RI Dalio: bitcoin is changing my view of it

Source: the purpose of this article is to illustrate my view on the comparison of special currency. Please pay attention to what I say here, not what the media reports say. The information in this article is reliable. I’ve found that those who want to promote bitcoin (most of them) describe it in one way, while those who oppose it (a few who are cowered in the corner) describe it in another way. Like my comments on most things, reality has its advantages and disadvantages, and I will try to express my understanding as accurately as possible. I’d like to reiterate that since I’m not an expert on bitcoin or cryptocurrency, I don’t think I’m going to rely on my opinion, so I shouldn’t talk about it. I know how much insight one needs to know before forming a valuable view of the market, so I won’t bet on my point of view. However, people still hope that I can make a comparison with the special currency, even if my evaluation is not professional. Moreover, it would be better to explain myself than to distort my views by the media, so I have this article. But it also reminds you not to rely on my point of view. The only thing I ask of you is to read what I write here, not to pay attention to the media’s out of context reports. I think bitcoin is a great invention. The invention of a new type of currency, which was programmed into a computer system, has not only been in existence for nearly 10 years, but its popularity as a means of storing money and wealth is increasing rapidly. This is an amazing achievement. Just like building an existing credit based monetary system, this is the alchemy of creating wealth at little or no cost. Just as the creation of credit made many bankers rich (first by the Medici family around 1350), bitcoin made its inventors and early buyers very rich, and could make more people very rich and subvert the existing monetary system. Those who invented bitcoin and supported the transformation of this new currency from a dream to a reality have achieved remarkable success, not only to sustain this dream, but also to develop bitcoin (I mean bitcoin and its competing products) into an alternative asset similar to gold. There are not many alternative assets similar to gold, but there is growing demand for these assets (due to ongoing and future credit creation and money printing). In view of the current global situation, in addition to increasing demand for capital or (limited supply) assets that can store wealth, there is also an increasing demand for private assets. Because there are not many gold like, storable assets that can be held privately, and the relatively small size of the market for these assets, bitcoin and its competitors are likely to be able to meet this growing demand. In my opinion, bitcoin has successfully achieved a leap from a highly speculative idea that may exist for a short time to an asset that is likely to exist for a long time and is likely to have a certain value in the future. For me, the biggest question is what the actual use of bitcoin is and how much demand it will be. Since its supply is known, its price can only be determined by estimating its demand. It is necessary for me to state my view on its supply. Although the supply of bitcoin is limited, there is no limit on the supply of digital currency, because new digital currency has emerged and will continue to emerge and form competition. Therefore, the supply of assets similar to bitcoin should affect the price of bitcoin and other cryptocurrencies, and competition will also affect the price. In fact, I think there will be better products in the future that will replace bitcoin, because everything has evolved in this way – that is, new ways and new things will always replace the old ones. Because bitcoin works in a fixed way and can’t evolve, I speculate that there will be better alternatives to bitcoin in the future. I think it’s a risk. For these reasons, the idea of “limited supply” is not as true as it seems, for example, that even if BlackBerry supply is limited, it will not be of much value because they have been replaced by more advanced competitors. I still don’t understand why this is not seen as a risk, but I welcome the correction of my shallow understanding. As an extension of the digital characteristics of bitcoin 1, my question is what is the privacy of bitcoin and how the government will define the uses of bitcoin, such as what can be used and what can not be used. With regard to privacy, bitcoin seems unlikely to be as private as some have speculated. After all, it’s an open book, and a lot of bitcoin is held in a non private way. If the government (and possibly hackers) wants to know who owns what, I doubt whether the privacy of the token can be protected. In addition, I believe that if the government intends to ban the use of bitcoin, most bitcoin users will no longer be able to use bitcoin, and their demand will drop sharply. The idea that the government has violated the privacy of bitcoin (and its competitors) and / or banned its use is not incredible. In my opinion, the more successful bitcoin is, the more likely it will be. Since the establishment of the first central bank (i.e. the Bank of England, which was established in 1694), for reasonable reasons, governments all want to control money and protect their exclusive right to issue money and credit in their own territory. When I a) stand in the shoes of these government officials, b) observe their behavior, and C) listen to what they say, I can hardly imagine that they will allow bitcoin (or gold) to be significantly more attractive than the money and credit they offer. I suspect that bitcoin’s biggest risk is its success, because if it does, the government will try to kill it, and they have the power to do it. In addition, I really appreciate that bitcoin has stood the test in the past 10 years, not only in the above aspects, but also in the technology it uses, which has never been compromised by hackers. Even so, for those who hold digital / network assets, network risk is a kind of risk that I can’t ignore under the background that network attack is obviously more powerful than network defense. When the U.S. Department of defense is unable to protect its systems from hackers, it is naive to think that digital assets will not be hacked at all. This is an advantage of gold like assets and one of the risks of all financial assets. In fact, I think one day in the future, we are likely to find that financial systems that are mainly digital are more vulnerable to disruption and / or cyber extortion than we currently realize. Moreover, these are happening at an increasing rate and may threaten the value of traditional financial assets. I’m here to remind you, but it’s up to you to judge. Although I know bitcoin can be held offline through “cold storage,” I realize it’s hard to do so, and very few people actually do it. Therefore, in general, my view is that because bitcoin is digital and interconnected, I am not satisfied with the protection provided by bitcoin against network risks. I welcome the correction of my point of view. In terms of supply and demand, although the supply is known, it is difficult to judge the long-term demand for bitcoin over a relatively long period of time (because it is a long-term asset). This is mainly due to the reasons I mentioned earlier. For example, since I see bitcoin as an alternative asset similar to gold, I asked Rebecca Patterson and other qiaoshui colleagues to do some calculations to analyze the total value of private holdings of gold and assume that some of the gold is converted into bitcoin for decentralized allocation. For example, suppose that 10% of privately held gold is converted into bitcoin as a way to spread risk, or 20%, 30%, 40% or 50%, or that some people who create or hold bitcoin hope to achieve decentralized allocation by holding gold and stocks, or assume that the government wants to ban the use of bitcoin, or What are these scenarios going to be like? All in all, these circumstances reflect the prospect of great uncertainty. So, I think bitcoin looks like a long-term option full of uncertainties in the future, so the amount of money I invest in bitcoin will be limited to the amount I won’t mind losing even 80%. That’s what I think of TEK as a non professional. I would like to be corrected and have a better understanding of the special coin. On the other hand, my colleagues and I are paying close attention to assets that can be used as alternative wealth hoards. Note: 1 by bitcoin, I mean bitcoin and its competitors. (source: Dalio)

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