The cryptocurrency and blockchain community is highly operatic about the technology making a significant impact in multiple domains, often drawing a comparison to the internet. However, several seasoned entrepreneurs have called out the optimism of both the technology and its devotees.
Internet Personality but Blockchain Permabear
In an interview with Arabian Business, Sabeer Bhatia, the founder of now-defunct email service Hotmail, revealed he considers all cryptocurrencies to be operating with a fraudulent business model.
Bhatia closely echoed the thoughts of Jamie Dimon and Warren Buffett, who are famously critical about cryptocurrencies, calling the asset class “nothing more than whitepapers” built on hopes of it changing the world.
Bhatia’s experience in rising technology is unquestionable – he sold Hotmail for $400 million to Microsoft in 1997 when the internet boom was beginning. The entrepreneur also rejected blockchain comparisons with the internet, stating:
“It’s worse. The likes of Pets.com and the Books.com were at least versions of e-commerce platforms that are only growing today. They were right, but they were too early and didn’t have the staying power like an Amazon.”
“Too Good to be True”
Bhatia notably called out IOTA in his interview, stating the blockchain-based Internet-of-Things (IoT) as “too good to be true.”
“They haven’t sold a single device to anyone,” said Bhatia, “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.”
Though the project had signed partnerships with German carmaker Volkswagen, Cisco, and Bosch in December 2017, the entrepreneur called IOTA’s $15 billion market cap as “entirely speculative.”
Unanswered Fundamental Question
Continuing his barrage, Bhatia stated that many investors would lose money in a highly-speculative asset class which creates no value for society. However, he did believe that blockchain technology finds a use in facilitating instant, cheap, and democratic cross-border settlements.
Bhatia regarded the fundamental question of what do cryptocurrency networks do as one which “they carefully dodge,” presumably referring to cryptocurrency firms.
The entrepreneur concluded:
“Facebook, WhatsApp, Instagram, and even Uber are a network. It seems that cryptocurrencies are trying to grow a network and people buy tokens and people participate in the growth of the network. But what is the network doing? The fundamental question of creating value for society is one they carefully dodge.”