Billionaire Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, says what bitcoin has accomplished is “incredible“, but believes that crypto-currency will not be an effective currency, store of value or medium of exchange. Nevertheless, he points out that “we are in a world where money as we know it is in danger.“
Billionaire Ray Dalio on bitcoin
Billionaire investor and hedge fund manager Ray Dalio, who founded the world’s largest hedge fund, Bridgewater Associates, and was previously its co-chief investment officer, gave his thoughts on bitcoin in an interview with CNBC on Thursday. Referring to the world’s largest crypto-currency, he said:
I think it’s quite amazing that for 12 years it’s accomplished … But I don’t think it has anything to do with anything … It’s a tiny thing that gets a disproportionate amount of attention.
Noting that the total value of the bitcoin market is less than a third of the stock of Microsoft, which had a market capitalization of $1.92 trillion on Friday, Ray Dalio said, “Biotechnology and many other industries are more attractive than bitcoin“. The billionaire stated:
It will not be an efficient currency. It is not an efficient means of storing wealth. It is not an efficient medium of exchange.
“But we are in a world in which money as we know it is in danger… We are printing too much, and it’s not just the United States, all the reserve currencies” he continued, mentioning the problems of the euro and the Japanese yen in particular. “And so in this world, the question is what is money and how is it going to work. So when we look at something like China’s renminbi, and then you take the digital renminbi, I think you’re going to see that become more and more of a thing“, Dalio shared.
The founder of Bridgewater Associates noted that “if you want a digital currency, you have to do something different” from bitcoin. However, he noted, “I don’t think stablecoins are good because then you get a fiat currency again“. He added:
What would be better is a coin tied to inflation. In other words, something that would allow you to say, “OK, this is going to give me purchasing power because every individual wants…”. What do they want? They want to secure their purchasing power.
“The closest thing to it is an inflation-indexed bond and so on“, said Ray Dalio. “But if you create a coin that says, okay, here’s the buying power where I know I can save and invest my money over a period of time, and then I can make transactions anywhere, I think that would be a good coin“, he continued. “So I think you’re probably going to see the development of coins that you haven’t seen that will probably end up being attractive and viable coins. I don’t think bitcoin is that one“.
Many people disagree with Ray Dalio
Following the Ray Dalio interview, many people took to Twitter to disagree. Some pointed out that Ray Dalio only described bitcoin, while others pointed out that bitcoin has been around for over 14 years, not 12 as the Bridgewater founder said.
“An ‘inflation-linked currency’ is nonsense“, commented bitcoin supporter Robert Breedlove. “A lesson for Ray Dalio: The purchasing power of money is preserved by the integrity of its supply. Bitcoin has a perfectly integral money supply of 21M. In the long run, bitcoin is the perfect currency to preserve purchasing power over time.“
Gabor Gurbacs, strategy consultant at Vaneck/MVIS tweeted, “Ray Dalio is wrong about bitcoin. I respect Ray’s work and love his books, but his comments on bitcoin are under-researched and disappointing.“Gurbacs added:
Ray’s views, particularly on the size, scope and importance of the bitcoin market, are concerning. Tens of millions of people use bitcoin around the world, particularly in emerging markets. Bitcoin’s resistance to censorship is a game changer.
Ray Dalio used to have a more bullish outlook on bitcoin. In January 2021, he stated, “I think bitcoin is quite an invention. To have invented a new type of money via a system programmed into a computer, which has been operating for about 10 years and is rapidly gaining popularity both as a type of money and as a store of wealth is an incredible accomplishment.” Last February, he confirmed that he had “a tiny percentage” of its portfolio in crypto-currencies.
Nevertheless, he has repeatedly warned that governments may ban bitcoin if the crypto-currency “becomes material“, predicting that the crypto will be “outlawed, probably by various governments.“