- BBC News World
In finance, the dumbest theory starts with an investor doing something stupid in the hope that someone else will later decide to do something even dumber.
The first buyer pays an inflated sum of money for a good which he then puts up for sale at an even more exorbitant price while trying to find someone even more “con” to buy it.
In this dangerous game, what is exchanged may be tulips – as happened in the first big 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 market for cryptocurrencies and NFTs (digital tokens) they are based “100%” on the big fool theory.
And it is that according to this theory, it is possible for investors to obtain a profit buy too much then resell it to another investor.
This whole cycle works without anyone stopping to think about the true value of the asset And many investors fall into this trap, experts say, probably unknowingly.
The price of gasoline can go up and up, but oil is always supported by its usefulness. It’s useful for something.
Gates added that he preferred invest in companies that create real products.
And not in a service whose “anonymity is used to evade taxes he says in reference to the most famous cryptocurrency.
He said people buy cryptocurrencies and NFTs regardless of price and believe they can sell for more because “someone is willing to pay more for ita that I”.
And he said he had never invested in this market.
Other wealthy investors and executives, including Warren Buffett or Jamie Dimon, have also expressed their skepticism towards cryptocurrencies.
Buffett was once called Bitcoin “rat death squared”.
Gates also quipped about the value of NFTsor non-fungible tokens.
These are 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 leveled off recently.
“Obviously expensive. digital images of monkeys will make the world a lot better. It’s amazing,” Gates said sarcastically on the forum.
The 66-year-old philanthropist and billionaire was referring to the Bored Ape Yacht Club digital art collection, a limited run of 10,000 unique pieces from the image of a monkey with minor variations which have been sold for thousands of dollars.
But now that the global economy is going through a rough patch, investors prefer to place their capital in less risky investments and they shun the most speculative bets like cryptocurrencies or digital certificates, two markets that have no legal protection.
Bitcoin accumulates falls above 50% in 2022, while Ethereum has lost 69% of its value.
Monkey NFT also lost more than half of its value.
All this suggests that the search string for the “dumbest” has stopped affecting many other parts of the market.
Just this week, 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”. freeze the accounts of its 1.7 million users and imposing a sort of “corralito” on its customers.
In a similar vein, Binance, the world’s largest cryptocurrency exchange, also had to “pause” bitcoin withdrawals for a few hours as Coinbase Global, another major platform, announced that it would lay off almost a fifth of its staff.
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