Billionaire hedge fund manager Ray Dalio tried to clarify his views on the world’s most famous digital asset with the release of a short essay entitled “What I Really Think About Bitcoin”.
Dalio’s views on Bitcoin (BTC) – which he should read directly to avoid media misinterpretation – are both hopeful and cautious. First, Dalio recognized the technological achievements of Bitcoin and praised its ability to last for over a decade:
“I think Bitcoin is a damn good invention. To have invented a new type of money through a system programmed into a computer that has worked for about 10 years and is rapidly gaining popularity as a type of money and store for wealth is an amazing accomplishment. “
Additionally, Dalio believes that Bitcoin is already an “alternative gold-like asset” and will become increasingly important in the future due to the devaluation of fiat currencies from excessive money and debt pressures:
“Those who built it and supported the dream of making this new breed of money a reality did a great job of making that dream a reality and turning Bitcoin (by which I mean it and its analogous competitors) an alternative gold-like asset do . There aren’t currently many alternative gold-like assets whose demand is increasing (due to all of the debt and money creations that are underway and will take place in the future). “
Dalio believes that Bitcoin has already crossed the line from a “speculative idea” to something that is “likely” to have some value in the period ahead:
“It seems to me that Bitcoin has succeeded in crossing the line from a highly speculative idea that could not exist in a short period of time, to a possible and probably also possible in the future.”
However, not all is rosy when it comes to Dalio’s thoughts on the world’s first cryptocurrency. The hedge fund manager believes that the level of privacy of Bitcoin depends entirely on how private the government allows it:
“As an extension of Bitcoin to be digital, the questions of how private it is and what the government allows and what doesn’t. In terms of privacy, Bitcoin seems unlikely to be as private as some suggest. After all, it is a public ledger … “
Why should governments want to disrupt the use of Bitcoin? As Dalio points out, the current principles are exactly the same as they were in 1694 when the newly formed Bank of England sought to consolidate its position as the sole issuer of debt and money within its borders.
Leading companies in any industry will of course try to stifle opposition, and the same could happen with Bitcoin, especially as Dalio points out, as it becomes more popular.
“Rather than being far-fetched that the government would invade privacy and / or prevent the use of Bitcoin (and its competitors), it seems to me that the more successful it is, the more likely these possibilities are.”
Dalio doesn’t think government agencies will thrive Bitcoin as an alternative to printed money – a sobering thought that doused his earlier praise for the technology with icy waters. Dalio said:
“I have a hard time imagining that Bitcoin (or gold) would be an obviously better choice than the money and credit it produces. I suspect that Bitcoin’s greatest risk is to be successful because if it does, the government will try to kill it and they have a lot of power to succeed. “
The supposed demand attributed to Bitcoin due to its declining supply has also been questioned by Dalio, who suggested that the emergence of “Bitcoin-like” assets (other altcoins) effectively expanded the supply of Bitcoin by offering an alternative but offered similar service.
Put his thoughts and theories aside, Dalio asked his staff at Bridgewater Associates to calculate the effectiveness of Bitcoin as a diversified asset in relation to gold during market downturns.
The researchers concluded that it was too early to judge whether Bitcoin would offer the same level of diversification in the future.
“We hesitate to draw firm conclusions with such a small sample size and the speed at which the world of cryptocurrency is evolving. So far, Bitcoin’s ability to offer some diversification advantage appears to be more theoretical than realized, ”the report said.