Ray Dalio Says US Will Ban Bitcoin?
Updated: Apr 12, 2021
The headline glared bright and bold on both my traditional and alternative media newsfeeds. An inflaming statement constructed to sell eyeballs and clicks. The co-founder of Bridgewater Capital, the worlds largest Hedge Fund, just said the US government is likely to ban the golden digital knight that is Bitcoin.
Sell every Satoshi you have ever bought, every alt coin- crap coin- Timbuctoo coin you own. The government was going to shut it all down because they don't like it, can't control it and see it as a threat to one of the last divine powers of the State.....their money.
Ray Dalio has had a interesting couple of years. I have followed and listened to him here and there. A industry titan, I observe he is more the public face/macroeconomic philosopher at Bridgewater then daily operations. There have been prominent economists CEO's and politicians with cautionary musings about Bitcoin over the decade. All were horribly wrong. All were laughably wrong. All were so wrong that you can't help partially, if not completely discredit the detractors, less they repent. Now, that last statement is a bit hyperbolic, but you get the point. Why continue to listen to traditional voices when they talk about Bitcoin critically if they have been deadpan wrong for a decade? The track record of Bitcoin critics has been utterly terrible, yet we lend our ear to such. And this is different then just "hearing the other side", their opinions factor into our actions. I had two individuals who I have raked over the coals about buying Bitcoin for years. Since it was $3,000, and who I finally convinced too purchase at around $10,000. Both messaged me and wanted to sell because of what Ray Dalio said. It's easier said then done to ignore a figure like Ray Dalio. Wisdom states that an individual who dismissed and ridiculed an asset that rose from $0.01 to $55,000 over 10 years should not hold sway over an intellectual argument regarding that asset. Yet he still does. It's something to ponder over for each of us personally how we allocate and form our own opinions in respect to industry authorities.
Forgoing more personal Dalio attacks, let's look what he really was saying. Essentially, he was saying that if we look back to the 1930's when FDR outlawed the private use of gold through executive order demand and citizens turn it over. That same event could and even is likely to happen again with Bitcoin. There are a few differences between then and now.
Gold was preventing the monetary maneuverers that the government and Federal Reserve wanted to preform during the 1930's as gold was still 'backing' the Dollar directly at that point. - Bitcoin is under no such scenario in relation to current monetary policy today and the Federal Reserve chairman himself has stated recently he views Bitcoin as a speculative gold type asset. Gold has been revoked from 'official' dollar backing for 50 years. Henceforth, the banning of Bitcoin serves no direct monetary policy benefit except as seen as a threat to the dollar. After FDR issued his infamous act the US devalued the dollar compared to gold. No such relationship exists with the government and Bitcoin today.
Financial Suicide. With Bitcoin being a global money, a issuance of the ban and citizen forfeiture of the asset would be detrimental to significant degree. The companies in the US that help make up and contribute to the Bitcoin infrastructure is in the hundreds of billions of dollars and many thousands of jobs. The companies and banks that hold or interact directly with Bitcoin numbers in the dozens and is on track by the end of the year to be in the hundreds. All this would be stopped in the tracks with Bitcoin being banned in the US. Billion dollar companies would collapse overnight, companies who had bought Bitcoin as a treasury reserve assets would be forced to sell. All the infrastructure being build by around Bitcoin would be set idle. The effect would be felt by names like Morgan Stanley, Cash App, Pay Pal, NYSE, Nasdaq, Goldman Sacs, CME group, Tesla to name but a few. Yet, the space as a whole would simply move outside the US and the innovation would be captured by another jurisdiction more accommodating. For the benefit to outweigh the cost of banning Bitcoin in the United States, the political and financial condition of the country would have had to deteriorate to a degree many of us would have a difficult time envisioning.
Good luck getting the Bitcoin. Many individuals associated with Bitcoin already have a general distrust of government. After all, that is one of the reasons Bitcoin was created and a founding pillar of the technology. Seizure of gold was already difficult enough during the 1930's and largely functioned on a honor system. Bitcoin would be that, but worse. Not only is it very difficult to determine how much Bitcoin and individual holds, but if it is not on an exchange, there is no way to extract and individuals bitcoin. All they need is 12 numbers memorized in there heads. All they need to say is "I lost my Bitcoin in a boating accident" and there is no way to prove otherwise.
There are many more reasons and nuances as too why Ray Dalio's argument is wrong. I don't actually think he believes Bitcoin will be banned, he more was throwing it out there, as Bridgewater itself has started dabbling in Bitcoin. This is just another in a long series of fear articles/statements aimed at Bitcoin. They have been heard before, they will be heard again. Regulation and environmental concerns are the popular ones now that Tether has been cleared. While what Ray Dalio outlines is surely possible, the probability remains low. This doesn't mean dismiss it entirely, it is just important to take it all with carful consideration.