Some extracts from the hedge fund manager Ray Dalio’s public note about Bitcoin.
I believe Bitcoin is one hell of an invention. To have invented a new type of money via a system that is programmed into a computer and that has worked for around 10 years and is rapidly gaining popularity as both a type of money and a storehold of wealth is an amazing accomplishment.
Because of what is going on in the world, besides there being a growing need for money or storehold of wealth assets that are limited in supply, there is also a growing need for assets that can be privately held. Because there aren’t many of these gold-like storehold of wealth assets that can be held in privacy and because the sizes of their markets are relatively small, there exists the possibility that Bitcoin and its competitors can fill that growing need.
He does make a counter-argument against supply: that while Bitcoin itself is limited, there is no limit to the number of cryptocurrencies that can be created in the same manner. As untamperable and un-shut-down-able as Bitcoin.
Speaking of untamperable, Dalio recognises that the biggest threat to Bitcoin is not an attack on the chain itself, but in governments restricting access to it in the first place.
I suspect that Bitcoin’s biggest risk is being successful, because if it’s successful, the government will try to kill it and they have a lot of power to succeed… for good logical reasons governments wanted control over money and they protected their abilities to have the only monies and credit within their borders. When I a) put myself in the shoes of government officials, b) see their actions, and c) hear what they say, it is hard for me to imagine that they would allow Bitcoin (or gold) to be an obviously better choice than the money and credit that they are producing.
This is potentially what could happen in India. While the government recognises – rightly – that cryptocurrency isn’t clearly either a currency or an asset and therefore doesn’t fit into existing regulatory frameworks, its approach to it seems to be one of antipathy. A bill that may be tabled and discussed in the coming weeks is described in the current parliamentary session agenda as one that intends to
… create a facilitative (sic) framework for creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seems to prohibit all private cryptocurrencies in India, however (sic) it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.