NFTs and the Big Fool Theory – Are They Related? | Rodman Law Group, LLC

[author: Natalie Afshar]

Belgrade, Serbia – March 18, 2022: The Bored Ape Yacht Club NFT (BAYC) is the collection of the most expensive NFTs. 10,000 monkey avatar collection. Inappropriate marker on computer monitor

With NFTs becoming such a thriving cryptocurrency industry, some big-name billionaires disagree on whether NFTs are worth all the hype they’re getting. In a recent interview, Bill Gates mentioned that he is not a fan of cryptocurrencies.[1] and believes NFTs are part of the “Big Fool theory”. But what is the Greater Fool theory?

Viki Borgan, a finance professor at Cornell, explains: “One can make money by buying overvalued assets and then selling them for profit, because it will always be possible to find someone willing to pay a higher price.”[2] Also, someone who would contribute to the Greater Fool theory would buy overvalued assets regardless of their underlying value, like a type of gambling game.

Bill Gates classifies himself as an old school investor and states that he will not invest in cryptocurrencies, stating that NFT pictures ‘do not have much benefit to the world’. As bitcoin and the crypto market struggled in the summer of 2022, Gates found the Greater Fool argument successful, but are NFTs as bad as Gates stated?

Since the recent rise of NFTs – non-tradable tokens are seen by many other stakeholders as a very valuable investment because NFTs validate the reality of a non-redeemable asset.[3] For example, if you have an original Banksy piece, this painting you have is irreplaceable and unique. If you convert it to an NFT, you digitize the piece and it can still be irreplaceable and even more valuable. The basic idea here is that if something is immutable, it cannot be changed with the same value.

So how does this tie into the Big Fool theory? We can determine that NFTs are not part of the Greater Fool’s dilemma because of the underappreciated value and useful uses they generate. Items of value are labeled as collectibles (art, wine, film, etc.) and NFTs are the digital version of these valuable collectibles. This is why people who invest in NFTs seriously consider the underlying value of their item and what the profit will be, contrary to what Gates believes.

Similarly, real-world uses of NFTs change the playing field in terms of technology and help the industry of NFTs move away from the Big Fool Theory. For example, one of the uses is event ticketing. Instead of buying an Over-the-Ticket Ticket, an NFT holder can sell their ticket on Open Seat and for example make 10,000 NFTs for a ticket.

During this process, the ticket is uploaded to a blockchain array where it is validated, eliminating the possibility of ticket fraud. Unlike Ticker Master, when using NFT there is no use of an intermediary third-party vendor, and people can submit tickets for someone else’s property much faster and more securely than with other apps.

Another useful use of NFTs can be the ownership of game assets. For example, if you’re playing a game like Fortnite and one day you find that you don’t want to play anymore but spend a lot of money on assets for your character, you can use NFTs to sell your character to someone else.

In this case, you can resell your character along with their assets and profit from it. You can also set your own price, which opens a price free market. The gaming asset side of NFTs has been revolutionary in terms of being able to sell gaming components to others at a fair price.

While Bill Gates claims that cryptocurrencies and NFTs are not worth the investment, NFTs have many valuable uses. From the collectible side to real developments in the gaming and ticketing industry, there is substantial evidence to suggest that the Greater Fool theory is not relevant to NFTs because of how valuable they are. For Gates to say that NFTs are not valuable is like saying that any collectible item, such as the autographed jersey of a famous athlete, has no value – this is not a logical argument. Therefore, as Bill Gates has been commenting on NFTs and cryptocurrencies, until comprehensive data on the proven value of these investments are available, it should be taken with a grain of salt.

[1] Brown, Ryan. “Bill Gates Says Crypto And Nfts Are ‘100% Based On The Big Fool Theory’.” CNBCCNBC, June 15, 2022.

[2] “The Big Fool Theory: What Is It?” Hartford Fund

[3] Alex Gomez. “Why Are Nfts So Valuable?” Cyber ​​ScrillaCyber ​​Scrilla, April 11, 2022

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