Paul Singer, the billionaire founder of hedge fund Elliott Management, has compared cryptos to empty boxes with an inflated value.
It is one thing to be skeptical about the worth of cryptocurrencies as a means of exchange and quite another to say they are an outright scam that aims to swindle people out of their hard-earned money. Paul Singer, the man behind $34 billion hedge fund Elliott Management, aired highly negative sentiments in a note the company recently dispatched to its clients.
He started by saying that we “laugh at primitive tribes which used large stones (or pigs) as currency,” but those at least were “something.”
Singer then compared them to cryptocurrencies, which, according to him, are the machinations of inventors who “love the idea” of buying an empty box “for the price of a Kia and dreaming that it will turn into a Mercedes.
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…When the history is written, cryptocurrencies will likely be described as one of the most brilliant scams in history,” he continued.
The letter also said the notion of Bitcoin’s scarcity is misguided because a “forking event” could increase the limit at any time.
What he fails to mention — likely out of ignorance — is that a fork doesn’t modify a cryptocurrency’s limitations but rather creates a new one that runs in parallel to the original coin. Investors can choose which of them to use.
Various forks of Bitcoin have appeared, yet the original Bitcoin continues to have a hard limit of 21 million coins.
Earlier this month, World Bank leader Jim Yong Kim also called the cryptos market a fraud, saying “I am told the vast majority of cryptos are basically Ponzi schemes.”
Still, this isn’t as harsh a judgment since it is an accusation that does not encompass the entire market.