Elliott's Singer: Bitcoin Boom Confirms "The Limitless Ignorance Of Humans"

With Bitcoin having bounced almost 100% off its early February lows, dashing many hopes that the decentralized cryptocurrency 'fad' had begun to die, it appears the FUD-mongering is resonating once more among the cognoscenti.

One of the world's largest hedge funds Elliott Management, founded by billionaire Paul Singer in 1977, dedicated three pages to describing its negative view of cryptocurrencies in a fourth-quarter letter to clients, calling cryptocurrencies "one of the most brilliant scams in history."

As a reminder, Paul Singer is also among the group that initially funded the creation of the so-called 'Trump Dossier'.

As CoinTelegraph reports, in the letter dated Jan. 26, Elliott claims that people encountering cryptocurrency have switched from sense of “WTHIT (What the hell is this?)”  to a stable FOMO (fear of missing out). Elliott likens cryptocurrency investors to buyers of a “black box” that will, according to the firm, turn out to be empty.

"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."

The firm does not shy away from hyperbole in the letter, insisting that cryptocurrency is the “equivalent of nothing” and that the desire to invest in it is an “indication of the limitless ignorance of swaths of the human race”, continuing:

“This [cryptocurrency] 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...

But is it not glorious that when the equivalent of nothing attracts priests and parishioners who run up the price, the very willingness of the mob to buy it at higher and higher prices is seen as validation of the thing, rather than an indication of the limitless ignorance of swaths of the human race?

Further along in the letter, Elliot expresses skepticism about the scarcity of Bitcoin (BTC). Despite the fact that Bitcoin’s supply is capped at 21 million coins, the letter from Elliot argues that the forking of the Bitcoin Blockchain could threaten scarcity, stating: 

“this limitation [scarcity] is not nearly as sacrosanct as the bitcoin evangelists would have you believe."

According to Business Insider, Elliott managed $34.1 bln as of January 1, 2018 and the Elliott Associates LP fund returned 8.7% last year

In 2017 alone, the number of digital currency-based hedge funds grew from 30 to about 130.

Traditional hedge funds have also increasingly been buying up cryptocurrencies, most famously that of American investor Bill Miller, who as of Dec. 2017 held 50 percent of his fund’s money in Bitcoin.

Comments

Baron von Bud Brazen Heist Tue, 02/20/2018 - 13:06 Permalink

Singer is right of course. But people have made good paper profits trading crypto. As a speculation it has interest. People should know there is nothing to prevent the managers of BC from doubling the number of coins to 42 million or to a billion. It's just a software change. BC is a belief system but so is fiat dollars on a much bigger scale. For a long term holding, I'd prefer gold to BC. For a short term holding and transaction fiat I'll take dollars. The craziness can go on for a long time.

In reply to by Brazen Heist

Klassenfeind ZorroHedge Tue, 02/20/2018 - 13:24 Permalink

"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."

I completely agree! Buy gold!

In reply to by ZorroHedge

Automatic Choke pods Tue, 02/20/2018 - 12:30 Permalink

You don't need to go as far as he does to explode the "scarcity" fraud.

Right here on ZH, about a week ago, there was an article that showed a table of holdings by size.   The vast majority of bitcoin holdings have never seen the market -- they are held by the originators or very early players, with billions of value.   If they were in play, the dilution would be thousandfold and the coins nearly worthless.    Scarce, they are not.   Waiting, they apparently are.

I daresay that other coins have the same phenomena....pure ponzi for the originators, if only they can dribble out enough to cash in somewhat before the masses wise up.

In reply to by pods

eclectic syncretist Automatic Choke Tue, 02/20/2018 - 12:32 Permalink

"[It's] 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... an indication of the limitless ignorance of swaths of the human race..."

Well Mr. Singer, although I personally have no intention of ever holding an interest in them, cryptocurrencies do make more common sense than central banks, so there is that.

In reply to by Automatic Choke

pods Automatic Choke Tue, 02/20/2018 - 12:41 Permalink

The pre-mined coins maybe, fully mined coins nope. (I dont even call the non-mineable coins cryptos)
That is why I mine a coin that has no premine to enrich the starters (it does have a certain % of the initial mined go to them for network upgrades though because nobody works for free, but they are granted as blocks are mined, not premined).

pods

In reply to by Automatic Choke

Exponere Mendaces Automatic Choke Tue, 02/20/2018 - 13:30 Permalink

You insufferable fuckface, it is scarce.

You are confusing undetermined holdings with a system that inherently limits total issuance. Get that through your fucking skull. It would take a monumental consensus agreement to change that, and you better believe that all the original holders of Bitcoin wouldn't be going for it.

The cap will stay at 21 million coins, period.

As for who will do what with their coins - it doesn't fucking matter in the long run, does it? We're talking financial freedom, not just how much per unit it is. When the time comes, the question "How much is 1 Bitcoin worth" will elicit the same confusion as "How much is one dollar worth" -- it will BE ITS OWN UNIT, so making that comparison will seem idiotic.

But here we are, on fucking Zerohedge, and most of the intelligent commenters have left the building.

I'm financially independent and don't give a fuck, which is why I'm still fucking around on here -- you? I have no idea what the fuck you get out of it, honestly.

In reply to by Automatic Choke

Exponere Mendaces zebra77a Tue, 02/20/2018 - 15:57 Permalink

You are a lying sack of shit.

If you could achieve the mining improvements you mentioned - the SMART move would be to mine a fuckload and use the reward. However, it would increase the number of blocks found, and when you hit the 2016th one, it would hike up Difficulty to the sky.

I don't see a spike in Difficulty or blocks found - so you're a fucking liar.

And what the fuck is this bullshit "The blockchains won't talk to each other" -- Hey asshole, you have a modified client that doesn't obey the CONSENSUS RULES, that is why they IGNORE YOUR STUPID ASS. Its working as designed, fucko.

As for Exchanges doing shenanigans with IOU's or some shit -- could it happen, sure -- but most of the exchanges have published wallet addresses that can be monitored and they haven't imploded from redemptions. An idiot running an exchange doing that game wouldn't last too long.

The short of it is - You're just another fucking idiot who's claimed they "cracked crypto" or some bullshit, and you have no idea what the difference is between the shady bucketshop exchanges and the KYC/AML ones.

Try to be less of a n00b, christ.

 

In reply to by zebra77a

whatswhat1@yahoo.com pods Tue, 02/20/2018 - 12:44 Permalink

Tell us something we don't know. Of course it's a fraud.  But bitcoin isn't an only child.  Everything is a fraud.  The entire securities market is a fraud.  The U.S. government is a fraud.  All of the world governments are a fraud.  Every corporation is a fraud.  The SEC is a fraud.  The FDIC is a fraud.  The FED is a fraud.  Obama is a fraud.  Donald Trump is a fraud (it was all up-votes until I used this example).

Guess what.  People make money off of a fraud.  People lose money off of a fraud.  Always have, always will.

By the way, I'm going to discredit your fraud because it competes with my fraud.

Caveat emptor

In reply to by pods

Decoherence Ghost of PartysOver Tue, 02/20/2018 - 12:34 Permalink

“Never argue with stupid people, they will drag you down to their level and then beat you with experience.”

― Mark Twain

 

There are better options.  This is going to end in tears for the majority of people invested in it.   The people who think they're winning with this should think again.  The element of surprise is over.  This made sense when it was a sucker punch to the balls, but those days are long gone now.  Every day you sit in it increases the chances that you will be the one taking the next sucker punch.  The whales are running up the price to keep drawing more fools in, then they dump it.  Rinse and repeat.  They will leave you hanging at the top when this is through.   

 

In reply to by Ghost of PartysOver

Decoherence ZorroHedge Tue, 02/20/2018 - 13:50 Permalink

The ones that bought Bitcoin at 15-20K are doing great?  Hopefully this goes on long enough for them to get out.  My prediction is Bitcoin gets body slammed right along with stocks, bonds, etc. when that day finally comes.  When other asset classes become cheap again, Bitcoin will be a used condom on the beach.  This was engineered out of desperation, because in absence of any real assets that are a good value, just make one out of thin air (ex nihilo) - same as the trash in your pocket.  

In reply to by ZorroHedge