Ray Dalio: There Will Be A Blockchain Revolution

The world’s most significant hedge fund founder wasn’t always keen on crypto, but he now believes it has earned its keep.

Ray Dalio recently told Market Watch that a blockchain revolution would happen, given everything Bitcoin has survived already. This was part of a broader conversation about the perilous state of inflation and the Federal Reserve’s lack of solutions.

Bitcoin Is The New Gold

Dalio touched on crypto Thursday while covering its evolution into a “political statement” against irresponsible monetary policy. He remarked that Bitcoin is incredible for succeeding, from surviving hackers to gaining widespread adoption.

Bitcoin has experienced multiple 80%+ pullbacks in its history, alongside internal wars over block size between nodes and miners. Crypto site 99Bitcoins even hosts a page that tallies the number of times Bitcoin has been declared dead by journalists. The number currently sits at 435, even though it has traded at all-time highs this year.

“I’m not an expert on bitcoin, but I think it has some merit as a small portion of a portfolio,” said Dalio.  “Bitcoin is like gold, though gold is the well-established blue-chip alternative to fiat money.”

Ray Dalio Says 'Cash Is Trash' and Warns How Governments Could Destroy Crypto - Bloomberg
Ray Dalio. Source: Bloomberg


The billionaire is far from the first to make the comparison. Bitcoin has gained notoriety among investors as a form of “digital gold” due to its fixed supply and incorruptibility. These investors include Mark Yusko, Michael Saylor, and Paul Tudor, Jones.

Dalio calls explicitly Bitcoin a “younger generations’ alternative” to gold. However, whereas gold has “intrinsic value” from things like industry and jewelry, Bitcoin has “imputed” value, which he said has “some merit”.

Nevertheless, Dalio maintains some of his criticisms from months ago. Primarily, he thinks that if Bitcoin becomes a threat to governments, many will outlaw it like China did.

The fund manager holds “a little bit” of his portfolio in Bitcoin as part of a diversified portfolio.

The Fed Is Doomed

Like much of the Bitcoin community, Ray Dalio is very pessimistic about the US dollar. He advocates for people not holding cash instead of having a diversified portfolio across assets, industries, and countries. While explaining demand-driven and monetary inflation, the hedge fund manager said that the US is experiencing both.

According to the US Bureau of Labor Statistics released this month, November’s CPI rose 6.8% from 12 months prior. That’s the highest inflation rate in about 40 years.

“Central bankers, especially the Fed, are between a rock and a hard place. They need to tighten quite a lot to restrain inflation, yet if they do they will hurt the economy.”

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Kraken CEO Jesse Powell recently expressed the same idea, arguing that the dollar will zero against Bitcoin.

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