Bitcoin is Not a Good Competitor Against Gold

Ray Dalio (billionaire investor, founder of Bridgewater Associates) acknowledged the potential for digital assets and highlighted their remarkable performance over the past decade in a recent interview with The Economic Times.

Dalio: Bitcoin Still has Unresolved Problems

A 72-year-old American investor noted that Bitcoin’s finite supply is similar to other universally accepted inflation-hedging strategies such as gold.

He doesn’t think central banks will adopt Bitcoin as a reserve currency, due to privacy issues and bans in certain countries.

They have their problems. Transactions can be tracked so privacy is a concern. They can be managed, shut down or made illegal. This tends to make it difficult to trace transactions during times when there may be threats to alternative currencies. He stated that he doesn’t believe they will be held in central bank reserves for different reasons.

A poor competitor against gold

Dalio said that investors should include digital assets such as Bitcoin in their portfolios, but he also noted that gold is better at protecting against inflation.

He also claimed that Bitcoin’s market value is lower than Microsoft’s, making it less attractive for wealth storage than gold.

However, the billionaire expressed optimism about the future growth of crypto over the next ten years.

“I believe that the current environment is one in which there is a risk for political confiscation or other forms of confiscation. Gold does a better job, but I believe gold does a much better job. We’re in a new environment that could include NFTs or other forms of confiscation. Although it is a competitor, I consider it to be a good competitor. But we will figure out the details. It will change over the next five to ten years,” Dalio stated.

Diversification is a must

He pointed out that investors should diversify their portfolios due to the changing economic environment. To protect against inflation, every investor should own crypto, gold and other traditional assets.

“It’s a mistake to have only one currency, like picking a digital currency but not having any gold or having just gold and no digital currency.”

Dalio suggested earlier this year that people are paying too much attention cryptocurrency after admitting that Bitcoin is a reliable and trustworthy currency over the past 13 years.