O human folly, thy name is bitcoin! At least that might be the takeaway from hedge fund Elliott Management's latest letter to clients. 

In a creative January missive that is equal parts critical about the hyperbole associated with cryptocurrencies and admiring of the manner in which they have captivated public imagination, Elliott Management described cryptocurrencies as “one of the most brilliant scams in history.” (See also: Cryptocurrencies Gained More Than 1,000% In 2017.) 

“FOMO (Fear of Missing Out) has solidly trumped WTHIT (What the Hell Is This??),” Elliot wrote to clients, as an explanation for the current crypto mania.

According to the hedge fund, cryptocurrencies are 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.”

Billionaire Paul Singer is the founder and president of Elliot Management, which has $34.1 billion of assets under management as of January 1.

The hedge fund remarked in its epic crypto smackdown: “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."

As regular readers of Investopedia already know, 2017 was a seminal year for cryptocurrencies. Their valuations skyrocketed after they burst into public consciousness thanks to extensive media coverage and attention from regulatory agencies, governments, and public intellectuals. 

Cryptocurrencies are unlike fiat currencies because they are not backed by a central authority. They are also unlike gold because they do not have real-world applications (as yet) and the theoretical limits to their numbers (which has been set to imitate gold’s status as a store of value) are easily offset by hard forks. (See also: Will Bitcoin Undergo 50 Forks In 2018?)

The folks at Elliot Management were particularly tough on hard forks, which increase the numbers and prices of cryptocurrencies in circulation. “Perhaps we can coin a ‘More’s Law,’ which is: As the aggregate purported market value of cryptocurrencies continues to explode higher, the incentives to conjure more of them, more versions of them and more imitations and ‘improvements’ of them, continue to soar,” the note’s authors wrote in a play on the term 'Moore's Law.' That is shorthand for the theory in semiconductors which basically says that the number of transistors in an integrated circuit doubles roughly every two years. 

They also touched upon human nature and its folly in their letter. 

“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 a validation of the thing, rather than an indication of the limitless ignorance of swaths of the human race?” Elliot Management wrote. 

Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin.