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Ray Dalio Compared Bitcoin To Digital Gold

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Ray Dalio, a well-known investor and popular book, has compared Bitcoin and other cryptocurrencies to “digital gold,” the latest in a string of indicators that his views on blockchain have evolved dramatically.

Dalio stated today on CNBC’s Squawk Box that “cryptocurrencies and blockchain are great.” When compared to other scarce commodities, such as precious metals, he asserted that Bitcoin and some of its brethren would have a significant role among asset classes. “I think a digital gold, which would be a Bitcoin sort of thing, has a small spot related to gold and then relative to other things,” he explained.

Dalio also raised larger philosophical considerations about the nature of money, namely the role of productive assets in relation to fiat currencies, which influenced his thinking about cryptocurrencies. “I believe we are in a situation where we will question, ‘What is the new money?'” he added, referring to fiat currencies. “When we look at currencies, you hold currencies in the form of a debt.”

He also repeated his famous “cash is garbage” adage, stating that all fiat currencies eventually lose value in comparison to products and services. “When I say ‘cash is garbage,’ what I mean is that all currencies in reference to the euro and the yen, all of those currencies will be currencies that will go down in relation to goods and services,” Dalio explained.

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Dalio’s remarks that “Bitcoin has made a remarkable achievement over the previous 11 years” appear to bolster his image as a crypto “bear” who has recently come around to the asset class. Dalio had had a largely unfavorable position on Bitcoin and cryptocurrency in general until November 2020, when he acknowledged on Twitter to “missing something” about it. He appears to have reversed his position since then. Dailio acknowledged in May 2021 that he owned “some” Bitcoin as an inflationary hedge, a revelation that was echoed in today’s interview when Dalio stated that it was “a little percentage of [his] portfolio.”

However, Dalio warned against believing in a particular asset class to the exclusion of others, adding that “the Bitcoin people get too consumed with it, and the gold bugs get too preoccupied with it, and I think you have to look at the larger range of assets.”