Ray Dalio: Bitcoin is Not a Good Competitor Against Gold

In a recent interview with the Economic Times, billionaire investor and founder of Bridgewater Associates, Ray Dalio, acknowledged the potential of digital assets, especially Bitcoin, emphasizing their impressive performance over the past decade.

Dalio: Bitcoin Still Has Unresolved Issues

72-year-old American investor also noted that Bitcoin’s finite supply makes it similar to other universally accepted inflation hedges such as gold.

However, he doesn’t see central banks adopting Bitcoin as a reserve asset due to several issues such as privacy and ban in some countries.

“Still, there are issues with them. Transactions can be traced so privacy is an issue. They can be controlled, they can be shut down, they can be made illegal which tends to tap in during times when they may be threats to the alternative currency. So, I don’t think they’ll be held as central bank reserves for various reasons,” he said.

Not a Good Competitor Against Gold

While Dalio believes investors should have digital assets like Bitcoin in their portfolio, he noted that gold does a better job at hedging against inflation.

He also argued that Bitcoin’s total market value is less than that of Microsoft, which makes it less desirable for storing wealth compared to gold.

The billionaire, however, expressed optimism about the growth of the crypto industry over the next 10 years.

“I think that the environment that we’re in is an environment in which there is a risk of political confiscation or any other forms of confiscation. I think gold does a better job but as I said, we’re into this new environment and that could include NFTs and all sorts of things. It’s a competitor but I think in terms of its qualities, not as good a competitor… But we’ll figure those things out. It will evolve over the next 5 to 10 years,” Dalio said.

The Need for Diversification

The billionaire investor pointed out that due to the changing global economic environment, it would be wise for investors to diversify their investment portfolios. He commented that every investor should have crypto, gold, and other traditional assets in their portfolio to strengthen them against raging inflation.

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“I think it’s a mistake for anybody to have just one, such as picking a digital currency and not having any gold or just having gold and not having any digital currency.”

Earlier this year, Dalio argued that people are giving too much attention to cryptocurrencies after admitting that Bitcoin has proven itself in its 13 years of existence.