Sabeer Bhatia, the founder of now-defunct email service Hotmail, believes that cryptocurrencies are fraudulent and are founded on the principle of hope and dreams.
“The underlying business model that I have looked at is fraud. Cryptocurrencies are nothing more than whitepapers, a hope in the way the world will be,” he told the Arabian Business journal.
To make his point, he name-dropped IOTA, a cryptocurrency that is focused on working in the rapidly-growing “internet of things” (IoT) market.
“There is a token called IOTA, which is based on the internet of things. But they haven’t sold a single device to anyone. The whole idea is: ‘In the future, one IoT device will be able to talk to another IoT device and settle any financial transaction between them using blockchain.’ That’s the idea. And although it’s never been implemented, the idea is worth $15 billion? Really? The values are entirely speculative,” he added.
Bhatia is nonetheless not as adamantly against the idea of cryptocurrencies as Warren Buffett. He believes that blockchain technology provides a strong backbone for payment processing.
However, he also thinks that most investors in cryptocurrencies will be sorely disappointed in the future. According to him, the crypto market’s boom is similar to that of the dot-com bubble, where investors were paying exorbitant amounts of money for overvalued firms that were far ahead of their time.
Bhatia likens the Bitcoin boom to that of Pets.com, which had an evolved e-commerce platform that was developed at just the wrong time. Instead, Amazon (NASDAQ:AMZN) took the lead after the dot-com mania experienced a bust and the e-commerce market consolidated around the company.
This is quite similar to the point of view expressed by investment firm GP Bullhound, which said that the cryptocurrency market would inevitably collapse over the next 12 months. In addition to this, the company said that the market would experience a resurgence that will consolidate around a few highly successful coins.
“The growth dynamics for the precious few survivors will be unprecedented,” GP Bullhound claimed in its report.
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