A couple of days ago Prince Alwaleed bin Talal Saudi, a billionaire investor and chairman of the Kingdom Holding Company, called Bitcoin “an Enron in the making”, saying that it will eventually implode. That was the latest part of a recent mainstream anti-crypto criticism wave that brought together everyone from JP Morgan CEO Jamie Dimon who called Bitcoin investors ‘stupid’, to Jordan Belfort, of Wolf of Wall Street infamy, who declared ICOs worse than anything he had ever done.
For people who are in the business, this seems to be a repercussion of the current ICO bubble.
Bharath Rao, CEO of Leverj, said: “The utility of bitcoin is the ability to send large amounts of value over large distances in a very short time. This makes it a commodity with measurable value. Many prominent figures have called bitcoin a fraud and ponzi. This argument is as old as bitcoin itself, but interestingly, instead of putting brakes on the bitcoin bullet train, it has actually accelerated adoption by giving it more publicity.
The reason for this is quite simple. People intuitively understand what fraud is: Something is misrepresented and exchanged for value. Clearly, this is not the case with bitcoin, since its purpose (internet money) cannot really be misrepresented. Ponzi on the other hand is equity that has no real utility and whose returns are from future investors. Ponzis are simply not possible without a central issuer and thankfully bitcoin has none.”
Abhishek Pitti, CEO and founder of Nucleus, commented: “What’s primarily driving criticism toward cryptocurrencies is the massive $170 billion bubble to which it has rapidly grown. Unfortunately, many entrepreneurs conducting ICOs today lack a basic understanding of how blockchain works. There’s definitely a lot of easy money on the table right now, which has caused every entrepreneur within even an inkling of an idea to rush toward an ICO, and thus, has resulted in a lot of criticism toward cryptocurrencies.
The reality is that ICOs are changing the way many technology startups raise money to fund their projects. The amount of money raised by cryptocurrency and blockchain startups via ICOs has surpassed early stage venture capital funding in the last few quarters. ICOs are a way for startups to raise capital without giving up decision-making power to venture capitalists nor surrendering any equity to them. The cat’s out of the bag, and ICOs are here to stay as a form of fundraising.”
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