Now, Ray Dalio, the billionaire founder and co-chairman of the world’s biggest hedge fund, Bridgewater Associates, has warned that governments could “outlaw” bitcoin if it continues to grow and starts to become “material.”
“[Governments will] use whatever teeth they have to enforce that. They would say, OK, you can’t transact the bitcoin, you can’t have a bitcoin,” Dalio, who has a personal worth of around $17 billion and manages roughly $140 billion through his hedge fund, told Yahoo Finance in an interview earlier this month.
“So then you have to sort of be almost, like, ‘is it a felony,’ and ‘I’m going to have to be a felon in order to transact?’,” Dalio asked, adding that he would prefer to hold gold than bitcoin even though that was also banned by the U.S. government in 1930s.
“I don’t think digital currencies will succeed in the way people hoped they would,” Dalio said, pointing to the continued volatility of bitcoin and other cryptocurrencies as well as limited options to spend them.
While the like’s of payments giant PayPal PYPL have recently added support for bitcoin, potentially opening up the bitcoin and crypto market to millions, the bitcoin price continues to swing wildly—falling to under $4,000 per bitcoin earlier this year before surging to over $16,000 last week.
“Theoretically, [bitcoin is] good, but the three basic things are a currency has to be an effective medium of exchange, store hold of wealth, and the governments want to control it,” Dalio, who expects fiat currencies including the U.S. dollar, the euro and China’s renminbi to become increasingly “digitalized,” said.
China has already begun the roll out of its digital yuan and the president of the European Central Bank, Christine Lagarde, has said the ECB “should be prepared to issue a digital euro.” Some expect these new digital currencies to speed bitcoin and cryptocurrency adoption as people increasingly transact online.
Dalio’s comments were met with a mixture of scorn and ridicule by the bitcoin and cryptocurrency community on Twitter—with many of bitcoin’s biggest proponents rushing to explain why they think a bitcoin ban wouldn’t mean the end of the cryptocurrency.
“Governments could try to ban bitcoin, but they can’t stop it,” tweeted Tyler Winklevoss, who founded the New York-based bitcoin and crypto exchange Gemini with his twin brother Cameron in 2014.
“Capital control anywhere have never worked and gold has always worked,” tweeted Raoul Pal, the chief executive of Global Macro Investor and Real Vision Group. “Bitcoin will be the same.”
Dalio’s comments echo those made over the summer by legendary investor Jim Rogers who warned bitcoin and similar “virtual currencies beyond the influence of the government” will not be allowed to survive.