EDITOR NOTE: If there’s one common thing central banks and governments don’t like, its competition with their own sovereign currency. Bitcoin and other cryptocurrencies unbacked by fiat represent a threat to the dollar (and the fiat regime in general). Should crypto adoption levels increase, governments may simply outlaw their use, according to Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates. As we all know, the crypto markets are highly volatile, sinking each currency’s reliability as a store of value. The only valid competitor to any form of fiat remains gold. Central banks know this; they’ve been increasing their reserves for decades.
Ray Dalio, the founder and co-chairman of Bridgewater Associates, the world’s largest hedge fund, said he sees three main problems with bitcoin and other cryptocurrencies that will limit their future, including that governments will “outlaw” them should they start to become “material.”
A lack of venues that will accept cryptocurrencies for purchase. “I today can’t take my bitcoin yet and buy things easily with it.”
Bitcoin and other cryptos are too volatile to be considered an effective store of wealth. That volatility also hurts bitcoin’s use transactionally because vendors won’t know how much they’re getting, Dalio said.
If bitcoin or other cryptos become “material,” Dalio predicted governments will “outlaw” it. “They’ll use whatever teeth they have to enforce that.”
“I don’t think digital currencies will succeed in the way people hope they would,” Dalio said.
“Would I prefer bitcoin to gold? No,” Dalio said.
Originally posted on Yahoo! Finance