A well known investor and hedge fund manager, Ray Dalio caused a stir last week with his comments on cryptocurrencies. In an interview with CNBC, he had some positive things to say, noting that crypto and Bitcoin’s accomplishments have been “quite amazing”, but ultimately struck a skeptical tone when he reasoned that Bitcoin “has no relation to anything… it moves and has no relation. It’s a tiny thing that gets a disproportionate attention.”
The billionaire Bridgewater Associates founder went on to say: “It’s not going to be an effective money. It’s not an effective store hold of wealth. It’s not an effective medium of exchange.”
It should be stressed that Dalio is not arguing in favor of the status quo. In fact, he has gained attention both in and outside the world of finance for his views on the cyclical nature of history and empire, and his belief that the globe is currently going through the kind of radical power shifts that happen every couple of centuries or so.
As such, he asks broad questions, and hints at possible outcomes: “We are in a world in which money as we know it is in jeopardy, right? We are printing too much and it’s not just the United States, all the reserve currencies… And so in that world, the question is, what is money and how’s that going to operate? 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 a thing… I think the question over the next number of years is really what is money, not just as a medium of exchange, but a store hold of wealth.”
Dalio also suggested that: “What would be best is an inflation linked coin. In other words, something where basically you would say okay, this is going to give me buying power because every individual wants, what do they want? They want to secure their buying power, if you want to save.”
Not surprisingly, these comments prompted significant pushback from Bitcoin’s proponents, since the leading cryptocurrency is heralded by its advocates as addressing precisely the issues that Dalio points to. That is, in a shifting, unstable world, where people are questioning the reliability of money itself, where preserving wealth and buying power are genuine problems, and in which digital transactions are rapidly becoming the norm, Bitcoin is presented as an all-purpose solution.
What’s more, Bitcoin has a first-mover advantage, operates internationally and outside…
