Billionaire hedge fund manager Ray Dalio thinks Bitcoin is “one hell of an invention” that could potentially become a privately held “storehold of wealth” asset like gold.
Dalio, the founder of Bridgewater Associates, has been a noted Bitcoin skeptic in the past.
On Thursday, he published his opinions about the asset at length on the Bridgewater website, highlighting both the risk and potential of the biggest cryptocurrency. He does caution, however, that he is not a Bitcoin or cryptocurrency expert.
Says the hedge fund manager,
“There aren’t many alternative gold-like assets at this time of rising need for them (because of all the debt and money creations that are underway and will happen in the future). Because of what is going on in the world, besides there being a growing need for money or storehold of wealth assets that are limited in supply, there is also a growing need for assets that can be privately held.
Because there aren’t many of these gold-like storehold of wealth assets that can be held in privacy and because the sizes of their markets are relatively small, there exists the possibility that Bitcoin and its competitors can fill that growing need. It seems to me that Bitcoin has succeeded in crossing the line from being a highly speculative idea that could well not be around in short order to probably being around and probably having some value in the future.”
Despite acknowledging that potential, Dalio thinks future government crackdowns present serious risk to the asset.
“I suspect that Bitcoin’s biggest risk is being successful, because if it’s successful, the government will try to kill it and they have a lot of power to succeed.”
He also doesn’t buy into the argument that Bitcoin’s scarcity guarantees its status as a store-of-value asset, given the potential that other, newer cryptocurrencies could take its place.
“Since the way Bitcoin works is fixed, it won’t be able to evolve and I presume that a better alternative will be invented and pass it by. I see that as a risk. For those reasons the ‘limited supply’ argument isn’t as true as it might appear – e.g., if Blackberries were in limited supply they still wouldn’t be worth much because they were replaced by competitors that were more advanced. I still don’t know the answer to why that isn’t a risk, but I would welcome my naïveté being corrected.”
Dalio also believes Bitcoin is at risk of being hacked. Still, the billionaire appears to be looking into the asset as a potential investment option.
“This is why to me Bitcoin looks like a long-duration option on a highly unknown future that I could put an amount of money in that I wouldn’t mind losing about 80% of.
That is what Bitcoin looks like to this non-expert. I am eager to be corrected and learn more. On the other hand, believe me when I tell you that I and my colleagues at Bridgewater are intently focusing on alternative storehold of wealth assets.”
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