One of the most prominent traditional investors, Ray Dalio, recently said that Bitcoin (still) fails to serve the purpose of money. However, he also holds that people should look for alternatives of cash as governments can print out as much as they want, which ultimately depreciates its value.
Bitcoin’s Volatility Holds It Back
Raymond (Ray) Dalio is one of the most popular U.S. investors and hedge fund managers. He is also the founder and co-chairman of the successful investment firm Bridgewater Associates. Speaking at the 2020 World Economic Forum in Davos, Dalio shared his opinion on Bitcoin, gold, and the current financial system.
According to him, the largest cryptocurrency still has a long way to go if it wants to serve as a real means of payment. Dalio says that Bitcoin’s high volatility rates are its main drawback, and it has to outgrow them in the future. When asked if people should consider buying BTC in the same manner as buying gold, he answered:
“There’re two purposes of money- a medium of exchange and a store hold of wealth. And Bitcoin is not effective in either of those cases now. […] It’s too volatile. Because of the volatility, you can’t go next to it.”
He continued by outlining that Facebook’s potential stablecoin Libra, could provide the needed stability in the future. The social media giant’s project would serve as a cryptocurrency backed by several financial assets, which should reduce its volatility.
Cash Is Trash, Gold Is Preferred
Dalio also shared his quite negative opinion on fiat money, saying that “cash is trash.” He believes that the world currently has a fiat-monetary system that allows governments to continue printing cash. This would eventually lead to more economic turmoil, as fiat currencies will keep depreciating.
However, the famous investor noted that even though the worldwide economy is thriving at the moment, people shouldn’t be scared to enter the markets now. He advised that “you have to have a well-diversified portfolio.”
He continued by adding that new investors should be global and emphasized once again, how important it is to purchase gold. He said that central banks would buy gold instead of Bitcoin. In his words, the former has already proven itself as a “reserve currency for a thousand years.”
Featured image courtesy of CNBC