Billionaire Ray Dalio criticizes Bitcoin as not a viable alternative to gold, warns of risk of being banned

Legendary investor Ray Dalio remains unfazed by Bitcoin’s impressive early-year rally, maintaining his stance that the cryptocurrency is neither a reliable store of value nor a medium of exchange.

Dalio is the founder of Bridgewater Associates. The 73-year-old American, whose net worth is estimated at around $19.1 billion (as of APRIL 16, 2023), created the asset management firm Bridgewater Associates from his New York City apartment just two years after receiving his MBA from Harvard Business School.

In a recent interview on The Julia La Roche Show, Dalio shared his unchanged views on Bitcoin, highlighting its continued volatility.

According to Dalio, Bitcoin’s price fluctuations do not correlate with practical factors, making it an inefficient currency. He explained that the cryptocurrency’s value can decline due to various reasons, such as tech industry insiders selling it in response to sector-specific problems. Dalio went on to argue that Bitcoin is a “very, very poor alternative to gold,” noting that central banks hold gold as their third largest reserve after the US dollar and the euro.

Dalio also emphasized the ongoing risk of Bitcoin being banned or heavily regulated. He argued that central banks and nations in general have little interest in embracing the flagship cryptocurrency, making it an unattractive option. Despite the attention Bitcoin is receiving, Dalio pointed out that it is not a significant asset, with its prominence disproportionate to its actual size.

On February 2, Dalio spoke with Andrew Ross Sorkin, co-anchor of CNBC’s Squawk Box. During this conversation, he shared his thoughts on the crypto landscape, and reiterated his belief that Bitcoin is not an efficient store of value or medium of exchange.

Despite Bitcoin’s impressive 12-year run, Dalio stated that it has no real connection to anything and attracts disproportionate attention. He insisted that it would not serve as adequate money, store of wealth or medium of exchange.

Nevertheless, Dalio acknowledged the current monetary system’s vulnerability due to excessive money printing by central banks, including those in the United States, Europe and Japan. He believes that as the world evolves, people will seek a safe store of wealth, and digital currencies can have a role to play in this transformation.

Dalio asked the question “What is money?” not only as a medium of exchange, but also as a store of wealth, suggesting that inflation-linked digital currencies may be a better option than Bitcoin. He envisions a coin that guarantees purchasing power over time and can be used for transactions anywhere, but he doesn’t think Bitcoin fits.

Despite the criticism, Dalio sees the potential for cryptocurrencies to continue to evolve, possibly giving rise to new, more attractive and viable coins in the future.