The co-manager of the world’s biggest hedge fund, Ray Dalio, has a knack for picking out macroeconomic shifts before they become mainstream. One transformation he predicts is the growing competition between various forms of money, and he is so confident in the cryptocurrency Bitcoin (BTC 1.26%) that he has allocated 2% of his own portfolio to it.
On the Lex Fridman Podcast, Dalio discussed why he has taken on such a large position in the digital asset. He believes Bitcoin has earned its value and become a viable alternative to other forms of currency. Additionally, the billionaire pointed out how the cryptocurrency has grown exponentially since its inception, and its code is virtually unhackable.
The fading of the dollar
In the discussion, Dalio explained his thoughts on the future of money, noting that it will include competition between different forms of currency. He believes citizens are becoming aware of the fact that their paychecks are losing value due to the increasing money supply. As such, Bitcoin has the potential to become a viable rival to fiat money.
Gold or crypto gold?
Though some view Bitcoin and gold as separate entities, Dalio believes they share many similarities. He stressed that Bitcoin is the perfect currency for digital transactions, and gold is ideal for offline exchanges. In this sense, he sees the crypto as the “younger generation’s alternative to gold”.
Suggestions for non-billionaires
Dalio has an estimated net worth of over $19 billion, so his risk tolerance is likely much lower than most. Depending on your investing time horizon, you might feel comfortable allocating a larger share of your portfolio to a volatile asset like Bitcoin. For those in wealth preservation mode, a 2% allocation could be a reasonable amount.
RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
