Billionaire investor Ray Dalio, the founder of the world’s largest hedge fund Bridgewater Associates, believes bitcoin could have a similar fate to gold in the United States in the 1930s.
“[B]in the 1930s … because cash and bonds were such a bad investment in other things, there was a movement toward these other things, and then the government banned them, “Dalio told Yahoo Finance on Wednesday. . ” They banned gold.
“That’s why banning bitcoin is a good probability,” he said.
Bitcoin, the largest cryptocurrency in terms of market value, has been “proven” because its blockchain has not been hacked and has a large number of people, Dalio said. “It’s an alternative wealth deposit. It’s like digital cash. And that’s the advantage.”
“So I think it would be very likely that in certain circumstances you would have outlawed the way gold was banned,” Dalio said.
Dalio explained that “every country values its monopoly on the control of supply and demand. They do not want other sums to work or compete, because things can get out of control.”
As an example, Dalio cited India and its efforts to ban cryptocurrency.
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 is a whole way. My understanding, from the people who are under government surveillance and so on, is yes, they can follow it. They can know who is in charge of it.”
However, James Ledbetter, editor of the fintech FIN newsletter and a CNBC contributor, previously told CNBC Make It that the government would be quite difficult to effectively ban bitcoin.
Although there is “concern or risk about regulating” bitcoin, “I don’t think even a concerted effort between different countries and different central banks could shut down bitcoin,” Ledbetter said. “I don’t think it’s technologically possible. But there are ways in which bitcoin could be regulated.”
Although he did not mention a ban, Federal Reserve Chairman Jerome Powell has repeatedly warned against cryptocurrencies such as bitcoin.
“They are extremely volatile and therefore not really useful for valuable stocks and are not supported by anything,” Powell said in a virtual discussion about digital banking on Monday. “It’s more of a speculative asset that is essentially a substitute for gold, rather than the dollar.”
Dalio previously addressed the government banning bitcoin.
In a January post entitled “What I Think of Bitcoin” on Bridgewater Associates, Dalio wrote that while he is not an expert on bitcoin / cryptocurrencies … I suspect that Bitcoin’s biggest risk is success, because “If he succeeds, 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 will probably come and replace it, “because that’s how all things work,” he said. “I see this as a risk.”
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