Elliott Management, a $34 billion hedge fund, described cryptocurrencies as ‘one of the most brilliant scams in history’ in a brutal takedown

Elliott Management, a $34 billion hedge fund founded by billionaire Paul Singer, has an acronym to describe the folly surrounding cryptocurrencies – WTHIT, or what the hell is this?

“FOMO (fear of missing out) has solidly trumped WTHIT (what the hell is this??),” Elliott told clients in a January 26 letter seen by Business Insider. “When the history is written, cryptocurrencies will likely be described as one of the most brilliant scams in history.”

The fund dedicated three pages to covering what it sees as issues with cryptocurrencies. The letter said:

“We all laugh at primitive tribes which used large stones (or pigs) as currency. Well, laugh as you will, but a stone or a healthy pig is something. Cryptocurrencies are nothing except the marketing power of inventors, financiers and others who love the idea of buying a black box (which is obviously empty) for the price of a Kia and dreaming that it will turn into a Mercedes. There have been times recently when this dream has materialized within hours. This is not just a bubble. It is not just a fraud. It is perhaps the outer limit, the ultimate expression, of the ability of humans to seize upon ether and hope to ride it to the stars.”

This is not the first time Elliott has criticized cryptocurrencies; the firm raised concerns in a 2013 client letter. But the value of cryptocurrencies has surged since then, with some volatility surfacing earlier this year.

One of Elliott’s concerns is the notion that bitcoin is scarce. The hedge fund cites a recent Barron’s magazine interview with venture capitalist Avie Tevanian, who says “we know that only 21 million bitcoins will be created.”

According to Elliott, this is misguided because “through a process known as a ‘forking event,’ this limitation is not nearly as sacrosanct as the bitcoin evangelists would have you believe.” […]

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