CBOE Applies to List First Bitcoin ETF in US
Ray Dalio Calls Bitcoin ‘One Hell Of An Invention,’ Considers It For New Funds
Bridgewater Associates founder Ray Dalio said Bitcoin is “one hell of an invention” and he’s considering cryptocurrencies as investments for new funds offering clients protection against the debasement of fiat money.
“To have invented a new type of money via a system that is programmed into a computer and that has worked for around 10 years and is rapidly gaining popularity as both a type of money and a storehold of wealth is an amazing accomplishment,” Dalio wrote in a note to clients that was disclosed to Bloomberg News. “There aren’t many alternative gold-like assets at this time of rising need for them.”
Like others, however, Dalio said he found it challenging to put a value on digital assets. While Bitcoin has the potential to make investors “very rich” as well as “disrupt the existing monetary system,” there are risks. He said cryptocurrencies are probably vulnerable to being hacked and subject to restrictions by governments that want control over the money supply.
Dalio said he thinks of Bitcoin as a “long-duration option on a highly unknown future” and investing in it means recognizing the potential to lose about 80%.
Among his other comments in the note:
• Bitcoin has succeeded in “crossing the line” from speculative idea to something likely to have value.
• “Because there aren’t many of these gold-like storehold of wealth assets that can be held in privacy and because the sizes of their markets are relatively small, there exists the possibility that Bitcoin and its competitors can fill that growing need.”
• Another risk is supply: While a finite number of Bitcoins can be mined, there is nothing to stop new coins from being created and “I assume that better ones will come along and displace this one.”
• “When the Department of Defense can’t protect its systems from being hacked it would be naïve to be totally comfortable that digital assets can’t be hacked.”
• If there were restrictions on the usage of Bitcoin, “demand for it would plunge.”
• “Rather than it being far-fetched that the government would invade the privacy and/or prevent the use of Bitcoin (and its competitors) it seems to me that the more successful it is the more likely these possibilities would be.”
• “I and my colleagues at Bridgewater are intently focusing on alternative storehold of wealth assets and expect Bridgewater to soon offer an alt-cash fund and a storehold of wealth fund in order to better deal with the devaluation of money and credit that we consider to be a major risk and opportunity, and Bitcoin won’t escape our scrutiny.”
The original article from bloombergquint