There was a James Bond movie years ago where the bad guy planned to devalue gold buy making all the gold in Fort Knox radioactive, so it was not worth anything. I’ll be honest, I think that was the premise, but it was a long time ago, so I might not be remembered it 100 percent correctly. Why does this vague memory of a movie apply to what is going on today? Well, I read an article about Ray Dalio’s recent comments on crypto. Mr. Dalio is the founder of the world’s largest hedge fund, Bridgewater Associates.
Good ol’ Ray believes regulators will ultimately take control of bitcoin if the cryptocurrency gains mainstream success.
“I think at the end of the day if it’s really successful, they will kill it and they will try to kill it. And I think they will kill it because they have ways of killing it,” Dalio told Andrew Ross Sorkin Wednesday on CNBC’s “Squawk Box” at the SALT conference in New York.
Does he have a point, or does he just like saying “kill it” over and over? He continues:
Dalio said bitcoin doesn’t have intrinsic value, meaning the asset lacks fundamental and objective worth. “There are so many things in a historical perspective that didn’t have intrinsic value and had perceived value. And then it went hot and it became cold. It could be either way. You just have to know what it is. It could be tulips in Holland.”
Now, I am not here to go off on this thought process of "no intrinsic value" because unlike a lot of these hedge fund guys, Dalio actually owns crypto and has it in his funds. So back to the original thought of the making gold lose its value. The villain in the Bond film was looking to make his supply of gold more valuable by making the overall supply scarcer. Mr. Dalio’s belief is a little different, but I think what he is alluding to is similar.
While he did not say how “they” will kill it, there are ways to try. While on its face, Bitcoin can survive no matter what regulators do by means of it being decentralized, Mr. Dalio does have a point. Regulators could simply ban crypto from being a currency to buy and sell, or used for any transactions that fall under government regulation. Not so hard to see how they can define anything as under their purview.
While Bitcoin would still be around, it would just be worthless as it could not be used for anything. Dalio’s point is that, while it is still not mainstream, the government does not consider it a threat, but, as soon as they do, they will simply make it worthless to use.
The real question is can crypto stand up to these regulations and survive in spite of them, or can governments really overpower them and shove their worth to zero?