Elliott Management, a $34 billion hedge fund, told clients that cryptocurrencies would most likely one day be described "as one of the most brilliant scams in history."

"FOMO (fear of missing out) has solidly trumped WTHIT (what the hell is this??)," Elliott wrote in a fourth-quarter letter to clients.

Elliott Management, a $34 billion hedge fund founded by the billionaire Paul Singer, has an abbreviation to describe the folly surrounding cryptocurrencies: WTHIT.

"FOMO (fear of missing out) has solidly trumped WTHIT (what the hell is this??)," Elliott told clients in a January 26 letter seen by Business Insider. "When the history is written, cryptocurrencies will likely be described as one of the most brilliant scams in history."

The fund dedicated three pages to covering what it sees as issues with cryptocurrencies:

"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.

"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."

This is not the first time Elliott has criticized cryptocurrencies — the firm raised concerns in a letter to clients in 2013. But the value of cryptocurrencies has surged since then, with some volatility surfacing earlier this year.

One of Elliott's concerns is the notion that bitcoin is scarce. The hedge fund cites a recent Barron's magazine interview in which the venture capitalist Avie Tevanian said, "We know that only 21 million bitcoins will be created."

According to Elliott, this is misguided because "through a process known as a 'forking event,' this limitation is not nearly as sacrosanct as the bitcoin evangelists would have you believe."

A forking event is essentially when rules are created for the software backing bitcoin, creating a new currency, according to CoinCentral.com.

Such events, Elliott says, "have created an increase in supply and a dilution (really an evaporation, as is the case with all currency debasements throughout human history) of the value proposition for cryptocurrencies."

Here's more from Elliott's letter (emphasis added):

"There is no basis excepting a brand new theology for accepting the '21 million bitcoin limit,' or any limit at all, for that matter. There is a theory in semiconductors called 'Moore's Law,' which basically says that the number of transistors in an integrated circuit doubles roughly every two years. 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.

"Since bitcoin and its cousins are, at the core, absolutely and utterly nothing, there is no limit on bitcoin supply except the outer boundaries of human folly. At a 'market cap' of $175 billion for bitcoin alone (as this piece is written), a 1% increase in the 'limited' supply of bitcoins conjures $1.75 billion out of thin air.

"Humility plus truth causes us to admit that we first expressed these kinds of thoughts in a 2013 quarterly report, when bitcoin had no real imitators and no forks, and when it traded at a tiny fraction of today's price. 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?"

Elliott managed $34.1 billion as of January 1, according to the letter. The Elliott Associates LP fund returned 8.7% last year.