Why Ray Dalio believes Bitcoin will never be a “reserve currency”

[TastyChillySauce00]

It's no surprise, because now, with this huge drop in Bitcoin's price, many gloating voices will emerge, saying, "Didn't I tell you so?" "Didn't I warn you?"

When Bitcoin's price peaked at $126,000, they all fell silent, and we didn't hear a peep from them. But today, they've come out and started shouting and questioning Bitcoin, claiming that gold is better, and so on. And before long, we'll start hearing the same old phrases like "Bitcoin is dead," and so forth. All of this is nonsense.

It's a cycle that repeats itself each and every time we see a decline in the price..

At least these voices become not so loud

For sure that's like the pattern and has been happening since long ago  . The problem with more privacy is that the government tend to meddle with it, some people will definitely scream AML, I mean there are some already that are doing exactly that.

Trying to make bitcoin fall with AML issue, fortunately bitcoin is still going strong.

[viljy]

Yesterday, I came across a video by Michael Saylor somewhere in Telegram, in which he expressed the idea that bitcoin's volatility is a gift from above, and not a flaw at all. Ray Dalio holds the opposite position, as he considers volatility to be an obstacle to the adoption of bitcoin as a reserve currency.

And they're both right that volatility actually makes bitcoin a commodity. However, at the same time, bitcoin has functions for calculations and accumulation of value (these are functions of money). On the other hand, gold is used as a reserve asset, despite its volatility (although less than that of bitcoin). That is, volatility is not an insurmountable obstacle to the status of, if not a reserve currency, then at least a reserve asset.

As for his other arguments, I think the quantum threat is exaggerated. Well, unless you think that some sinister scientists in secret laboratories are already hacking addresses with a quantum computer.  It is difficult to say about the openness of the blockchain as an obstacle. There are both cons and pros to this. This is ambiguous.

[betswift]

Yesterday, I came across a video by Michael Saylor somewhere in Telegram, in which he expressed the idea that bitcoin's volatility is a gift from above, and not a flaw at all. Ray Dalio holds the opposite position, as he considers volatility to be an obstacle to the adoption of bitcoin as a reserve currency.

And they're both right that volatility actually makes bitcoin a commodity. However, at the same time, bitcoin has functions for calculations and accumulation of value (these are functions of money). On the other hand, gold is used as a reserve asset, despite its volatility (although less than that of bitcoin). That is, volatility is not an insurmountable obstacle to the status of, if not a reserve currency, then at least a reserve asset.

As for his other arguments, I think the quantum threat is exaggerated. Well, unless you think that some sinister scientists in secret laboratories are already hacking addresses with a quantum computer.  It is difficult to say about the openness of the blockchain as an obstacle. There are both cons and pros to this. This is ambiguous.

It's because they are from two different worlds, and they perceive said volatility differently too.

And, yeah.. the quantums are coming, but by the time they do, BTC will probably be resillient to them.

[Sticky Bomb]

I don't know how much he has been into bitcoin or observed bitcoin price movement, saying that an asset that was $15k as at the beginning of two years ago, touched $126k last month and is currently experiencing a market correction at $87k and it is not a store of value?

He misses the point totally in bitcoin or he is trying to talk it down for him missing out on it when the prices were still cheaper. It surely makes sense to see bitcoin as money which has all valuable qualities that fiat doesn't have which includes limited supply and store of value despite its volatility, decentralization, censorship resistant among others.

Fiat doesn't come close to bitcoin price appreciation neither does gold. Countries, institutions and even banks are drifting towards bitcoin now because they see great value in it and if bitcoin was not good money, they wouldn't have such interest. I know for sure that Ray would speak from the other side of his mouth pretty soon and end up buying more bitcoin.

[uchegod-21]

Ray Dalio is not a hater, he just needs to understand alot of things about Bitcoin so he would really know his stand regarding Bitcoin. We have alot of people like him; they love bitcoin and even have some in their possession but are still stuck with the traditional mindset. They just want certain things done the traditional way which they are already used to. I am not surprised people like him do not have 100 percent confidence in bitcoin yet. By now, those who fully understand Bitcoin will stop using volatility against it everytime discussions about Bitcoin come up.

Skepticism about Bitcoin is common. People like Ray understands bitcoin primary function but doubt its readiness as a global currency. They worry that the government will eventually influence or break Bitcoin's code, which will not happen now or in the future. This fear is rooted in the government's history of influencing every other system. The reason banks resist Bitcoin is straightforward. Banks use non transparent systems where ledgers are not open to the public. This lack of transparency allows for manipulation, which is why banks will never fully embrace an open, public ledger like Bitcoin's.

This is just a clear misunderstanding of how the Bitcoin network works. The government can only regulate Bitcoin through exchanges and companies or businesses that hold Bitcoin in their portfolios. Beyond that, the government cannot undo decentralization, which is the major barrier standing in their way. If not for decentralization, maybe the fears about the government breaking the code would have become possible a long time ago. There is no point worrying about who accepts Bitcoin now or not; with time, everyone will get a clear sense of where they actually stand.

[Fivestar4everMVP]

Here are some of his replies under his tweet, and there more where he was criticising Bitcoin, saying manner of things about Bitcoin. And he even further stated that, gold is the first, while Bitcoin is the second, why because bitcoin did not pass secondary test (howey test).

Well, as hard as this is for to say, I still have to be honest and say that the man is right with all his claim, but maybe not with the claim that bitcoin will never be used as a reserve currency, and this is because the flaws he see in bitcoin may be there for real, but some people actually are not seeing this flaws but the value that bitcoin offers to the general society..

It is commonly said that a man food could be another man's poison, he thinks bitcoin flaws are too great and this automatically disqualifies it from being used as a reserve currency, to some, he may be right, but to some, he may not be completely right..
And concerning the use of bitcoin for payment for goods and services, it all depends on what is being offered as goods and services and their respective cost, I know of may car dealers who are gladly accepting full bitcoin payment for car purchases and all.

[passwordnow]

And, yeah.. the quantums are coming, but by the time they do, BTC will probably be resillient to them.

It's been said that quantum computers are going to be a problem for bitcoin. But, as these rumors have been said today, it's also said in the past long time ago. It was said to be a threat but what we're seeing right now is all rumors. Bitcoin has always been resilient in terms of the market approach but if it's with these threats and technology, it's not yet there to the point that it's going to be a huge trouble like what nontech people are saying about it.

[Joy- maker]

Here are some of his replies under his tweet, and there more where he was criticising Bitcoin, saying manner of things about Bitcoin. And he even further stated that, gold is the first, while Bitcoin is the second, why because bitcoin did not pass secondary test (howey test).

Well, as hard as this is for to say, I still have to be honest and say that the man is right with all his claim, but maybe not with the claim that bitcoin will never be used as a reserve currency, and this is because the flaws he see in bitcoin may be there for real, but some people actually are not seeing this flaws but the value that bitcoin offers to the general society..

It is commonly said that a man food could be another man's poison, he thinks bitcoin flaws are too great and this automatically disqualifies it from being used as a reserve currency, to some, he may be right, but to some, he may not be completely right..
And concerning the use of bitcoin for payment for goods and services, it all depends on what is being offered as goods and services and their respective cost, I know of may car dealers who are gladly accepting full bitcoin payment for car purchases and all.

Note, am not saying that Ray Dalio is wrong or correct with his claims, since I don't have good knowledge on technical things especially when it has to do with blockchain technology, but little. So I decided to bring this debate here, so that does with good knowledge and better understanding on Bitcoin and blockchain technology we clear on us on this debate started by Ray Dalio. Because what Ray Dalio stated as reason's why Bitcoin will never be a reserve currency I doubts if they can actually be enough reason for Bitcoin not to be accepted by a central bank as their reserve currency. And there is no doubt that "another man food is another man poison" But Ray Dalio still stated that he has some Bitcoin, so Bitcoin is actually a poison to him as you are seeing it, Ray Dalio is just criticizing Bitcoin for reason best known to him if you ask me.

[Dogedegen]

Somebody should get Ray to talk to Elizabeth Warren or Christine Legarde because he claims that all bitcoin transactions are visible and there's no privacy and these women fight bitcoin because there's too much privacy and anonymity 😃

At least Ray owns some bitcoin, but he did not say why. Does he trust bitcoin only a little? 🤔

I know right? They can't even make up their own minds. None of those corrupt dinosaurs have a clue what they are talking about, this includes people like Ray Dalio. Most people don't understand anything that happens in the world after they reach the age of 40 and get older. They can repeat words and sentences, but that does not mean that they understand anything.

And they're both right that volatility actually makes bitcoin a commodity. However, at the same time, bitcoin has functions for calculations and accumulation of value (these are functions of money). On the other hand, gold is used as a reserve asset, despite its volatility (although less than that of bitcoin). That is, volatility is not an insurmountable obstacle to the status of, if not a reserve currency, then at least a reserve asset.

The degree of volatility of something does not change what it is. If it did, then many currencies of the world should be reclassified as commodities according to you. In any case the volatility argument is dumb, the USD is pretty volatile itself and not that far off from Bitcoin's volatility and this is when you don't factor in the inflation derived loss of value. That one can't be seen directly in the exchange rates between the USD and other currencies as they are all inflationary so the numbers cancel themselves out for the most part, until some currency goes out of control.

As for his other arguments, I think the quantum threat is exaggerated. Well, unless you think that some sinister scientists in secret laboratories are already hacking addresses with a quantum computer. 

Ray Dalio has a chance of understanding the risk of the quantum threat as much as a toddler has the chance of understanding quantum physics overall.

[Darker45]

Those are opinions. I don't find anything to really disagree with. Central banks may or may not adopt Bitcoin as a reserve currency. One of the reasons why some won't might be Bitcoin's transparency. That's how Ray looks at it. I agree, many central banks might find Bitcoin's public transaction records as disadvantageous to them.

Also, Dalio's statements about volatility are true. Rather than deny it, I guess it would be better to accept it. I believe that's indeed a hindrance why Bitcoin isn't used much as a real-world currency. Last month, the price was as high as $126,000. Today, it's $87,000. That doesn't sound good for business.

[minairia3]

I don't know how much he has been into bitcoin or observed bitcoin price movement, saying that an asset that was $15k as at the beginning of two years ago, touched $126k last month and is currently experiencing a market correction at $87k and it is not a store of value?

He misses the point totally in bitcoin or he is trying to talk it down for him missing out on it when the prices were still cheaper. It surely makes sense to see bitcoin as money which has all valuable qualities that fiat doesn't have which includes limited supply and store of value despite its volatility, decentralization, censorship resistant among others.

Fiat doesn't come close to bitcoin price appreciation neither does gold. Countries, institutions and even banks are drifting towards bitcoin now because they see great value in it and if bitcoin was not good money, they wouldn't have such interest. I know for sure that Ray would speak from the other side of his mouth pretty soon and end up buying more bitcoin.

Store of value, and currency or reserve asset are different. He argues that bitcoin is unlikely to become a global reserve currency like gold, he does not say bitcoin is not a store of value.

With its price increasing over time, bitcoin has become a store of value and no one denies that, but it is clearly not a global reserve currency yet. However, it is still too early and incorrect to rush to the conclusion that it will never become a reserve currency. Because bitcoin is still very small and adoption is still happening, and things take time.

But if bitcoin's volatility doesn't ease and become more stable, its chances of becoming a true reserve currency will be slim.

[ultrloa]

Here are some of his replies under his tweet, and there more where he was criticising Bitcoin, saying manner of things about Bitcoin. And he even further stated that, gold is the first, while Bitcoin is the second, why because bitcoin did not pass secondary test (howey test).

Well, as hard as this is for to say, I still have to be honest and say that the man is right with all his claim, but maybe not with the claim that bitcoin will never be used as a reserve currency, and this is because the flaws he see in bitcoin may be there for real, but some people actually are not seeing this flaws but the value that bitcoin offers to the general society..

It is commonly said that a man food could be another man's poison, he thinks bitcoin flaws are too great and this automatically disqualifies it from being used as a reserve currency, to some, he may be right, but to some, he may not be completely right..
And concerning the use of bitcoin for payment for goods and services, it all depends on what is being offered as goods and services and their respective cost, I know of may car dealers who are gladly accepting full bitcoin payment for car purchases and all.

Note, am not saying that Ray Dalio is wrong or correct with his claims, since I don't have good knowledge on technical things especially when it has to do with blockchain technology, but little. So I decided to bring this debate here, so that does with good knowledge and better understanding on Bitcoin and blockchain technology we clear on us on this debate started by Ray Dalio. Because what Ray Dalio stated as reason's why Bitcoin will never be a reserve currency I doubts if they can actually be enough reason for Bitcoin not to be accepted by a central bank as their reserve currency. And there is no doubt that "another man food is another man poison" But Ray Dalio still stated that he has some Bitcoin, so Bitcoin is actually a poison to him as you are seeing it, Ray Dalio is just criticizing Bitcoin for reason best known to him if you ask me.

He might have some point on his statement, but he cannot actually say that it will not really happen. Because looking at the situation happening there are lots of country now are slowly becoming a Bitcoin friendly nation.

So those Bitcoin reserve currency really had a chance to happen. Maybe he just made everything so controversial so that his statement would come up lots of attention and this is actually what's happening now. Also if the person have different agenda for sure that they would say negative things  to try manipulate the minds of people. But as Bitcoin investor for sure those words he provided cannot poison us and majority would provably ignore his statements.

[d5000]

Let's analyze the arguments:

1) Bitcoin is not private as the ledger is public:

On a first glance that could be relevant for a central bank, because their decisions regarding Bitcoin purchases and sales would trigger important reactions on the market, and dealing with a "reserve asset" should avoid that.

But I believe this is not really important. Central Banks would probably have a contract with a service provider or several service providers who would hide all real transactions. Just like they do with gold: they don't buy it out of thin air. They have a lot of money to invest in mixing, CoinJoins, Lightning and other techniques. Only if Central Bank transactions would make up really a big part of the Bitcoin transactions, then this would be more difficult but not impossible.

2) The code could be broken by government intervention (at least I have understood that argument that way):

I have myself argumented that if some government or central bank purchases too many Bitcoins, they could get influence on the Bitcoin code. Above all they could block or force soft forks which are not unanimously supported by the Bitcoin community.

However, I don't really expect that governments and central banks will hold more than 10-20% of all Bitcoins. That would be too few to really exercise control.

Via regulations, it is possible that some privacy enhancements could be blocked too. Imagine for example that there is a soft fork adding something like MimbleWimble (see LTC) and the US and Europe together declare Bitcoin a "privacy coin" and ban it from commercial exchanges like the EU did de facto with Monero. Would Bitcoin be strong enough to resist the temptation to reject the softfork for the sake of a better market price?

3) Volatility.

This is from his earlier tweets. But volatility is decreasing practically since Bitcoin's first listing on an exchange. So I am quite optimistic that we'll reach gold-like volatility values in a few years (now BTC is about 1,5x to 2x as volatile as gold).

[abaeze]

Bitcoin is now on its way to becoming a global base money I think, so it is natural for it to have volatility. But Ray Dalio's view is different because he sees the issue through reserve currency stability. The main characteristics of a reserve currency/asset are low volatility and high deep liquidity, so the high volatility of Bitcoin discourages countries around the world from adopting it as a reserve. Because volatility is considered an operational risk by states, central banks.

[Publictalk792]

Ray Dalio is traditional investor who thinks gold best asset due to its long history and safe from governments, and Bitcoin is only second since it has not been tested by time and is at big risk of being outlawed or regulated by governments. Opposite is however that Bitcoin is digital better version to gold that has better features such as easy movement, perfect rarity, and against being controlled by anyone due to its technology. Thus, although Dalio considers gold proven, good things about Bitcoin in digital world and its ability to stand up to control make its advantages far more important than old position of gold. By the way this fight is remain till end, and both sides will give their reasons. So both side believers will admire their sides.

[Hanadawa]

As for his other arguments, I think the quantum threat is exaggerated. Well, unless you think that some sinister scientists in secret laboratories are already hacking addresses with a quantum computer.  It is difficult to say about the openness of the blockchain as an obstacle. There are both cons and pros to this. This is ambiguous.

I think people who claim quantum computers can hack Bitcoin wallets and addresses are influenced by hoaxes and lack credible references. I've said before that in this day and age, some news websites are simply seeking sensationalism and traffic by creating sensational stories that have the potential to go viral. They don't do in-depth research. They just ask whether it will pique people's curiosity. And we should be careful when reading every article on the internet these days.

Personally, I think quantum computers could theoretically hack Bitcoin encryption, but if a computer could hack Bitcoin, it would certainly be the most advanced computer capable of hacking all other encryption systems in the world. Instead of hacking Bitcoin, they could hack banks worldwide, which only use a few servers for small and medium-sized banks. So, I think even if it were possible, it's unlikely anyone would invest such vast resources into hacking Bitcoin.

[FortuneFollower]

Bitcoin is now on its way to becoming a global base money I think, so it is natural for it to have volatility. But Ray Dalio's view is different because he sees the issue through reserve currency stability. The main characteristics of a reserve currency/asset are low volatility and high deep liquidity, so the high volatility of Bitcoin discourages countries around the world from adopting it as a reserve. Because volatility is considered an operational risk by states, central banks.

Let it be.

They already consider it and some go forward than that, so it's a matter of time.

Volatility will become less and less of an issue for it to happen.

[Sovannar Sangha]

Let it be.

They already consider it and some go forward than that, so it's a matter of time.

Volatility will become less and less of an issue for it to happen.

Hopefully, Ray Dalio's message hasn't arrived yet, but right now, the market seems silent, but inside, it's quite frenzied, as whales continue to force the titans to sell BTC at low prices. It seems BTC's rise is inevitable, proven to be an undeniably reliable hedge.

We must develop a mindset that doesn't focus solely on issues and market sentiment about the future. Focus on the realities we face now. Don't be lazy, and don't misread signals. Right or wrong, don't seek winners; validation is also crucial. Investing isn't about making a lot of money, but about the present mindset.

[FortuneFollower]

Let it be.

They already consider it and some go forward than that, so it's a matter of time.

Volatility will become less and less of an issue for it to happen.

Hopefully, Ray Dalio's message hasn't arrived yet, but right now, the market seems silent, but inside, it's quite frenzied, as whales continue to force the titans to sell BTC at low prices. It seems BTC's rise is inevitable, proven to be an undeniably reliable hedge.

We must develop a mindset that doesn't focus solely on issues and market sentiment about the future. Focus on the realities we face now. Don't be lazy, and don't misread signals. Right or wrong, don't seek winners; validation is also crucial. Investing isn't about making a lot of money, but about the present mindset.

You talk about it there like about the price, but it's not the main issue for them..
It's that the price moves too fast for them.

Not on a retailer side, but on a bigger entity's side

[CryptoBuds]

Those are opinions. I don't find anything to really disagree with. Central banks may or may not adopt Bitcoin as a reserve currency. One of the reasons why some won't might be Bitcoin's transparency. That's how Ray looks at it. I agree, many central banks might find Bitcoin's public transaction records as disadvantageous to them.

Also, Dalio's statements about volatility are true. Rather than deny it, I guess it would be better to accept it. I believe that's indeed a hindrance why Bitcoin isn't used much as a real-world currency. Last month, the price was as high as $126,000. Today, it's $87,000. That doesn't sound good for business.

As far as I know, most central banks publicly disclose the amount of gold, foreign currency and many other assets in their national reserves. Everything is public and they are not shy about it, why should they be afraid of people knowing how many bitcoins they hold? I don't think bitcoin's transparency is a valid reason.

However, volatility is different and I agree with you and him. Volatility offers many advantages for investment and speculation, but is clearly unsuitable and disadvantageous for a currency or reserve asset. We should need to accept that fact.