Bill Gates Says Crypto and NFTs Are a Sham, '100% Based on Greater Fool Theory'
source link: https://tech.slashdot.org/story/22/06/15/1720218/bill-gates-says-crypto-and-nfts-are-a-sham-100-based-on-greater-fool-theory
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Bill Gates Says Crypto and NFTs Are a Sham, '100% Based on Greater Fool Theory'
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I expect this specific topic will explode with all sorts of interesting comments.-
Yeah, been saying this myself for years. The only hope is that all the fools finally wake up and realize they are the ones left holding the worthless "coins" when the overall market finally decides they are in fact as worthless as they always were and were simply a thought experiment that produces no real value, just a way to have an expensive way to have a public distributed ledger.
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Same here, crypto is neither commodity nor currency -- no intrinsic value to be a commodity and too volatile to be a currency -- so it must be something else. The most likely something else is a pyramid scheme.
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I guess we can say that, if we keep in mind the mean time between crashes for regular currency is orders of magnitude greater than with crypto, which makes it a different beast statistically.
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Isn't all currency just a pyramid scheme that hasn't collapsed yet?
No, it's not. Currency is just a convenient means to remove the difficulties of building up an efficient economy based on barter by representing value of your work in something that everyone accepts. Even volatile currency is *much* a much more sensible proposition than paying your baker with milk because that's what your baker wants, but you have to get your milk from a farmer who really wants a cell phone, but the cell phone owner shop is looking for some nice books and...well, you get the picture. As long as the short-term stability of your currency is sufficient, these N-way exchanges are obsoleted, and even with mildly volatile currency, that creates much less waste than barter, unless your time is worth nothing. So I'm not sure where do you see the pyramid scheme -- currency is simply the least bad of all the bad solutions when it comes to people trading their work. Pyramid schemes don't provide value, but actually working economies do.
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Slashdot is pretty solidly in the anti crypto and NFT camp. Most comments I've seen agree wholeheartedly with Gates.
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Early on (when a pizza cost several Bitcoin) it looked like Bitcoin could bring down VISA and MasterCard. That was cool and nerdy.
Unfortunately it turned out not to scale. A currency you can't actually transact in is pretty useless, except as a pyramid scheme.
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I am not sure Anti Crypto is the correct term. When it was new, a lot of us were actually rather interested in it and what it could bring to the world. However what it ended up becoming is a far cry to the objective we hoped it would achieve.
For long timer Slashdotters (spun has a low number). If in the late 1990's we would say 25 years into the future. Most devices would be running off of Linux or Unix, Apple would be a major Tech company, Windows would be delegated to mostly just business use, and old
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probably not actually pro-crypto, just preying on clickbaity stuff which crypto tends to be nowadays.
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Such as:
"Bill gates shouts what has been clear to many people for years, as if he's coming down the mountain with freshly etched stone tablets."
Only fanboys and the thoroughly deluded / ignorant ever believed that crypto and NFTs were *not* a sham based on the greater fool theory. And guess what? Fanboys and the thoroughly deluded / ignorant routinely fall into the greater fool category in many investment instruments, not just the latest in get-rich-quick fads.
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Bill Gates purchases paintings for tens of millions of dollars (e.g. dude in boat for 36m)
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Bill Gates purchases paintings for tens of millions of dollars (e.g. dude in boat for 36m)
and I have an exact copy of it on my wall. no, actually I do not.
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True. But he actually gets to own the physical painting. NFTâ(TM)s rarely come with copyright, and the NFT amounts to nothing more than a URL to a document hosted on the public internet.
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Agreed it's not identical, but the value of 36m, as opposed to some random professional's quality painting of "dude in boat" for a few hundred dollars is due to similar reasons that NFT's have value.
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Well, *it depends*.
There's two distinct kinds of value -- utility value and rarity value. You can certainly find an artist somewhere who can copy Winslow Homer's *Lost on the Grand Banks* convincingly enough to fool yourself, provided you aren't an art expert. For you.it would have all the use value of the original. But it would not have the rarity value of a genuine Homer canvas, the worlds's supply of which was fixed forever 112 years ago.
NFTs try to create a kind of synthetic rarity value. What you get is a hard-to-alter entry in a distributed blockchain ledger, that is rare as long as nobody decides to make an alternative blockchain ledger, which anyone could.
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Yes and no. An NFT has, again, no physical presence of any intrinsic value. The painting is a physical creation -- your SUBJECTIVE valuation is NOT THE SAME as having NO INTRISIC value.
You might pay $5, I might pay 500$ and someone else might find the value easy at 500k.
Regardless of your OPINION on the product, its at least a PHYSICAL product.-
To be clear, if you buy the NFT for something, generally all you own is a receipt. You don't own the actual object (or its copyright).
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First, the painting won't disappear if any number of commercial third party services disappears. Second, while both derive their value from being desirable cultural artifacts, the painting is irreplaceable— seeing those paintings in person and feeling that connection with the artists, their culture, and human history is an experience that everyone from collectors to historians to art students highly value. (There's a reason art museums don't look like the dusty stacks in your public library.)
Third,
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Paintings rarely come with copyright rights either.
You could make the exact same argument for physical paintings. Nothing more than some colored dyes on paper or cloth.
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Not really. Paintings have a few things going for them. First they're the product of skilled labor. Second, they have intrinsic value.
NFTs are essentially nothing. They cost virtually nothing to create and have no intrinsic value. You don't even get the associated image data with them, just a url completely controlled by someone else!
It was always an obvious scam. I have no idea how they got so many people to fall for it.
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An NFT that comes with the copyright isn't an NFT, it's a copyright transfer.
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The actual physical raw materials are close to worthless.
Let us be honest that it's no different from art collecting and that in practice artwork's value is due to name and greater fool. I remember reading about a painting of which even experts weren't sure whether it was made by Rembrandt van Rein or a student thereof, but in the former case the value would be a thousand times more than in the latter case if ever found out. — It isn't valued for the art itself but simply due to the name of the artist and the greater fool.
“Greater fool” is simply everywhere and much of the value of paper money also derives from it.
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It's a fair point. A painting is at least a physical object, but a reprint of one has the same aesthetic and material value - which is maybe a couple hundred bucks, leaving the rest of that $36M valuation to anticipated resale = greater fool.
The only real difference I can think of is that classical paintings have a centuries' long track record of ever-greater 'fools.'
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Exactly, time adds legitimacy.
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Original works of great art are the single best store of generational wealth there is. There's never going to be another Starry Night, the value only goes up over time, usually outpacing inflation.
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Only if you know how to choose them. The Getty Museum/Villa in LA, as I recall, makes the point that Getty himself was a terrible art collector, and their collections are insanely valuable now only because of the experts around him.
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And galleries, museums and art experts are largely market manipulators - focused at least partly (I'd say largely) on choosing and building valuable (i.e. recognizable) brands.
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Actual crafted works of art, one of a kind paintings by world famous painters, in marketplace that has been active and vibrant for centuries.
Bill Gates isn't buying up all the art produced in high schools and universities and kindergartens around the country. Nobody is.Just because someone made it doesn't mean anyone wants it.
The overwhelming majority of paintings produced each year are valued primarily based on how nice the frame is.
So why would procedurally generated digital cartoon apes that are triviall
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I'd rather own the Mona Lisa then a digital token saying I owned a receipt for a jpeg of the Mona Lisa, but IDK maybe I'm crazy.
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Zuck really missed the boat when he didn't charge 25 cents a piece for likes.
"my monkey picture post has 32M likes, it's worth $8M." -
This is the biggest misunderstanding about NFTs. It's not a receipt for a jpeg. You don't get the jpeg or the copyright, just a link that points to one which you don't control. When you buy an NFT, you're literally buying nothing. All you get is a receipt.
It's the greatest scam of all time. "If you give me thousands of dollars, I'll give you a receipt that doesn't even say how much money you gave me! What a deal!"
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And he actually owns the physical asset.
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And if you find an NFT crafted by the hand of Van Ghoh or da Vinci, that you can physically own and hold, not just "licesense the link of", then you too would have you would have something of value.
There is no ""fairness to NFT people", they're either grifters or morons... -
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You can still enjoy looking at your NFT's private key
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Maybe a good way to think of BitCoin is this way - each BitCoin represents a desire to send someone else value without interference or external controls potentially blocking or delaying the transfer.
The problem is the purity of this desire to have a free currency, has been muddied by a lot of financial shenanigans, and the value pumped WAY up by excess money printing from governments everywhere.
So currently you have no way of knowing how much this ability to conduct free transactions is worth to people, but the values as they are seem way too high because even now most current value is propped up by sheer speculation rather than utility.
Maybe when BitCoin returns to around $5k or so we might see a more stable price, but then again maybe it would just explode again.
It BTC would ever just stabilize I'd be a lot more interested in it.
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You're not sending anyone value with bitcoin, the token is exchanged for money at time of transaction. Your tiniest transaction takes 2MW to processes, same as burning a ton of coal, look it up.
Bitcoin is a gambling token with horrendously energy wasting infrastructure with badly designed distributed database that chokes under load. Not money, not liquid, no utility, extreme volatility, not anonymous as cash even.
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Which is why people don't invest in dollars, they spend them. The only way that stupid 'lost 99% of purchasing power' makes any sense is if you literally had a paper dollar that you kept since 1920. And nobody does that.
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And Bitcoin has lost 66% of its purchasing power since November of 2021 and 25% of its purchasing power since Friday (June 10th, 2022).
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And on top of that, to do anything useful with Bitcoin it gets exchanged for dollars somewhere along the line. So any 'value' the dollar has lost is also lost in the Bitcoin.
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How do they set the 'bitcoin' price? By converting the dollar price to bitcoin. Even if the bitcoins themselves aren't converted to dollars, the prices are.
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I am not talking about the price of bitcoin. I am talking about the price of something purchased with bitcoin. If an object costs $100, and you want to pay in bitcoin, then (unless the seller is an idiot) you must pay the equivalent of $100 in bitcoin. If inflation causes the price of the object to go up to $110, and you want to pay in bitcoin, then you owe $110 worth of bitcoin. If the bitcoin exchange rate has remained constant, your bitcoin lost exactly as much 'purchasing power' as the dollar did.
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It won't stabilize. You are being caught in the same problem that has caught most of the people. You keep thinking of BitCoin as a limited resource. But it isn't just BitCoin, it is ALL the coins that let you transfer/convert/exchange between. As long as some "coin exchange" lets you convert from their coin into another coin that somewhere else lets you change from that coin into another that lets you change into BitCoin, you now have to worry about ALL those other coins and the number of new coins in the m
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The other thing that a lot of people aren't looking at: as the price of crypto dives, it becomes unprofitable to do the work on a proof-of-work coin, so people stop doing the work. This causes transactions to slow and transaction prices to rise, making it less attractive to use. It can quickly become a death spiral.
For example, have a look at the hashrate chart of Ethereum [coinwarz.com] over the last 3 to 6 months. People are getting the fuck out because it's not worth it. And if they set off the "difficulty bomb" an
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All the proof-of-work coins just make the work easier when this happens, which keeps transactions running at the same rate no matter how much capacity is available. A higher hash rate does not enable more transactions (which is THE major flaw of current crypto coins).
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But the people who run, own, code and own bitcoin have no reason to stabilize it, it was never built to be a stable and flexible means of exchange, it was never designed to be a replacement currency by any stretch of the imagination.
It was a neat technical idea that got immediately swamped by speculators and scam artists, even the truly eager true believers were unwittingly becoming or falling victim to scammers.
If an actual crypto-currency is to actually take hold and not under control of a government then
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Outside of criminal interests, the cohort that desires this is infinitesimally small.
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Even at a reasonable value, the entire Bitcoin structure was not designed for what it is now. Everything from the woefully inadequate capacity to handle peak transactions to the fact that stuff stays on the blockchain forever, to the size of the blockchain only growing and can never really be pruned... and you have to either parse it yourself, or use a trusted node (which removed a lot of the value of a decentralized currency) to ensure you are not being double spent.
What would be nice is a Bitcoin 2.0 cur
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Anything not regulated will always have this happen. There are way too many people on this planet that think "purity" is bullshit and the only truth is making a buck. And if they are not held at bay, they will come and shit on "purity". Every. Single. Time.
Yes, that's what makes it a scam. There is NO control. It will always be converted into a scam, there can never be utility. The reason we don't have a utopia is because asshats exist and a utopia would allow asshats to exist. Every single person th
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I wouldn't say they're 100% a sham, at least not any more than buying physical artwork is a sham. The value is determined by the purchaser. Still, I'd say that leaves 99.9(repeating)% of all NFTs being complete money grabbing shams.
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Agreed. NFTs are in the craze mode right now and once that craze dies down (maybe its starting?) all the suckers who were unlucky enough to dump a bunch of money in at end will be left holding the bag.
NFTs and crypto are basically get rich quick schemes that have benefitted a few while the many will end up getting shafted.
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Not comparable. You can actually own and moreover insure artwork against theft or damage. NFT are just gambling tokens that aren't even physical, same as so-called crypto-coin. The are dependent on a networked systems that can vanish or become worthless in an instant. All NFT could be gone from this earth in less than 10 years, it's a fad.
Artwork with pedigree still appreciates less than equities over significant timescales though, I'd can it an investment hobby for those that like it.
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If I buy a painting from a no-name artist, regardless of value, I have a tangible object which can sit around, get hung on a wall, or get tossed for firewood. A NFT gives me a signed URL, and nothing more. It means no ownership of the work, no copyright ownership, no rights to duplicate it (like I would with a painting)... just a URL signed pointing to a wallet.
At any time, the website with that URL can go down and toss it. 20 years from now, that painting may be worse for wear and moths, but it will sti
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What of money you have on the bank?
What of transferring that money to pay for a service? Do you accept electronic money for your payment?
It's entirely greater fool and relies on the expectation that one can transfer those bits to someone else for services and find someone who accepts it. The only difference with bitcoin is that the system actually has more concrete guarantees to solve double spending that banks do not have.
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It's entirely greater fool and relies on the expectation that one can transfer those bits to someone else for services and find someone who accepts it.
That, and 5,000 thermonuclear warheads.
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That is really, really, stupid. Electronic transfers have nothing to do with 'greater fool'. Electronic transfers are a convenience.
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by mobby_6kl ( 668092 ) on Wednesday June 15, 2022 @01:33PM (#62621906)
I'm as smart as Bill Gates, who could've thought!
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Doesn't take much smarts - only fools don't see NFTs as the obvious scam that it is.
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It was a tax Dodge. Modern art has been used to dodge taxes for ages. The way it works is you buy a piece of art for $100,000, suddenly there's a market so it must be worth a lot and you declare the value to be over a million, then you donate that million dollar piece of artwork you paid $100,000 for and write that off on your taxes.
So last year those loopholes got closed and you couldn't get away with that anymore. That brief period of time when nfts went crazy was a bunch of rich people testing the wa
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Microsoft announces new "stable" coin and a boat load of new NFTs to celebrate Windows 11's one-year anniversary!
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I mean, yeah, you can make tons of money off this crap. If you're at the top, immediate investors. Then you get to eat the poor buggers that come after you.
P. T. Barnum may have said it first: "There's a sucker born every minute" The internet just allowed all the suckers to get sucked in at the same time.
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by DrXym ( 126579 ) on Wednesday June 15, 2022 @01:52PM (#62622032)
Anyone paying attention to crypto currency would recognize it largely isn't used for *anything* so the only way to make money is to convince idiots to buy in, hoping you can exit out at a profit. It's a variant of a ponzi where people need to buy in or the price collapses. And of course there are outright pump and dump schemes - ICOs, paid influencers etc. The sort of shit that John McAfee was arrested for but still happens.And NFTs are used to perpetrate every kind of scam under the sun. The simplest being junk art (Bored Ape + a grillion other variants), but ranging to selling digital swamp land, rug pulls and all the rest.
It is unsurprising that a lot of people get burned by crypto currency. The sad part is that the market will collapse but in a year or two there will be a fresh wave of suckers to build it back up again.
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Online free markets are based entirely on fungible cryptos. It's the only thing you can use there.
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Exactly like paper, unless you actually use the paper for something, which, incidentally, is a crime in many jurisdictions to destroy money, so one can only use it in a nondestructive way.
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... I'm buying something real --- property in the metaverse.
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We is movin' yo UI around again, sucka!
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Not a person on the planet can tell you or put a value on the price of crypto, because it has no value. If you want to compare it to another market for moving money, I can move money at my bank for free. The other 'benefits' of crypto aren't there - anonymity or regulation - anymore.
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Remember pogs? They were little cardboard disks that you could trade or gamble. They are essentially worthless now because no one plays pogs anymore. But back in their popular day, you could spend lots of real money acquiring rare or desirable pogs and slammers that you could gamble or trade for other rare or desirable pogs and slammers. Are bitcoins like pogs? An essentially valueless item that relies 100 percent on its current observers' perceptions.
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I had not heard it put that way before, so I had to go look up more information on that phrase. Turns out, I'm somewhat familiar with other instances of the theory in my own life... I was talked into being the Greater Fool by a very bullish real estate agent, not long before the housing crash of 2008.
I mean, it doesn't really make me feel better about the money I lost, but at least now I can put a name to it.
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marks and suckers love Bill Gates. You'd be amazed how many folks think he's a self made man, having no idea what the history of Microsoft was. Not that Gates has gone out of his way to talk about his advantages (like how is grade school had a computer when some Universities didn't).
This is going to make it much, much harder to find new victims for the ponzi schemes. -
It's not that he's fundamentally wrong. I've always felt that crypto is an investment in nothing. While the dollar or any other currency is effectively as ephemeral it's at least backed by the output and economy of the country it's tied to. There are also regulations to prevent manipulation. That being said Bill Gates is hardly a neutral party. If crypto were actually succeed in having trading value on par with standard currency it would severely undermine global economic control. Something that would
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At one point money was metal. Then it became backed by metal(s). Now the US dollar is backed by the full faith and credit of the US government. While faith in the US government has waned, it still far exceeds the faith and credit in random tech bros. Faith in the tech bros, who now are more interested in running a ponzi scheme, actually makes some sense. They continue to posses crypto coinage and there is no reason for them to stop pumping it and start dumping it.
Most cryptos at least come close to something of value. They are honestly not that different from those corporate/municipal coinage. Bristol, England for example, has the "Bristol Pound". If the company behind it, "Bristol Pound Community Interest Company" goes bankrupt or evil, the Bristol Pound becomes worthless instantly.
Personally, I think the decentralized nature of Crypto has certain advantages. But it is in no way close to the value of any real national currency. The Euro, the dollar, the Yen, the Frank, etc. are all more stable and more valuable.
Note, one sign of stability is the fact that it does NOT sky rocket in value. Going up that quickly means it can go down that quickly, as shown by recent history.
NTFs are legal contracts for special rights to a URL, but do not represent ownership in ANYTHING.
In fact, the contracts generally do not even require that what currently is displayed on the URL will remain so. For some reason the companies that make them do not want to take on any legal requirements. So the companies generally have the legal right to change it for anything - even porn or terrorist creeds.
For this reason, NFTs are the stupidest thing in the world. They literally are worthless. A subscription to any websight makes more sense than buying an NFT.
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I just had a thought. We're all the greater fools. Crypto is a lot like Windows. You pay more than it's worth for software you don't actually own and give up your rights to your computer along with all the data contained within it. Is he trolling us?
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I once bought an inkjet printer... I believe I am the greater fool here.
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... I agree with Bill Gates about something.
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You do realize most of this came along after Gates left Microsoft, right?... Right?
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Gold is just as much a sham. Nobody has to value it more than rocks. It's just a mass mutual agreement that makes it work.
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So it's fiat turtles all the way down...
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Uh, gold is a crucial industrial metal. People value it more than rocks because it has more uses than rocks. From electronics, to aerospace, to the manufacture of modern glass, gold is used in many industries.
Which actually makes it even worse as a token of exchange or store of value. How do you keep gold supply pegged to the size of the economy, when it has actual industrial uses?
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I'm not sure that's true, I see a lot more rocks being used around me than gold.
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The amount of gold we have mined would be sufficient for industrial and jewelry uses for centuries. Gold is only rare because most of it has been re-buried.
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But the difference is that central banks/governments cannot conjure gold out of thin air as they can with $. So you, as a user of gold, know that your 1 oz or whatever, is 1/N of the whole amount and will remain so for ever (modulo people digging more out of the ground, which is a slow process). It's the inability to create more that ensures it retains its value over time.
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In the majority of cases, people who invest in gold do not actually store the gold themselves. They get a piece of paper (or more likely an electronic receipt) that promises to pay out whatever a set amount of gold is worth. In most cases, owning this piece of paper does not entitle you to actual physical gold.
This enables "fractional reserve banking" in gold, as in selling more pieces of paper than you own gold.
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That's not true, it's a base material in electronics due to it's unparalleled corrosion resistance, and conductivity properties. Due to that, it will always have an inherent value higher than rocks. Any material needed to manufacture a physical good will always have a base value according to its difficulty to obtain.
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Long before it had industrial uses it was valuable, not just as a treasure metal but for ornamentation. I remember reading a story about life in the Soviet Union during the Great Patriotic War where somebody had gotten a gift of (among other things) sewing needles from relatives in the USA. Everybody was astonished at how rich the senders must be because the eyes of the needles were all gold. (The gold was to make the eyes easier to see, not to make them look pretty, and cost almost nothing.)
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Gold is simply as valuable as it's industrial application, which are numerous, and it's scarcity.
The fundamental thing about gold is that it's an element, a raw material, in the sense that every piece of gold bullion is the same and interchangeable.
Expensive paintings are in the interesting situation that if I can make a replica of the Mona Lisa such that no expert can tell the difference, it wil stil be worth far less than the original if there exist some tracking mechanism that can tell it from the origin
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Gold is not scarce at all. The only reason it appears scarce is that we store vast amounts of it in vaults.
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So it starts out with:
then:
longer timeframe, but still absolutely correct - then:
BWAH-AH-AH-AH-AH-AH-AH! TOO FUNNY!!
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and a lot of us were only half right about bitcoin, we thought it would crash to zero about now, but it is on it's way just a bit slower.
No utility, no value, no liquidity, not universally accepted, not stable in value.. crypto "coin" my ass. It's not money, not an investment.
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Exactly - more like "crypto con".
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Meh, I'd probably buy some if it gets into the $100 range again, sort of a YOLO Powerball ticket type thing. I wouldn't buy a lot, though, lol.
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I'm waiting for the inflection between rising energy prices, and the decreasing value of crypto to where mining becomes a negative return. That's when you see the whole thing unspool and collapse at speed.
It might already be starting for Ethereum. [coinwarz.com]. At a 400k hash-per-watt rate (GTX 3070 or Radeon RX6900 XT) and average priced electricity ($0.12/kWh), and a 1% pool fee, you're making about $0.02/hour right now. And energy prices aren't going down. If ETH drops a bit more, it's going to go to break-even or
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They can live without it in most cases. Just don't want to
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There will be no bailouts for crypto firms or NFTs. None of them are anywhere near “systemically important”. As much as I hated the 08-09 bailouts, I understand why they occurred. The big banks are truly systemically critical. Not just fatcats smoking cigars lit with flaming hundred dollar bills. Those banks make annual loans to farmers so they can plant crops. No manufacturing company holds 500 million in cash to fix critical machinery. Businesses of all types borrow the money as needed. And mo
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More importantly, none of them are sufficiently politically connected.
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Something evil would be a reasonable guess, but I wonder if the answer is more banal - he simply prefers a centralized rather than distributed mechanism of controlling money supply, companies and farmers. Then the proliferation of new cryptocurrencies and the gambling-related bankruptcies would have the nice side-effect of increasing volatility in the few (if any) existing cryptocurrencies that he's legitimately worried about, and reducing public perception of their value.
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Or. Here's a thought. Bill Gates thinks crypto currencies and NFTs are fucking stupid. Like he says. And like a majority of people actually think.
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