Billionaire investor Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, believes that Bitcoin may have a similar fate to gold in the US during the 1930s.
“[B]Ack in the 30’s in the war years … because cash and bonds were such bad investments relative to other things, there was a move towards those other things, and then the government banned them, “Dalio told Yahoo Finance on Wednesday. ” They banned gold.
“That is why banning bitcoin is also a good probability,” he said.
Bitcoin, the largest cryptocurrency in terms of market value, has “proven its worth” as its blockchain has not been hacked and it has a large following, Dalio said. “It’s an alternative store of wealth. It’s like digital cash. And those are the advantages.”
“So I think it’s very likely that, under certain circumstances, the way gold was banned will be outlawed,” Dalio said.
Dalio explained that “all countries treasure their monopoly in controlling supply and demand. They don’t want other money to be operating or competing, because things can get out of control.”
As an example, Dalio cited India and its efforts to ban cryptocurrencies.
Whether it could be effectively banned in the US 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 under government surveillance and so forth, is that yeah, they can track it down. They can know who’s dealing with it.”
However, James Ledbetter, editor of the fintech newsletter FIN and a contributor to CNBC, previously told CNBC Make It that it would be quite difficult for the government to effectively ban bitcoin.
Although there is “concern or risk around the regulation” of bitcoin, “I don’t think that even a concerted effort between different countries and different central banks can shut down Bitcoin,” Ledbetter said. “I don’t think that’s technologically possible. But there are ways that Bitcoin could be regulated.”
While he hasn’t mentioned a ban, Federal Reserve Chairman Jerome Powell has repeatedly warned against cryptocurrencies like bitcoin.
“They are highly volatile and therefore not really useful stores of value and are not backed by anything,” Powell said during a virtual panel discussion on digital banking on Monday. “It is more of a speculative asset that is essentially a substitute for gold rather than the dollar.”
Dalio has previously addressed the government banning bitcoin.
In a January post titled “What I Think of Bitcoin” on the Bridgewater Associates website, Dalio wrote that although he is “not a bitcoin / cryptocurrency expert … I suspect that the biggest risk of Bitcoin is being successful, because if he is successful, the government will try to kill him and they have a lot of power to succeed. “
Dalio also wrote that a “better alternative” to bitcoin is likely to emerge and displace it, “because that’s the way the evolution of everything works,” he said. “I see that as a risk.”
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