Billionaire Ray Dalio says Bitcoin is not effective money, store of value or medium of exchange - Featured

Billionaire Ray Dalio, founder of the world's largest hedge fund Bridgewater Associates, says it is "amazing" what Bitcoin has achieved but believes the cryptocurrency will not be an effective money, store of value or medium of exchange. Still, he stressed 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 previously served as co-chief investment officer, expressed his views on Bitcoin in an interview with CNBC on Thursday. Regarding the world's largest cryptocurrency, he said:

I think it was pretty amazing that it took 12 years to complete... But I think it has nothing to do with anything... It's a tiny thing that gets a disproportionate amount of attention.

Noting that Bitcoin's total market value is less than a third of Microsoft stock, whose market cap stood at $1.92 trillion as of Friday, Dalio claimed, "Biotech and many other industries are more interesting than Bitcoin." The billionaire said:

It won't be effective money. It is not an effective store of wealth. It is not an effective medium of exchange.

"But we are in a world where money as we know it is in danger... We print too much, and it's not just the United States, but all reserve currencies," he continued, mentioning the problems with the euro and the Japanese yen in particular. "So in this world the question is: What is money and how is it going to work? So if we look at something like China's renminbi and then take the digital renminbi, I think you'll see that become more and more of a thing," Dalio said.

The founder of Bridgewater Associates emphasized: “If you want a digital currency, you have to do something different” than Bitcoin. However, he noted: “I don’t think the stablecoins are good because then you get a fiat currency again.” He added:

An inflation-linked coin would be best. In other words, something where you would basically say, okay, this will give me purchasing power because every individual wants it. What do you want? They want to secure their purchasing power.

“The closest thing to that is an inflation index bond and so on,” Dalio said. "But if you created a coin that says, okay, this is purchasing power that I know I could save and invest my money over a period of time and then I can transact 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 are likely to become attractive, viable coins. I don't think it's Bitcoin."

A lot of people don't agree with Ray Dalio

After Dalio's interview, many people took to Twitter to disagree with him. Some people noted that Dalio was only describing Bitcoin, while others pointed out that Bitcoin has been around for longer than that 14 years not 12, as the Bridgewater founder said.

“An ‘inflation-linked currency’ is nonsense,” commented Bitcoin advocate Robert Breedlove. "Lesson for Ray Dalio: The purchasing power of money is preserved by the integrity of its supply. Bitcoin has a fully integral money supply of 21 million. In the long term, Bitcoin is the perfect money to maintain purchasing power over time."

Gabor Gurbacs, strategy consultant at Vaneck/MVIS, tweeted: "Ray Dalio is wrong about Bitcoin. I respect Ray's work and like his books, but his comments on Bitcoin are under-researched and disappointing." Gurbacs added:

Ray's views, particularly on the size, reach and importance of the Bitcoin market, are concerning. Tens of millions of people use Bitcoin around the world, especially in emerging markets. Bitcoin’s censorship resistance is groundbreaking.

Dalio previously had a more optimistic outlook on Bitcoin. In January 2021 he has called: "I think Bitcoin is a damn good invention. To have invented a new kind of money via a system programmed into a computer that has worked for about 10 years and is rapidly gaining popularity as both a kind of money and a repository of wealth is an amazing achievement." In February last year he confirmed that he has “a tiny percentage” of his portfolio in cryptocurrency.

Nonetheless, he has repeatedly warned that governments can Ban Bitcoin when cryptocurrency “becomes material,” crypto is predicted to “ forbidden probably from different governments.”

What do you think of billionaire Ray Dalio's comments? Let us know in the comments section below.

Kevin Helms

As a student of Austrian economics, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects, and the interface between economics and cryptography.

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