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Ray Dalio coming around on Bitcoin, but sees gov’t regulation as its primary threat

Ray Dalio, longtime holdout on Bitcoin, seems to be coming around. Just a few months ago he raised a few criticisms about the technology but was ‘open to being corrected’. Now he has posted a full screed outlining his thoughts…

I believe Bitcoin is one hell of an invention. 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. 

A lot of his commentary is just basic realizations of what Bitcoin is that many in the space came to over a decade ago. He basically says that there aren’t many gold-like assets and that we live in a world that “needs them”, he recognizes it is limited in supply (but thinks other cryptocurrencies’ existence makes this less important than Bitcoin proponents suggest), and admits that the technology has “stood the test of time” for more than 10 years.

He doesn’t directly address price or any specific predictions, but does allude to supply and demand — which, obviously, come together to make price. While he points out that supply is limited, he says long-term demand is ‘tough to know’.

As far as the supply/demand picture is concerned, while the supply is known the long-term demand over the relevant long-term time horizon (because this is a long-duration asset) is tough to know, largely for reasons I mentioned.

He sees the biggest question mark on demand to be the government regulation question. And he believes that the more successful Bitcoin becomes the more likely governments will want to control or outright ban it.

In summary, he has come around to the idea and sees it as an impressive and promising technology. But he also sees it possible if not likely that it could lose 80% of its value, likely at the whim of government intervention.

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