.

Gates added that he prefers to invest in companies that create real products rather than services whose “anonymity is used for tax evasion”, he said in reference to the most famous cryptocurrency. .

According to him, people were buying cryptocurrencies and NFTs regardless of the price and were convinced that they could sell for more because “someone is willing to pay more than me”.

He also stated that he had never invested in this market.

Other wealthy investors and executives, including Warren Buffett and Jamie Dimon, have also expressed their skepticism towards cryptocurrencies.

Buffett even called bitcoin “the squared rat poison.”

Gates also quipped about the value of NFTs, or non-fungible tokens.

These are certificates of ownership of virtual or physical assets that are often used – in the art world or song digital. After becoming extremely popular last year, its demand seems to have leveled off recently.

“Obviously expensive digital images of monkeys are going to make the world a whole lot better. It’s amazing,” Gates said sarcastically on the forum.

The 66-year-old billionaire philanthropist was referring to the digital art collection Bored Ape Yacht Cluba limited edition of 10,000 unique pieces of a monkey image with minor variations, which sold for thousands of dollars.

But now that the global economy is going through a bad time, investors prefer to place their capital in less risky investments and avoid more speculative bets, such as cryptocurrencies and digital certificates, two markets that do not have legal protection.

Bitcoin racks up declines of over 50% in 2022, while Ethereum has lost 69% of its value.

The value of the NFT of the monkeys also fell by more than half.

All of this suggests that the chain for finding the “dumbest” has been broken, affecting many other parts of the market.

Just this week, the Celsius platform, one of the largest digital currency lending companies playing a key role in the world of decentralized finance, decided to protect itself from “extreme market conditions” by freezing the accounts of its 1.7 million users and imposing a sort of “corralito” on customers.

In a similar vein, Binance, the world’s largest cryptocurrency trading platform, also had to “stop” bitcoin withdrawals for a few hours, while Coinbase Global, another major exchange, announced that she was going to lay off almost a fifth of her staff.

This text was originally published in https://www.bbc.com/portuguese/geral-61837761

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