Bitcoin provides great protection against inflation.
Ray Dalio, founder of Bridgewater Associates, emphasized that the potential of digital assets, especially Bitcoin, is impressive.
Bitcoin Still Has Some Problems
The American investor also noted that Bitcoin’s limited supply makes it similar to other universally accepted inflation hedges like gold.
Many countries still do not see Bitcoin as a reserve due to bans and problems.
There are still problems with them. Transactions can be tracked, so privacy is an issue. They can be controlled, they can be shut down, they can be made illegal which tends to come into play when they could pose a threat to the alternative currency. Therefore, I do not think that they will be kept as central bank reserves for various reasons.
Not a Good Competitor Against Gold
He stated that investors should have digital assets like Bitcoin in their portfolios. But he said gold is still more effective at hedging against inflation.
Bitcoin’s overall market cap is lower than Microsoft’s, and it lags behind in storing wealth compared to gold.
“I think the environment we are in is one where there is a risk of political or other confiscation. I think gold does a better job but as I said, we’re in this new environment and that could include NFTs and all sorts of things. Competitor, but in terms of its qualities, I think it is not as good as the competitor… But we will solve them. It will evolve over the next 5 to 10 years,” Dalio said.
The Need for Diversification
He said every investor should have crypto, gold and other traditional assets on hand to strengthen them against severe inflation.
“I think it is a mistake for everyone to have only one currency, like choosing a digital currency and not having gold, or just having gold and not having a digital currency.”
He pointed out that Bitcoin has proven itself and people’s interest in cryptocurrencies has increased.