KOMPAS.com – On several occasions, the founder of the technology giant Microsoft, Bill Gates, has revealed that he is reluctant to invest in crypto assets, including Bitcoin and Non-Fungible Tokens (NFT).
Recently, Gates reiterated his rejection of NFT investment, calling it the “Greater Fool Theory”.
This was stated by Bill Gates when speaking at an event on climate change organized by outlet media TechCrunch.
“As an asset, the NFT is 100 percent based on the Greater Fool Theory—where someone would pay more for the asset than I would,” Gates said.
Also read: Bill Gates Refuses to Invest in Crypto, Here’s the Reason
Not only that, Gates also satirized the Bored Ape Yacht Club, a high-priced NFT image of apes.
“Obviously, an expensive digital image of a monkey would go a long way in making the world a better place,” Gates quipped sarcastically.
Instead of crypto assets such as Bitcoin or NFT, Bill Gates insists that he prefers to invest in assets with tangible returns, such as farms, factories, or companies where they make products, as compiled The VergeThursday (16/6/2022).
Also read: Bored Monkey’s NFT Assets Worth Rp 5.2 Billion Lost
— TechCrunch (@TechCrunch) June 14, 2022
What is “Greater Fool Theory”?
So, what is the meaning of “The Greater Fool Theory” that Gates labels on NFT assets?
“The Greater Fool Theory” is the idea that one can make money by buying overvalued assets (overvalued) and resell it for a profit at a later date.
This theory believes that it is always possible to find someone who is willing to pay a higher price for the asset overvalued.
An investor who adheres to the Greater Fool Theory will buy an asset that has the potential to be overvalued regardless of its fundamental value.
Also read: Bill Gates Turns Out To Use A Folding Phone, But Not Made By Microsoft
The “Greater Fool Theory” approach is speculative because it is based on the belief that an investor can make money by betting (gambling) at future asset prices.
Investors who adhere to the “Greater Fool Theory” also believe that they can always find “more naive investors” who are willing to pay more than other investors do.
However, in the event of a crisis, the asset will experience a massive sell-off which causes a rapid decline in the value of the asset.
During a sell-off, “Greater Fool Theory” investors can lose a lot of money if they are the last to hold the asset overvalued and can’t find a buyer, as compiled Hartford Funds.
Also read: Positive for Covid-19, Bill Gates is in self-isolation
4 reasons Bill Gates doesn’t invest in crypto assets
The father of Microsoft and the fourth richest person in the world version Forbes it claims to have absolutely no Bitcoin or other crypto assets.
On several separate occasions, Gates revealed, there are at least four reasons he is reluctant to invest in crypto assets, such as Bitcoin and NFT.
Following KompasTekno summarize the reasons, as follows.
Reason firstInvesting in crypto assets is considered not to bring additional benefits to the community. Because, the value of crypto is only decided based on someone’s desire to buy it.
Also read: 5 Books Bill Gates Read in 2021
Different from the value of a company which is based on how they make good products and benefit society.
Reason secondBitcoin uses too much electrical energy in every activity, such as mining (mining).
Reason thirdthe anonymity of Bitcoin and crypto is often used to buy drugs, do money laundering, tax evasion, terrorist financing, and avoid taxation or any kind of government regulation.
Last, or reason fourththe price of crypto assets is quite volatile.
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