Bitcoin will not be an effective currency, says Ray Dalio – Crypto News Today

Ray Dalio – founder of Bridgewater Associates – doubts Bitcoin’s ability to function like money and believes it is getting outsized attention relative to the size of its market capitalization.

That said, the billionaire believes the existing monetary system is “at risk”, due to excessive money printing by central banks around the world.

Bitcoin: is not tied to anything

In a interview with CNBC’s Squawk Box on Thursday, Dalio said that while bitcoin has accomplished “incredible” things over the past 12 years, it ultimately has “nothing to do with anything.”

“It’s a small thing that attracts disproportionate attention,” he said. “Bitcoin’s value is less than a third of Microsoft’s stock value.”

The investor added that industries like biotechnology are far more attractive than Bitcoin and the latter cannot be an “efficient currency” – either as a store of wealth or a medium of exchange.

This criticism is not new: several central bankers, including the former chairman of the Fed Ben Bernankeand Riksbank – the central bank of sweden – argue that Bitcoin’s price volatility makes it a poor custodian of value and an ineffective tool for trading. Active Supporters Argue that Bitcoin’s long-term performance provides evidence to the contrary, and that its fixed supply could turn it into a global store of value within a decade.

In fact, Dalio admits that the unlimited supply of fiat currencies proves that they are not entirely stable either, given their high rates of money printing and

“It’s not just the United States,” he says. “All reserve currencies – what’s happening in Euroland, what’s happening with the Yen. In this world, the question is ‘what is money, and how will it work?’

The Federal Reserve has been engaged in a battle to rein in inflation for more than a year after underestimating the magnitude and persistence of rising prices in 2021. It has now raised its benchmark interest rate to the above 4.5%, the highest since 2007.

Many wonder if the Fed can continue raising rates at this pace without causing major damage to the global economy. The two The United Nations And one analyst from JP Morgan called on the Fed to pivot as soon as possible.

What is the optimal digital currency?

Turning to China, Dalio thinks his move to a digital renminbi will become more of a “thing”. As the nation denominates more of its trade in renminbi, the currency could become a more effective store of value.

When asked about cryptocurrency alternatives to the fiat system, Dalio did not recommend Bitcoin or stablecoins (cryptos pegged to traditionally “stable” currencies, such as USD.)

Instead, he suggested an “inflation-linked coin” that secures an individual’s purchasing power, similar to an inflation-linked bond.

“I think you’re going to see the development of coins that you haven’t seen that will probably end up being attractive and viable coins. I don’t think Bitcoin is,” he concluded.

Some groups, including the stablecoin company Attached and Russian governmentare now experimenting with gold-backed stablecoins.