This post should be mostly discounted because Ray doesn't really seem to be aware of the true risk of the Tether scam, the biggest component of and risk to Bitcoin's value.

For those not aware, Tether is a "stable coin" that issues tokens that supposedly represent dollars and can be used as a medium of exchange. However, it's widely suspected that Tether is unbacked and printing fake dollars and even Tether itself has admitted that at least 26% of their tokens have no backing [1]. Tether has never been audited so we have no clue how much of it is actually backed and how much of it is fake.

This is extremely problematic because Tether is currently printing around $500 million per day and is a source of a significant amount of buy pressure in the market. Tether is used on almost every exchange and is the vast majority of Bitcoin buy orders so Tether can be used to artificially pump the price of Bitcoin quite effectively.

Ray points out Tether as a risk to Bitcoin's value, but I don't think he does an adequate job explaining the risk. Tether isn't a small component of the Bitcoin ecosystem. It's at the heart of Bitcoin with it being the primary currency used to buy Bitcoin with at most exchanges. Most of the buy volume is with Tether and that $500 million per day is huge.

Regardless of what one thinks about the value of Bitcoin, it's irrational to invest while $500 million of fake dollars are being pumped in every day. Once that artificial $500 million buy pressure is removed, the market will face an existential risk. Who knows what the real price of Bitcoin would be without all that fake money?

https://davidgerard.co.uk/blockchain/2021/02/03/tether-print... is a good article for additional context on Tether.

1. https://www.coindesk.com/tether-lawyer-confirms-stablecoin-7...

I think it's time to put Bitcoin on the ignore list.

You will never learn anything new about it, only the same stories:

1. It's a disastrous waste of energy resources.

2. HODLers like to compare it with gold and use it as a store of value. Because of this, they will constantly make a noise about it to raise its price.

3. No one will ever use it as an ordinary currency to buy simple things. Oh, you could buy Tesla with it, but you won't do that, because bitcoin holders think it will only grow.

Nathan Robinson did a great piece[0] on Ray Dalio's principles and Bridgewater's culture, which looks extremely toxic:

> Make sure, of course, that you always make specific people feel bad about mistakes: “Instead of the passive generalization or the royal ‘we,’ attribute specific actions to specific people: ‘Harry didn’t handle this well.’” And make sure everyone knows it: “Use ‘public hangings’ to deter bad behavior,” he says, by which he means making sure to belittle (I’m sorry, accurately explain the failings of) employees in front of their coworkers so that the lesson is learned widely.

[0]: https://www.currentaffairs.org/2018/06/how-to-make-everyone-...

Bitcoin will be gold-like store of value because people think it is like gold and financialize it with ETFs and a futures market.

However should we change our mind and instead start thinking some other cryptocurrency or maybe just a registration in some more or less distributed database is gold. Then that can become gold.

Or something like that?

Or maybe only gold is gold because it has been like that for a thousand years and throughout multiple empires and wars.

Here Ray Dalio says he views Bitcoin as a gold-like asset.

This is the first time I have felt that Bitcoin has some value: as a commodity that wealthy people put their wealth into when they have nothing better to do with it. People are not buying gold because they ever plan to use the gold.

MacroVoices #255 with Mike Green discussed another regulatory threat not mentioned in the Bridgewater post. Governments don't have to ban BTC outright. They have other tools for making it wildly unattractive to hold. I can't remember the details but they discussed a scenario where the US government classifies BTC as a commodity and requires K-1 style taxation. That would mean that you would have to pay taxes on any gains in BTC even if you haven't sold your shares.

> I should clarify what I said about its supply. Although Bitcoin is limited in supply, digital currencies are not limited in supply because new ones have come along and will continue to come along to compete so the supply of Bitcoin-like assets should, and competition will, play a role in determining Bitcoin and other cryptocurrency prices. In fact I assume that better ones will come along and displace this one because that is the way the evolution of everything works—i.e., new ways of doing things and new things always have and always will replace old ways of doing things and old things. Since the way Bitcoin works is fixed, it won’t be able to evolve and I presume that a better alternative will be invented and pass it by. I see that as a risk. For those reasons the “limited supply” argument isn’t as true as it might appear—e.g., if Blackberries were in limited supply they still wouldn’t be worth much because they were replaced by competitors that were more advanced. I still don’t know the answer to why that isn’t a risk, but I would welcome my naïveté being corrected.

What I think about bitcoin and crypocurrencies in general that are based upon a "proof of work" with no tangible production of anything useful in society?

They are a giant waste of electricity.

Even renewably-sourced electricity is in finite supply, even near large hydro-electric dams or geo-thermal plants, and thus this deprives the world of metal smelting or other energy-intensive activities we urgently NEED to adapt to electrically-driven processes.

I should expect to see intelligent folk like those in tech to understand the multiple environmental crises we are in, and how bitcoin and it's ilk are not aiding resolution of this in any way, and indeed can be shown to be hampering efforts.

Wasted CPU cycles have environmental costs. Proof of work is a giant waste of electricity that could be better spent.

Introduce a cryptocurrency that actually incentivizes goodness through it's creation instead of further destruction and spare me the hypotheticals. As currently implemented= BAD FOR PLANET EARTH and a diversion of resources to literal waste.

Imaginary money burning real joules of energy

<Ctrl-F> "environment"

2 hits, both "regulatory environment"

I think there is a huge tail risk that Ray Dalio missed about bitcoin.

https://cbeci.org/

It's incredibility energy intensive and as the world works towards reducing the our impact on the climate, it's possible energy can get too expensive to operate a bitcoin farm mining farm. Or governments decide that using precious electricity production on hashing blocks is the same as other forms of pollution and regulates it away.

- "Since the way Bitcoin works is fixed" Bitcoin's work is not fixed. Since it evolves depending on the wishes of the community You only need the 51% of the network has applied the changes in order to evolve.

- "limited supply they still wouldn’t be worth” I think limited supply is one of the most attractive things of Bitcoin :)

90% of the time Ray Dalio has an interesting opinion and good analysis, and he does this here.

I did an analysis based on the same premise (Bitcoin competes with gold) and came to basically the same conclusion.

Dalio's writings about how the "All Weather" fund works are based on a premise a lot like the "Permanent Portfolio" advocated by Libertarian presidential candidate Harry Browne but Dalio took out the "gold" component and replaced it with "treasury inflation protected securities."

Circa 2000 I bought a lot of TIPS and they did very well despite there being little inflation. Dropping interest rates had something to do with it, but I still don't understand exactly why they did so well.

(My stockbroker fired me as a client because I went to a presentation and asked why I needed the product they were selling when I bonds were yielding so well and had all the tax benefits they had)

I don't know how TIPS will do now, but I am sure that getting into TIPS at the right time is part of why Dalio is a legend. Maybe these days he thinks gold is better than TIPS.

> Since the supply is known, one has to estimate the demand to estimate its price.

Is there any other asset we can make this statement about? That supply is 100% known and cannot change in future?

> I know how much one needs to know in order to have a valuable opinion in the markets, so I wouldn’t bet on my own views.

Good to emulate.

I think Dalio used to be more against Bitcoin. His writing/books are definitely worth reading though.

Store of value like gold & crypto currency is an idea that has a clear side effect. There will be inflation, it's how governments move the economy around. Yet, bankers and crypto fans keep talking how gold or bitcoin can help you evade it. Which it means, even more pressure will be put on people who don't have the ways of escaping inflation through such ways. It will be the poor that will pay the highest price while rich people will go around it.

For my money buffet > Dalio, this superficial framing of The Whole topic is a case in point.

Who challenges dalio on his submerged assumption that a gold-like store of value is really of any value to rank and file investors compared to the stock, bond and real estate markets?

He should be equally criticized for obsessing about gold as for being attracted to Bitcoin.

General AI will need a bearer asset.

I could not read this article because first I had to agree to this: "I am entering this website only to obtain general information regarding Bridgewater Associates, LP and not for any other purpose." but that was not at all why I was trying to enter the website. So I will probably never know what Ray Dalio thinks of Bitcoin.

Bitcoin was good until around early-mid 2017, when it became over-regulated, too expensive to use, no privacy, too slow, etc. The fungibility is gone. Everything is taxed and tracked. Pretty much useless

I don’t get how Bitcoin can become a viable currency or store of value in the future. It’s almost exclusively owned by a small group of individuals. Are we gonna accept that level of centralisation? Of course not.

I offer no commentary on the actual content, but this is a truly horrible piece of writing - almost every sentence is clunky, poorly phrased, ungrammatical, or repetitive. I guess you don't need to be able to write decent prose to make $18B!