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Bitcoin Could Be Outlawed? Good Probability!

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EDITOR NOTE: Billionaire investor Ray Dalio of Bridgewater fame claims in his upcoming book The Changing World Order, that bitcoin could be outlawed, similarly to how gold was outlawed in 1934. As a gold owner, this is something that should concern you. In the 1930s the US government valued gold enough to seize it from its citizens. In contrast, the government has no use for bitcoin as it's a competing currency. Bitcoin wallets and exchanges can be tracked and monitored. Bitcoin tokens are not physical and can be accessed with enough pressure on the institutions controlling its circulation. Non-CUSIP gold, on the other hand, is not trackable and can be stored physically, in a safe at home, in a depository, or anywhere it can be locked away and easily accessed. Should electronic infrastructure shut down, central banks have gold reserves (not bitcoin reserves). People can exchange with gold and silver coins (or bars), not bitcoin. Gold has proven its value for millennia, and despite the recent FinTech innovations that are disrupting the monetary world order, there’s no reason to think that the ultimate reckoning belongs to gold and silver before any form of cryptocurrency.

Billionaire investor Ray Dalio, the founder of the $150 billion hedge fund Bridgewater Associates — the world’s largest — made a case that there’s a “good probability” bitcoin could be outlawed, similar to when the U.S. government made it illegal to privately own gold.

As Dalio points out in his upcoming book “The Changing World Order,” the Gold Reserve Act of 1934 made it illegal for individuals to own gold “because government leaders didn’t want gold to compete with money and credit as a storehold of wealth.” Something similar could happen with bitcoin, which has surged against a backdrop of high levels of debt, low interest rates, a lot of liquidity and stimulus, and investors seeking alternatives to bonds and currencies. At the time of this writing, bitcoin’s price was near $56,559.98, spiking after Elon Musk tweeted that you can use it to buy Teslas (TSLA).

“Every country treasures its monopoly on controlling the supply and demand. They don’t want other monies to be operating or competing, because things can get out of control. So I think that it would be very likely that you will have it under a certain set of circumstances outlawed the way gold was outlawed,” Dalio told Yahoo Finance Editor-in-Chief Andy Serwer in an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.

Dalio pointed out that India’s government is currently exploring outlawing bitcoin and other cryptocurrencies altogether.

“[We] have to see what that means,” the investor added.

A government ban could likely cause demand to plummet. While emphasizing he’s not an expert, Dalio also cast doubt that bitcoin's privacy could be protected.

“Now, can they do it? Yeah. Now we get into the particulars. My understanding from people who are sort of in government surveillance is yes, they can understand they can track it. They can know who’s dealing with it. I don’t know, like, I’m not an expert on that. But, you know, there’s a whole way, is it private wallets? Is it not private wallets? How do you do this, this, and the other thing? I would suspect it would be very hard to hold up against that kind of action.”

To be sure, Dalio highlighted many of the merits of bitcoin as it's stood the test of time for a decade.

“Bitcoin has proven itself over the last 10 years,” Dalio said, adding. “It hasn’t been hacked. It’s by and large, therefore, worked on an operational basis. It has built a significant following. It is an alternative, in a sense, storehold of wealth. It’s like a digital cash. And those are the pluses.”

Originally posted on Yahoo! Finance

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All articles are provided as a third party analysis and do not necessarily reflect the explicit views of GSI Exchange and should not be construed as financial advice.

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