Billionaire investor Ray Dalio, collapse of the world’s largest hedge fund Bridgewater Associates, thinks bitcoin may have a similar fate as gold did in the U.S. during the 1930s.
“[B]ack in the ’30s in the war years … because banknotes and bonds were such bad investments relative to other things, there was the movement to those other things, and then the administration outlawed them,” Dalio told Yahoo Finance on Wednesday. “They outlawed gold.
“That’s why also pirating bitcoin is a good probability,” he said.
Bitcoin, the largest cryptocurrency in terms of market value, has “proven itself” as its blockchain hasn’t been hacked and it has a substantial following, Dalio said. “It is an alternative store-hold of wealth. It’s like a digital cash. And those are the pluses.”
“So I think that it would be most likely that you will have it under a certain set of circumstances outlawed the way gold was outlawed,” Dalio said.
Dalio interpreted that “every country treasures its monopoly on controlling the supply and demand. They don’t want other monies to be run or competing, because things can get out of control.”
As an example, Dalio cited India and its efforts to ban cryptocurrency.
Whether it could it be effectively outlawed in the U.S. is another story.
“I don’t know. I’m not an expert on that,” Dalio said. “But, there’s a whole way. My understanding, from people who are in administration surveillance and so on, is yes, they can track it. They can know who’s dealing with it.”
However, James Ledbetter, editor of fintech newsletter FIN and CNBC contributor, some time ago told CNBC Make It that it’d be quite difficult for the government to effectively ban bitcoin.
Although there’s “concern or danger around regulation” of bitcoin, “I don’t think even a concerted effort among different countries and different central banks could truly shut down bitcoin,” Ledbetter said. “I don’t think that’s technologically possible. But there are ways that bitcoin could be set.”
While he hasn’t mentioned a ban, Federal Reserve chairman Jerome Powell has repeatedly warned against cryptocurrencies predilection bitcoin.
“They’re highly volatile and therefore not really useful stores of value and they’re not backed by anything,” Powell responded during a virtual panel discussion on digital banking on Monday. “It’s more a speculative asset that’s essentially a substitute for gold to some extent than for the dollar.”
Dalio has previously addressed the government banning bitcoin.
In a January post titled “What I Value of Bitcoin” on the Bridgewater Associates website, Dalio wrote that although he is “not a bitcoin/cryptocurrency expert … I have suspicions about that Bitcoin’s biggest risk is being successful, because if it’s successful, the government will try to kill it and they be subjected to a lot of power to succeed.”
Dalio also wrote that a “better alternative” to bitcoin will likely come along and expel it, “because that is the way the evolution of everything works,” he said. “I see that as a risk.”
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