JUNE 2018: Bitcoin sank below US$7,000 during crypto winter.
At that time, the world’s greatest investor Warren Buffett told CNBC: “The asset itself is creating nothing. When you buy non-productive assets, all you’re counting on is the next person to pay you more.”
Former world’s richest man Bill Gates piled on: “It’s kind of a pure Greater Fool Theory type of investment”.
Long observed in irrational markets, the Greater Fool Theory explains how speculation is used as a trading tactic.
It can be traced to the economist John Maynard Keynes.
The mindset goes like this: “I know this asset is overpriced. I’m buying it anyway because I expect someone dumber to take it off my hands at a higher price. If that buyer never comes, I’m the fool.”
In those days, it was the law of the crypto jungle: “You either fool others or be fooled yourself! Those who are informed exploit those who aren’t.”
The victims are retail investors who make emotional decisions, as hype often reaches them faster than discipline does. Markets give them a cruel nickname: “dumb money”.
Fast forward to June 2026: Bitcoin trades above US$70,000.
The market has come a long way and grown tenfold to US$1.5 trillion.
Regulated in over 45 jurisdictions, trading is now highly structured and aligned across major exchanges.
Institutional participation has sharply reduced retail speculation; volatility is cut by half, making 2025 “the calmest year in history”! Spot exchange-traded funds, perpetuals, and treasury products thrive, while state-backed miners prop up the global supply chain.
Price discovery is highly efficient in speed, unfolding in seconds or milliseconds. Although futures tend to react faster to new information before cascading to spot, the window for arbitrage has narrowed considerably.
Yet one problem remains: Bitcoin is still compared to fraud every so often.
Why so? Ponzi schemes run on Greater Fool logic too. There’s no intrinsic value to the investment; demand is driven by fear of missing out and unrealistic number-go-up expectations.
When the market crashes, the last buyer is left holding the bag with a useless asset.
On the surface, it sounds terribly like bitcoin!
But here’s the counterpoint – fraud usually burns out fast; it has a short shelf-life.
A Cambridge University study of 1,108 Ponzis in the same period as bitcoin (2008 to 2023) found that their median duration is only 3.1 years.
Tulip Mania peaked within months (1636 to 1637), Charles Ponzi’s scam barely lasted a year (1919 to 1920).
If bitcoin’s a fraud, the argument follows, it would have imploded by now!
Instead, it survived multiple meltdowns for almost two decades, with its reputation intact.
Not bad for an asset that has never issued a prospectus or promised returns from the start.
Also, investors learn from the mistakes of others, i.e. fools wise up. Stupidity is punished by the market, but word gets out quickly; information has become more symmetric and widely accessible.
Nowadays you can easily track exchange quotes, hash price (for production cost), open interest (in futures), whale activities (large order flows), live squawks, etc, all on open-source intel without having to pay for a pro subscription.
In short, bitcoin has become a boring asset.
What are traders going to do without “dumb money”? Are there any greater fools left? Where have they gone to?
It turns out, they’re around writ large, at other corners of the cryptosphere.
For instance: Non-fungible tokens ( T) shot up like crazy in 2021 and burst the following year, leaving over 95% of them worth next to nothing.
The T of the first ever tweet was bought for US$2.9mil by a businessman in Malaysia’s balmy Sri Hartamas, but bid for less than US$4 post-bubble!
Local T platforms, which took out massive billboards on the Federal Highway, had to close or wind down in short order.
If you miss easy marks (or what traders cheekily call “dumb alpha”), the new hunting ground is meme coins with routine pump-and-dumps.
And let’s not get started on prediction markets (which have proud origins in crypto), where you can punt on anything from reality shows to rumours of wars to political assassinations!
Coming back to the original question: Are bitcoin owners today the greatest fools who ever lived?
Evidently not, sceptics would have to find another reason to clutch their pearls.
Bitcoin is an 18-year-old that’s trying to be understood as an ‘risk-on’ alternative asset class: a digital commodity with teenage tantrums.
Its only other peer of similar age is voluntary carbon credits, which isn’t exactly setting the market on fire.
In truth, the core issue is no longer about “dumb money”, but “good money versus bad money”: There will be inevitable competition between the local currency and bitcoin, and eventually one displaces the other and drives it out of economic circulation.
This is called Gresham’s Law and is proven throughout history – the real fools are those who don’t see it coming!
Edmund Yong is a director of the Generative AI Association of Malaysia and ambassador of the Global Blockchain Business Council founded in Davos.
