Cryptocurrency experts fire back after billionaire hedge fund manager Ray Dalio once again casts doubt on Bitcoin believes that the largest and oldest cryptocurrency lacks the qualities that make gold a reliable store of value.
The Bridgewater Associates founder said on the All-In Podcast that Bitcoin should not be compared to gold because it lacks central bank backing, offers limited privacy, and may face existential threats from future advances in quantum computing. Dalio also pointed to the asset’s public ledger, suggesting transactions can be monitored and potentially controlled.
Dalio, who last year said he held about 1% of his allocation to Bitcoin, is no stranger to criticism of the digital asset. At the time, he said that Bitcoin faced challenges as a global reserve asset due to its traceability and potential vulnerabilities in quantum computing.
However, industry insiders say the criticism reflects the long-standing debate surrounding Bitcoin, and that the risks highlighted by Dalio are already reflected in Bitcoin’s much smaller market capitalization relative to gold.
Bitcoin’s risks are also its advantages
However, some analysts say these criticisms are exactly why Bitcoin is worth buying.
“In an absolute sense, there is nothing ‘wrong’ with Dalio,” Matt Hougan, chief investment officer at asset management firm Bitwise, told CoinDesk. “There is definitely some risk with quantum, and it’s true that central banks haven’t bought Bitcoin yet.”
But Hougan said these concerns are why Bitcoin trading volume remains well below gold’s total market size, which is about 4%. Bitcoin’s market cap is currently around $1.4 trillion, while gold’s market cap is estimated at $35 trillion
“These criticisms are actually opportunities,” he said. “We invest in Bitcoin because we think these things will change over time; developers will address quantum risks and central banks will change attitudes.”
“If these criticisms didn’t exist, the price of Bitcoin would have reached $1 million per coin,” he added.
“Tired” of the old narrative
Alex Thorn, director of research at Galaxy, said Dalio’s arguments echoed old narratives from Bitcoin’s early years.
“Ray Dalio’s criticism of Bitcoin is reminiscent of tired narratives from the pre-2017 era,” Thorne said in an email, adding that developers are already addressing quantum risks.
Read more: Here’s why Bitcoin’s quantum threat may be smaller than feared
He also said that comparing Bitcoin to gold is fair but ignores the differences between the two assets in practice. “Gold may work well stored in a bunker or at the New York Fed, but Bitcoin has real utility in the real world that gold cannot match,” he said, noting that individuals and institutions have increasingly adopted the asset over the past two decades.
currency transfer
Matthew Sigel, director of digital asset research at VanEck, said both gold and Bitcoin “play a role” because they represent hard assets from different monetary eras.
“Ultimately, this is a debate between the monetary architecture of the last century and the emerging monetary architecture of this century,” he said in an email.
In his view, gold solves the problem of trust in an “analog” financial system built around reporting reserves and custodians. Bitcoin, meanwhile, solves this problem in a digital environment through open source development and verifiable transactions.
He added that central banks such as the Czech National Bank have begun experimenting with digital asset exposure, and privacy improvements are emerging through better wallet practices and second-layer networks.
Siegel also dismissed concerns about quantum computing, saying the issue affects the entire financial system, not just Bitcoin. “Quantum risk is a broader cryptographic challenge facing the entire financial system, rather than a flaw unique to Bitcoin,” he said.
He said investor surveys also showed that young investors are increasingly favoring Bitcoin, indicating that the “monetary center” is gradually changing.
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