Strong criticism of cryptos and NFT3 min read
In business, the dummy theory starts with an investor doing something ridiculous in the hope that someone else will decide to do something even more absurd later.
The initial buyer pays an exaggerated amount of money for a good that will later sell for an even more disproportionate value trying to find someone even “dumber” to buy it.
In this risky game, what is exchanged can be tulips -as occurred in 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.
At a conference in Berkeley, California, the founder of Microsoft stated that the cryptocurrency market and NFTs (digital tokens) are based “100%” on the theory of the big fool.
According to this theory, investors are likely to make a profit by buying too expensive and then selling it to another investor.
This circle works without anyone stopping to think about the real value of the asset and many investors fall into this trap, experts say, possibly without knowing it.
The value of gasoline can go up and up, but oil is always backed by its utility. Good for something.
Bill Gates added that he prefers to invest in companies that create real products.
He said in reference to the most famous cryptocurrency, and not in a service whose “anonymity is used to evade taxes.” People bought cryptocurrencies and NFTs regardless of their price and convinced that they could sell for more because “someone is willing to pay more for it than me,” he added.
And he stated that he had never invested in that market.
Warren Buffett, Jamie Dimon, and other wealthy investors and executives have also expressed skepticism about cryptocurrencies.
Gates was also ironic about the value of NFTs, or non-fungible tokens. He once called bitcoin “rat poison squared.”
These certificates of ownership of virtual or physical assets often used in the world of art or digital music. After becoming extremely popular last year, their demand seems to have plateaued recently.
Gates sarcastically stated on the forum, “Obviously, expensive digital images of monkeys are going to make the world so much better. It’s amazing.”
The billionaire was referencing the Bored Ape Yacht Club’s digital art collection, a limited run of 10,000 unique pieces of an ape image with minor variations that sold for thousands of dollars.
Nowadays, when the global economy is in crisis, investors prefer to place their capital in less risky investments and flee from the most speculative bets such as cryptocurrencies or digital certificates, two markets that do not have legal protection.
In 2022, bitcoin accumulates falls of more than 50%, while ethereum has lost 69% of its value.
The monkey NFT has also lost more than half its value.
All this makes believe that the chain to look for the “dumbest” has stopped affecting many places in the market.
The Celsius platform, one of the largest digital currency lenders and a key player 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 kind of “corralito” to its customers.
In this framework, the world’s largest cryptocurrency exchange platform, Binance, had to “pause” bitcoin withdrawals for a few hours while Coinbase Global, another major platform, announced that it would lay off almost a fifth of its staff.
Taking into account all this perspective in the world of finance and global economic movement, investors have joined this absurd theory, creating a dangerous circle to handle in the financial field, generating a high risk when the invested capital is at stake, where no matter how much money is won or lost. For this reason, economists and specialists argue that despite all the financial crisis that has been presented, the world has been transforming in economic terms towards the progress of a new structured and organized economy in all sectors of the industry through IRAIC.
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Published by Iraic.info, news and information agency.