As the resident cryptocurrency believer at venture capital firm Benchmark, Sarah Tavel says digital coins like bitcoin are “not the internet, yet” — in other words, they’ll be a big deal, eventually.
Just like the internet, though, there may be some false prophets en route to their acceptance. On the latest episode of Recode Decode, Tavel, who is a partner at Benchmark, told Recode’s Kara Swisher and Teddy Schleifer that there’s a big difference between some cryptocurrencies, such as bitcoin and ethereum, and the tidal wave of Initial Coin Offerings that began flooding the ecosystem late last year.
“A lot of these projects are going to collapse,” she said. “A lot of them have been complete scams.”
“I don’t believe in the structure of ICOs,” Tavel added. “I don’t believe in a couple of engineers writing a white paper, trying to anticipate the inflation rate they want to have, all the incentives. It just seems like we’ve gone back to the ’80s, when you had waterfall development. Really, to build these types of networks, you want to have a very iterative process.”
On the new podcast, Tavel acknowledged that there was more money invested across various ICOs in 2017 than was invested in traditional venture capital seed rounds. But she predicted that that won’t last, which means her job as a startup investor isn’t put at risk by the decentralized nature of the crypto craze.
“I don’t believe that the ICO structure as it is right now is going to continue,” Tavel said. “I think there was a lot of FOMO driving it. It’s very clearly a bubble to me, what’s happening with the ICOs.”
“You’ve got all these people who made a lot of money in bitcoin, and later ethereum, who are rolling it into these ICOs,” she added. “They think they have the Midas touch. Everybody looks smart in a bull market, so there are a lot of people who think they’re really smart right now.”
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This article originally appeared on Recode.net.