15 ms·

What I Think of Bitcoin

PaulHoule 6y ago
90% of the time Ray Dalio has an interesting opinion and good analysis, and he does this here. I did an analysis based on the same premise (Bitcoin competes with gold) and came to basically the same conclusion. Dalio's writings about how the "All Weather" fund works are based on a premise a lot like the "Permanent Portfolio" advocated by Libertarian presidential candidate Harry Browne but Dalio took out the "gold" component and replaced it with "treasury inflation protected securities." Circa 2000 I bought a lot of TIPS and they did very well despite there being little inflation. Dropping interest rates had something to do with it, but I still don't understand exactly why they did so well. (My stockbroker fired me as a client because I went to a presentation and asked why I needed the product they were selling when I bonds were yielding so well and had all the tax benefits they had) I don't know how TIPS will do now, but I am sure that getting into TIPS at the right time is part of why Dalio is a legend. Maybe these days he thinks gold is better than TIPS.
- okprod 6y ago
  > (My stockbroker fired me as a client because I went to a presentation and asked why I needed the product they were selling when I bonds were yielding so well and had all the tax benefits they had) That's interesting the broker didn't want to sell any other products to you. > I don't know how TIPS will do now, but I am sure that getting into TIPS at the right time is part of why Dalio is a legend. Maybe these days he thinks gold is better than TIPS. I think Buffett has also recommended TIPS.
- marcrosoft 6y ago
  My guess is TIPS would outperform gold for low to moderate inflation and get absolutely crushed for high or hyper inflation.
  - paulpauper 6y ago
    they would only get clobbered if the fed is ahead of the curve. If the CPI is 4% a year and interest rate is 2%/year, then TIPS are very good cuz you are getting a 2% real return even with high inflation.
- hankthecat 6y ago
  dropping interest rates had everything to do with it. the 10yr treasury was at 6% in 2010 and now it's at 1.15%. your TIPS did well because rates dropped. Also those are mostly paper gains unless you sell... fyi the "all weather" portfolio's name is stupid given it's mostly backward looking and benefited from a commodities supercycle and rates dropping from QE. With the 10yr at 1% putting 30-40% of your portfolio in long dated treasuries is insane. Let's use the TLT etf as an example (20 yr treasury). It has a duration of 19 years. That means for every 1% increase increase in rates, the value of your bonds will go down 19%....yikes. Let's say you are going to buy individual bonds and hold to maturity. Ok, you are protected from that price drop assuming you don't sell, but you've also just made a 20 year bet you don't think interest rates will go higher from here.
bshimmin 6y ago
I offer no commentary on the actual content, but this is a truly horrible piece of writing - almost every sentence is clunky, poorly phrased, ungrammatical, or repetitive. I guess you don't need to be able to write decent prose to make $18B!
- capableweb 6y ago
  What a boring comment. Unfortunately, this comment reveals more about you as a person than it does about Ray Dalio for putting out that article. Too bad writing pessimistic comments about others on HN doesn't earn you any money, otherwise you could have made some too! I'd love it if your comment could raise the same point as you did, but also include examples of the poor sentences and how it could be better. Then at least we could have learned something. Instead you went for the shallow dismissal. Boring.
  - paulluuk 6y ago
    The fact that you chose to comment on a "negative comment" simply by stating that it is "boring" and "pessimistic" is pretty funny.
    - capableweb 6y ago
      I understand and appreciate the irony for sure :) I have a small tick that I cannot downvote someone on HN without explaining why, even though the author won't actually know I was the one downvoting. But downvoting without explaining why, feels wasteful. At least now I get to explain why I feel that comment doesn't live up to the HN standard.
- agumonkey 6y ago
  Nor becoming president. It seems humanity is on firesale this days.
- loceng 6y ago
  I don't downvote, so none of the downvotes are from me, however instead I'll try to learn: what examples would you consider as well-written in comparison? So far from what I've read, it's extremely well-written; the repetition is to drill in specific points - just take it for that and not be annoyed by it, as it's not done in an annoying way - at least for how far I've read through so far.
learnstats2 6y ago
Here Ray Dalio says he views Bitcoin as a gold-like asset. This is the first time I have felt that Bitcoin has some value: as a commodity that wealthy people put their wealth into when they have nothing better to do with it. People are not buying gold because they ever plan to use the gold.
- nine_zeros 6y ago
  For the wealthy, it's truly a hedge or an insurance policy. Even if America and the dollar collapses, bitcoin will keep the elites rich.
  - MrMan 6y ago
    I don’t think it will, if things get like that. They will need to find a safe place to hide, which Bitcoin cannot provide
- loceng 6y ago
  The only, and it is a major problem with unavoidable pitfalls that shouldn't - can't be in our systems - is that Bitcoin is an MLM scheme and thus it is aligning people through financial gain, creating a religion of "HODLers" who are already a mob of varying levels of self-control and critical thinking. And as Dalio says, those who speak a counter-narrative to Bitcoin are rightfully "a few scared souls cowering in a corner;" so he's in fact acknowledging this mob without actually directly stating it. He's being very careful with his words to avoid being a target.
  - learnstats2 6y ago
    I would agree, and this matches it to gold, also from Ray Dalio's perspective. Ray Dalio invested heavily into gold, and has since repeatedly press released that he had done so. It's the same characteristics as an MLM scheme.
    - loceng 6y ago
      Apples to oranges comparison: gold actually has a use, and its value is kept in check by that - it's tied to the physical world, to reality, and gold also wasn't/isn't an attempt to replace a transactional layer. I'm sure there are more differences that make it incomparable - certainly that pro-Bitcoiners will simply dismiss the differences saying they're unimportant, irrelevant. Edit to add: qualitative comments rebutting my argument points would be greatly appreciated.
hjek 6y ago
Nathan Robinson did a great piece[0] on Ray Dalio's principles and Bridgewater's culture, which looks extremely toxic: > Make sure, of course, that you always make specific people feel bad about mistakes: “Instead of the passive generalization or the royal ‘we,’ attribute specific actions to specific people: ‘Harry didn’t handle this well.’” And make sure everyone knows it: “Use ‘public hangings’ to deter bad behavior,” he says, by which he means making sure to belittle (I’m sorry, accurately explain the failings of) employees in front of their coworkers so that the lesson is learned widely. [0]: https://www.currentaffairs.org/2018/06/how-to-make-everyone-in-your-vicinity-secretly-fear-and-despise-you/ https://www.currentaffairs.org/2018/06/how-to-make-everyone-...
- jeffreyrogers 6y ago
  I worked at Bridgewater, and while there are things I disliked about it, this piece is not at all fair and does not capture what it is actually like to work there. Nathan Robinson, who is a self described socialist, is not someone I would go to for an objective assessment of a hedge fund's working conditions.
  - hjek 6y ago
    > Nathan Robinson, who is a self described socialist, is not someone I would go to for an objective assessment of a hedge fund's working conditions. I'm glad you didn't have a bad time working there. Yes, of course you can disagree with NR's conclusions, yet the article is mainly a review of Dalio's book alongside some quotes from employees. This "public hangings" statement is picked straight out of his Principles book. Is any of that source material being misrepresented or unfair in your opinion, having worked there? I'm curious about the thing with the "overseers", "captains", "dots" and "baseball cards". Is that really a thing or not? > Each day, employees are tested and graded on their knowledge of the Principles. They walk around with iPads loaded with the rules and an interactive rating system called “dots” to evaluate peers and supervisors. The ratings feed into each employee’s permanent record, called the “baseball card.”
    - castlecrasher2 6y ago
okprod 6y ago
I think Dalio used to be more against Bitcoin. His writing/books are definitely worth reading though.
- agbell 6y ago
  I liked the first part of his book, that was a biography. The second part with the principles seemed strange. Meetings had realtime feedback dials so you tell the person listening you were bored? Every meeting is recorded and kept forever. I'm working from memory, but it seemed cultish and strange.
  - deleted 6y ago
    [deleted]
godelzilla 6y ago
This article might've been interesting 5 years ago. Why is HN so obsessed with bitcoin over every other crypto? It's like people are still arguing about DOS.
newswasboring 6y ago
> Since the supply is known, one has to estimate the demand to estimate its price. Is there any other asset we can make this statement about? That supply is 100% known and cannot change in future?
- rybosworld 6y ago
  Maybe Helium?
- thekyle 6y ago
  I'm not sure, besides all the other cryptocurrencies that have the same property.
- sjaak 6y ago
  It’s not 100%. If >= 50% of the network is in agreement we can make more bitcoins, right? The limit is set in code. But that code can be altered. Let me know if I’m wrong
  - rybosworld 6y ago
    Technically yes it is possible. Very, very unlikely though.
    - codeulike 6y ago
      But who knows what we'll all be thinking when 2140 arrives?
      - HashBasher 6y ago
        Will that stop you from making a small allocation into Bitcoin? Any and all risks to bitcoin can be mitigated by portfolio sizing.
      - spiorf 6y ago
        Block reward is now 6.25 btc, and fees reward is about 1.5 btc. Every 4 years block reward halves, so in the next two halving block reward will be much less than fee reward, making it more and more irrelevant. The 2140 is the date where it reaches 0, but it will be completely irrelevant in 12 years (3 more halving cycles).
joubert 6y ago
> I know how much one needs to know in order to have a valuable opinion in the markets, so I wouldn’t bet on my own views. Good to emulate.
lalaland1125 6y ago
This post should be mostly discounted because Ray doesn't really seem to be aware of the true risk of the Tether scam, the biggest component of and risk to Bitcoin's value. For those not aware, Tether is a "stable coin" that issues tokens that supposedly represent dollars and can be used as a medium of exchange. However, it's widely suspected that Tether is unbacked and printing fake dollars and even Tether itself has admitted that at least 26% of their tokens have no backing [1]. Tether has never been audited so we have no clue how much of it is actually backed and how much of it is fake. This is extremely problematic because Tether is currently printing around $500 million per day and is a source of a significant amount of buy pressure in the market. Tether is used on almost every exchange and is the vast majority of Bitcoin buy orders so Tether can be used to artificially pump the price of Bitcoin quite effectively. Ray points out Tether as a risk to Bitcoin's value, but I don't think he does an adequate job explaining the risk. Tether isn't a small component of the Bitcoin ecosystem. It's at the heart of Bitcoin with it being the primary currency used to buy Bitcoin with at most exchanges. Most of the buy volume is with Tether and that $500 million per day is huge. Regardless of what one thinks about the value of Bitcoin, it's irrational to invest while $500 million of fake dollars are being pumped in every day. Once that artificial $500 million buy pressure is removed, the market will face an existential risk. Who knows what the real price of Bitcoin would be without all that fake money? https://davidgerard.co.uk/blockchain/2021/02/03/tether-printer-go-brrrrr/ https://davidgerard.co.uk/blockchain/2021/02/03/tether-print... is a good article for additional context on Tether. 1. https://www.coindesk.com/tether-lawyer-confirms-stablecoin-74-percent-backed-by-cash-and-equivalents https://www.coindesk.com/tether-lawyer-confirms-stablecoin-7...
- thebean11 6y ago
  Ray isn't the only one, the market is pricing in zero risk of tether collapsing. It trades at no discount to real dollars, anybody with a Coinbase account could convert pretty high volumes of tether to real dollars. I really have no idea why, it seems sketchy.
  - choxi 6y ago
    It looks like Coinbase doesn't support Tether: https://www.coinbase.com/price/tether https://www.coinbase.com/price/tether
paulpauper 6y ago
Bitcoin was good until around early-mid 2017, when it became over-regulated, too expensive to use, no privacy, too slow, etc. The fungibility is gone. Everything is taxed and tracked. Pretty much useless
- tromp 6y ago
  The privacy / fungibility was never there. Not in 2009, not in 2017, not now.
Synaesthesia 6y ago
I don’t get how Bitcoin can become a viable currency or store of value in the future. It’s almost exclusively owned by a small group of individuals. Are we gonna accept that level of centralisation? Of course not.
- bitxbitxbitcoin 6y ago
  Do you think that centralization of Bitcoin is worse than centralization of USD?
  - HashBasher 6y ago
    Or gold, or stocks, or real estate or anything that can be used as a store of value today.
  - Synaesthesia 6y ago
    It is probably yeah.
- frankenst1 6y ago
  Bitcoin is permissionless and bootstrapped. It had to start with 0 users and $0 value. 10 years later it is now worth $50K and has 100M users (doubling every ~2 years). We are currently living in a world in which the rich get richer (bailouts, stocks, real estate, efficiency gains) while the poor get poorer (cash only, inflation, wage stagnation). Every $1 that trickles down from the top 1% is returned to them as $2 freshly printed from the central banks. Wealth and income inequality continue to rise as a result. Bitcoin has a fixed supply, and now you can't bailout the riches anymore while having the poor pay the bill in the future via inflation. Do we accept that inflation causes wealth centralisation? Of course not, but until Bitcoin there wasn't anything we could do about it.
herodotus 6y ago
I could not read this article because first I had to agree to this: "I am entering this website only to obtain general information regarding Bridgewater Associates, LP and not for any other purpose." but that was not at all why I was trying to enter the website. So I will probably never know what Ray Dalio thinks of Bitcoin.
- sergiotapia 6y ago
  Are you a robot?
  - herodotus 6y ago
    ....got me!
- paulgb 6y ago
  Isn’t Ray Dalio’s opinion information regarding Bridgewater Associates? This is likely a way to assert that the site is not intended to market Bridgewater’s investment products to non-accredited investors. I don’t know if the SEC explicitly requires a click-wrap warning but it’s generally an area that firms want to avoid toeing the line on.
dandanua 6y ago
I think it's time to put Bitcoin on the ignore list. You will never learn anything new about it, only the same stories: 1. It's a disastrous waste of energy resources. 2. HODLers like to compare it with gold and use it as a store of value. Because of this, they will constantly make a noise about it to raise its price. 3. No one will ever use it as an ordinary currency to buy simple things. Oh, you could buy Tesla with it, but you won't do that, because bitcoin holders think it will only grow.
- fwiwm2c 6y ago
  Looks like someone missed the train.
- ballofrubber 6y ago
  1. You don't decide whats a waste of energy or not. 2. https://www.youtube.com/watch?v=xLYYh4aPXAM https://www.youtube.com/watch?v=xLYYh4aPXAM 3. Bitcoin Mining will make investments in renewable energy a lot less riskier as you can scale up as much as you want and always have a buyer. This drives out fossil fuel miners 4. Once bitcoins true price has been found, holders will spend to consume as much as they need/want to. Just like every other currency, except without the inherent need to spend(fixed issuance)
  - carleverett 6y ago
    I don't think you could ever find the "true price" of a pure store of value asset like Bitcoin. Gold has been around for thousands of years and is still volatile enough that no one would want to use it for daily transactions. The characteristics of a great store of value are different than that of a great currency - it seems naive to me to think that Bitcoin would ever act like a fiat currency that way.
    - ballofrubber 6y ago
      It's because the currency gold is priced in is going down year by year. Why should you spend your gold if your fiat is worth less tomorrow? That's besides the point that gold is practically unusable as a currency for convenience reasons (divisibility, verification, storage, transportation). A great currency is a currency that preserves your value over time, as currency is what you earn for spending your time and skill. You shouldn't be forced to take a risk to maintain your wealth. Today it's risky not to divest your fiat.
joubert 6y ago
> I should clarify what I said about its supply. Although Bitcoin is limited in supply, digital currencies are not limited in supply because new ones have come along and will continue to come along to compete so the supply of Bitcoin-like assets should, and competition will, play a role in determining Bitcoin and other cryptocurrency prices. In fact I assume that better ones will come along and displace this one because that is the way the evolution of everything works—i.e., new ways of doing things and new things always have and always will replace old ways of doing things and old things. Since the way Bitcoin works is fixed, it won’t be able to evolve and I presume that a better alternative will be invented and pass it by. I see that as a risk. For those reasons the “limited supply” argument isn’t as true as it might appear—e.g., if Blackberries were in limited supply they still wouldn’t be worth much because they were replaced by competitors that were more advanced. I still don’t know the answer to why that isn’t a risk, but I would welcome my naïveté being corrected.
- Sargos 6y ago
  It's taken decades for IPv6 to make inroads onto the internet. Network effects are extremely strong when it comes to protocols and it's not easy even after something better comes along.
  - joubert 6y ago
    Agreed. Double edged: as the new entrant network effects of incumbent(s) can be the wall you hit. Can also be your moat if you innovate the space into a new, different direction.
kaycebasques 6y ago
MacroVoices #255 with Mike Green discussed another regulatory threat not mentioned in the Bridgewater post. Governments don't have to ban BTC outright. They have other tools for making it wildly unattractive to hold. I can't remember the details but they discussed a scenario where the US government classifies BTC as a commodity and requires K-1 style taxation. That would mean that you would have to pay taxes on any gains in BTC even if you haven't sold your shares.
- ttul 6y ago
  Absolutely. Governments have the power to make things unlawful or taxed even if you have ways to keep that activity secret. Sure, you can pay your builder cash to finish that deck, but it’s illegal. Making things illegal or taxed suppresses that activity.
- playingchanges 6y ago
  Mike Green is one of the most interesting thinkers in the finance space. His work on passive indexation is fascinating.
- coinward 6y ago
  How will they confiscate those BTC gains? They are literally relying on an honor system to report holdings today. Maybe this will change and they will come after those who are suspected to be holding BTC due to purchase records from KYC compliant services that IRS could get their hands on. Then what? Show up with their guns to coerce you or throw you in a cage until you fess up? The tax code mess becomes totally impossible post hyperbitcoinization. Bitcoin frees the tax slaves. You thought abolition was just for history books?
  - kaycebasques 6y ago
    It's just an example and I'm not invested enough to defend it. The main idea is that governments have a lot of levers to add friction (as Consultant32452 said) and if you think that governments are just going to peacefully concede their ability to control something as fundamental as money to the crypto illuminati, you might be in for a surprise. Another possible lever is government control over regulated financial institutions.
throwaway4good 6y ago
Bitcoin will be gold-like store of value because people think it is like gold and financialize it with ETFs and a futures market. However should we change our mind and instead start thinking some other cryptocurrency or maybe just a registration in some more or less distributed database is gold. Then that can become gold. Or something like that? Or maybe only gold is gold because it has been like that for a thousand years and throughout multiple empires and wars.
gegtik 6y ago
<Ctrl-F> "environment" 2 hits, both "regulatory environment"
- _han 6y ago
  I went one step further and searched for "energy", which only appeared in the article's disclaimer in names of institutions. I then proceeded to close the browser tab.
  - coinward 6y ago
    so you will only read content that confirms your belief that Bitcoin wastes energy? I see. Have fun staying poor.
    - gegtik 6y ago
      coinward has a nuanced opinion
jdcaron 6y ago
Store of value like gold & crypto currency is an idea that has a clear side effect. There will be inflation, it's how governments move the economy around. Yet, bankers and crypto fans keep talking how gold or bitcoin can help you evade it. Which it means, even more pressure will be put on people who don't have the ways of escaping inflation through such ways. It will be the poor that will pay the highest price while rich people will go around it.
mempko 6y ago
I think there is a huge tail risk that Ray Dalio missed about bitcoin. https://cbeci.org/ https://cbeci.org/ It's incredibility energy intensive and as the world works towards reducing the our impact on the climate, it's possible energy can get too expensive to operate a bitcoin farm mining farm. Or governments decide that using precious electricity production on hashing blocks is the same as other forms of pollution and regulates it away.
- coolestguy 6y ago
  Miners are incentivized to use renewable energy because it's cheaper and impacts their profit margins considerably. Is energy use a concern when you're primarily dealing with solar/hydro power?
- mastermojo 6y ago
  In the free market people will mine bitcoin if it's profitable. That is, if bitcoin is valuable enough and if energy is cheap enough and if the overall network hash rate is low enough. Any changes to network hash power, bitcoin prices and energy cost may cause miners to scale down operations and lower overall network hash. Then at a certain network hash rate it will become profitable again.
what_the_drew 6y ago
GPU miner go brrrr
josemwarrior 6y ago
- "Since the way Bitcoin works is fixed" Bitcoin's work is not fixed. Since it evolves depending on the wishes of the community You only need the 51% of the network has applied the changes in order to evolve. - "limited supply they still wouldn’t be worth” I think limited supply is one of the most attractive things of Bitcoin :)
- bitcharmer 6y ago
  I am struggling to understand this comment.
hootbootscoot 6y ago
What I think about bitcoin and crypocurrencies in general that are based upon a "proof of work" with no tangible production of anything useful in society? They are a giant waste of electricity. Even renewably-sourced electricity is in finite supply, even near large hydro-electric dams or geo-thermal plants, and thus this deprives the world of metal smelting or other energy-intensive activities we urgently NEED to adapt to electrically-driven processes. I should expect to see intelligent folk like those in tech to understand the multiple environmental crises we are in, and how bitcoin and it's ilk are not aiding resolution of this in any way, and indeed can be shown to be hampering efforts. Wasted CPU cycles have environmental costs. Proof of work is a giant waste of electricity that could be better spent. Introduce a cryptocurrency that actually incentivizes goodness through it's creation instead of further destruction and spare me the hypotheticals. As currently implemented= BAD FOR PLANET EARTH and a diversion of resources to literal waste. Imaginary money burning real joules of energy
- MrMan 6y ago
  These people don’t care
naveen99 6y ago
General AI will need a bearer asset.
Temasik 6y ago
Bitcoin is the MLM gor millennials
MrMan 6y ago
For my money buffet > Dalio, this superficial framing of The Whole topic is a case in point. Who challenges dalio on his submerged assumption that a gold-like store of value is really of any value to rank and file investors compared to the stock, bond and real estate markets? He should be equally criticized for obsessing about gold as for being attracted to Bitcoin.

90% of the time Ray Dalio has an interesting opinion and good analysis, and he does this here. I did an analysis based on the same premise (Bitcoin competes with gold) and came to basically the same conclusion. Dalio's writings about how the "All Weather" fund works are based on a premise a lot like the "Permanent Portfolio" advocated by Libertarian presidential candidate Harry Browne but Dalio took out the "gold" component and replaced it with "treasury inflation protected securities." Circa 2000 I bought a lot of TIPS and they did very well despite there being little inflation. Dropping interest rates had something to do with it, but I still don't understand exactly why they did so well. (My stockbroker fired me as a client because I went to a presentation and asked why I needed the product they were selling when I bonds were yielding so well and had all the tax benefits they had) I don't know how TIPS will do now, but I am sure that getting into TIPS at the right time is part of why Dalio is a legend. Maybe these days he thinks gold is better than TIPS.

okprod 6y ago
> (My stockbroker fired me as a client because I went to a presentation and asked why I needed the product they were selling when I bonds were yielding so well and had all the tax benefits they had) That's interesting the broker didn't want to sell any other products to you. > I don't know how TIPS will do now, but I am sure that getting into TIPS at the right time is part of why Dalio is a legend. Maybe these days he thinks gold is better than TIPS. I think Buffett has also recommended TIPS.
marcrosoft 6y ago
My guess is TIPS would outperform gold for low to moderate inflation and get absolutely crushed for high or hyper inflation.
- paulpauper 6y ago
  they would only get clobbered if the fed is ahead of the curve. If the CPI is 4% a year and interest rate is 2%/year, then TIPS are very good cuz you are getting a 2% real return even with high inflation.
hankthecat 6y ago
dropping interest rates had everything to do with it. the 10yr treasury was at 6% in 2010 and now it's at 1.15%. your TIPS did well because rates dropped. Also those are mostly paper gains unless you sell... fyi the "all weather" portfolio's name is stupid given it's mostly backward looking and benefited from a commodities supercycle and rates dropping from QE. With the 10yr at 1% putting 30-40% of your portfolio in long dated treasuries is insane. Let's use the TLT etf as an example (20 yr treasury). It has a duration of 19 years. That means for every 1% increase increase in rates, the value of your bonds will go down 19%....yikes. Let's say you are going to buy individual bonds and hold to maturity. Ok, you are protected from that price drop assuming you don't sell, but you've also just made a 20 year bet you don't think interest rates will go higher from here.

bshimmin 6y ago

I offer no commentary on the actual content, but this is a truly horrible piece of writing - almost every sentence is clunky, poorly phrased, ungrammatical, or repetitive. I guess you don't need to be able to write decent prose to make $18B!

capableweb 6y ago
What a boring comment. Unfortunately, this comment reveals more about you as a person than it does about Ray Dalio for putting out that article. Too bad writing pessimistic comments about others on HN doesn't earn you any money, otherwise you could have made some too! I'd love it if your comment could raise the same point as you did, but also include examples of the poor sentences and how it could be better. Then at least we could have learned something. Instead you went for the shallow dismissal. Boring.
- paulluuk 6y ago
  The fact that you chose to comment on a "negative comment" simply by stating that it is "boring" and "pessimistic" is pretty funny.
  - capableweb 6y ago
    I understand and appreciate the irony for sure :) I have a small tick that I cannot downvote someone on HN without explaining why, even though the author won't actually know I was the one downvoting. But downvoting without explaining why, feels wasteful. At least now I get to explain why I feel that comment doesn't live up to the HN standard.
agumonkey 6y ago
Nor becoming president. It seems humanity is on firesale this days.
loceng 6y ago
I don't downvote, so none of the downvotes are from me, however instead I'll try to learn: what examples would you consider as well-written in comparison? So far from what I've read, it's extremely well-written; the repetition is to drill in specific points - just take it for that and not be annoyed by it, as it's not done in an annoying way - at least for how far I've read through so far.

learnstats2 6y ago

Here Ray Dalio says he views Bitcoin as a gold-like asset. This is the first time I have felt that Bitcoin has some value: as a commodity that wealthy people put their wealth into when they have nothing better to do with it. People are not buying gold because they ever plan to use the gold.

nine_zeros 6y ago
For the wealthy, it's truly a hedge or an insurance policy. Even if America and the dollar collapses, bitcoin will keep the elites rich.
- MrMan 6y ago
  I don’t think it will, if things get like that. They will need to find a safe place to hide, which Bitcoin cannot provide
loceng 6y ago
The only, and it is a major problem with unavoidable pitfalls that shouldn't - can't be in our systems - is that Bitcoin is an MLM scheme and thus it is aligning people through financial gain, creating a religion of "HODLers" who are already a mob of varying levels of self-control and critical thinking. And as Dalio says, those who speak a counter-narrative to Bitcoin are rightfully "a few scared souls cowering in a corner;" so he's in fact acknowledging this mob without actually directly stating it. He's being very careful with his words to avoid being a target.
- learnstats2 6y ago
  I would agree, and this matches it to gold, also from Ray Dalio's perspective. Ray Dalio invested heavily into gold, and has since repeatedly press released that he had done so. It's the same characteristics as an MLM scheme.
  - loceng 6y ago
    Apples to oranges comparison: gold actually has a use, and its value is kept in check by that - it's tied to the physical world, to reality, and gold also wasn't/isn't an attempt to replace a transactional layer. I'm sure there are more differences that make it incomparable - certainly that pro-Bitcoiners will simply dismiss the differences saying they're unimportant, irrelevant. Edit to add: qualitative comments rebutting my argument points would be greatly appreciated.

hjek 6y ago

Nathan Robinson did a great piece[0] on Ray Dalio's principles and Bridgewater's culture, which looks extremely toxic: > Make sure, of course, that you always make specific people feel bad about mistakes: “Instead of the passive generalization or the royal ‘we,’ attribute specific actions to specific people: ‘Harry didn’t handle this well.’” And make sure everyone knows it: “Use ‘public hangings’ to deter bad behavior,” he says, by which he means making sure to belittle (I’m sorry, accurately explain the failings of) employees in front of their coworkers so that the lesson is learned widely. [0]: https://www.currentaffairs.org/2018/06/how-to-make-everyone-in-your-vicinity-secretly-fear-and-despise-you/ https://www.currentaffairs.org/2018/06/how-to-make-everyone-...

jeffreyrogers 6y ago
I worked at Bridgewater, and while there are things I disliked about it, this piece is not at all fair and does not capture what it is actually like to work there. Nathan Robinson, who is a self described socialist, is not someone I would go to for an objective assessment of a hedge fund's working conditions.
- hjek 6y ago
  > Nathan Robinson, who is a self described socialist, is not someone I would go to for an objective assessment of a hedge fund's working conditions. I'm glad you didn't have a bad time working there. Yes, of course you can disagree with NR's conclusions, yet the article is mainly a review of Dalio's book alongside some quotes from employees. This "public hangings" statement is picked straight out of his Principles book. Is any of that source material being misrepresented or unfair in your opinion, having worked there? I'm curious about the thing with the "overseers", "captains", "dots" and "baseball cards". Is that really a thing or not? > Each day, employees are tested and graded on their knowledge of the Principles. They walk around with iPads loaded with the rules and an interactive rating system called “dots” to evaluate peers and supervisors. The ratings feed into each employee’s permanent record, called the “baseball card.”
  - castlecrasher2 6y ago

okprod 6y ago

I think Dalio used to be more against Bitcoin. His writing/books are definitely worth reading though.

agbell 6y ago
I liked the first part of his book, that was a biography. The second part with the principles seemed strange. Meetings had realtime feedback dials so you tell the person listening you were bored? Every meeting is recorded and kept forever. I'm working from memory, but it seemed cultish and strange.
- deleted 6y ago
  [deleted]

godelzilla 6y ago

This article might've been interesting 5 years ago. Why is HN so obsessed with bitcoin over every other crypto? It's like people are still arguing about DOS.

newswasboring 6y ago

> Since the supply is known, one has to estimate the demand to estimate its price. Is there any other asset we can make this statement about? That supply is 100% known and cannot change in future?

rybosworld 6y ago
Maybe Helium?
thekyle 6y ago
I'm not sure, besides all the other cryptocurrencies that have the same property.
sjaak 6y ago
It’s not 100%. If >= 50% of the network is in agreement we can make more bitcoins, right? The limit is set in code. But that code can be altered. Let me know if I’m wrong
- rybosworld 6y ago
  Technically yes it is possible. Very, very unlikely though.
  - codeulike 6y ago
    But who knows what we'll all be thinking when 2140 arrives?
    - HashBasher 6y ago
      Will that stop you from making a small allocation into Bitcoin? Any and all risks to bitcoin can be mitigated by portfolio sizing.
    - spiorf 6y ago
      Block reward is now 6.25 btc, and fees reward is about 1.5 btc. Every 4 years block reward halves, so in the next two halving block reward will be much less than fee reward, making it more and more irrelevant. The 2140 is the date where it reaches 0, but it will be completely irrelevant in 12 years (3 more halving cycles).

joubert 6y ago

> I know how much one needs to know in order to have a valuable opinion in the markets, so I wouldn’t bet on my own views. Good to emulate.

lalaland1125 6y ago

This post should be mostly discounted because Ray doesn't really seem to be aware of the true risk of the Tether scam, the biggest component of and risk to Bitcoin's value. For those not aware, Tether is a "stable coin" that issues tokens that supposedly represent dollars and can be used as a medium of exchange. However, it's widely suspected that Tether is unbacked and printing fake dollars and even Tether itself has admitted that at least 26% of their tokens have no backing [1]. Tether has never been audited so we have no clue how much of it is actually backed and how much of it is fake. This is extremely problematic because Tether is currently printing around $500 million per day and is a source of a significant amount of buy pressure in the market. Tether is used on almost every exchange and is the vast majority of Bitcoin buy orders so Tether can be used to artificially pump the price of Bitcoin quite effectively. Ray points out Tether as a risk to Bitcoin's value, but I don't think he does an adequate job explaining the risk. Tether isn't a small component of the Bitcoin ecosystem. It's at the heart of Bitcoin with it being the primary currency used to buy Bitcoin with at most exchanges. Most of the buy volume is with Tether and that $500 million per day is huge. Regardless of what one thinks about the value of Bitcoin, it's irrational to invest while $500 million of fake dollars are being pumped in every day. Once that artificial $500 million buy pressure is removed, the market will face an existential risk. Who knows what the real price of Bitcoin would be without all that fake money? https://davidgerard.co.uk/blockchain/2021/02/03/tether-printer-go-brrrrr/ https://davidgerard.co.uk/blockchain/2021/02/03/tether-print... is a good article for additional context on Tether. 1. https://www.coindesk.com/tether-lawyer-confirms-stablecoin-74-percent-backed-by-cash-and-equivalents https://www.coindesk.com/tether-lawyer-confirms-stablecoin-7...

thebean11 6y ago
Ray isn't the only one, the market is pricing in zero risk of tether collapsing. It trades at no discount to real dollars, anybody with a Coinbase account could convert pretty high volumes of tether to real dollars. I really have no idea why, it seems sketchy.
- choxi 6y ago
  It looks like Coinbase doesn't support Tether: https://www.coinbase.com/price/tether https://www.coinbase.com/price/tether

paulpauper 6y ago

Bitcoin was good until around early-mid 2017, when it became over-regulated, too expensive to use, no privacy, too slow, etc. The fungibility is gone. Everything is taxed and tracked. Pretty much useless

tromp 6y ago
The privacy / fungibility was never there. Not in 2009, not in 2017, not now.

Synaesthesia 6y ago

I don’t get how Bitcoin can become a viable currency or store of value in the future. It’s almost exclusively owned by a small group of individuals. Are we gonna accept that level of centralisation? Of course not.

bitxbitxbitcoin 6y ago
Do you think that centralization of Bitcoin is worse than centralization of USD?
- HashBasher 6y ago
  Or gold, or stocks, or real estate or anything that can be used as a store of value today.
- Synaesthesia 6y ago
  It is probably yeah.
frankenst1 6y ago
Bitcoin is permissionless and bootstrapped. It had to start with 0 users and $0 value. 10 years later it is now worth $50K and has 100M users (doubling every ~2 years). We are currently living in a world in which the rich get richer (bailouts, stocks, real estate, efficiency gains) while the poor get poorer (cash only, inflation, wage stagnation). Every $1 that trickles down from the top 1% is returned to them as $2 freshly printed from the central banks. Wealth and income inequality continue to rise as a result. Bitcoin has a fixed supply, and now you can't bailout the riches anymore while having the poor pay the bill in the future via inflation. Do we accept that inflation causes wealth centralisation? Of course not, but until Bitcoin there wasn't anything we could do about it.

herodotus 6y ago

I could not read this article because first I had to agree to this: "I am entering this website only to obtain general information regarding Bridgewater Associates, LP and not for any other purpose." but that was not at all why I was trying to enter the website. So I will probably never know what Ray Dalio thinks of Bitcoin.

sergiotapia 6y ago
Are you a robot?
- herodotus 6y ago
  ....got me!
paulgb 6y ago
Isn’t Ray Dalio’s opinion information regarding Bridgewater Associates? This is likely a way to assert that the site is not intended to market Bridgewater’s investment products to non-accredited investors. I don’t know if the SEC explicitly requires a click-wrap warning but it’s generally an area that firms want to avoid toeing the line on.

dandanua 6y ago

I think it's time to put Bitcoin on the ignore list. You will never learn anything new about it, only the same stories: 1. It's a disastrous waste of energy resources. 2. HODLers like to compare it with gold and use it as a store of value. Because of this, they will constantly make a noise about it to raise its price. 3. No one will ever use it as an ordinary currency to buy simple things. Oh, you could buy Tesla with it, but you won't do that, because bitcoin holders think it will only grow.

fwiwm2c 6y ago
Looks like someone missed the train.
ballofrubber 6y ago
1. You don't decide whats a waste of energy or not. 2. https://www.youtube.com/watch?v=xLYYh4aPXAM https://www.youtube.com/watch?v=xLYYh4aPXAM 3. Bitcoin Mining will make investments in renewable energy a lot less riskier as you can scale up as much as you want and always have a buyer. This drives out fossil fuel miners 4. Once bitcoins true price has been found, holders will spend to consume as much as they need/want to. Just like every other currency, except without the inherent need to spend(fixed issuance)
- carleverett 6y ago
  I don't think you could ever find the "true price" of a pure store of value asset like Bitcoin. Gold has been around for thousands of years and is still volatile enough that no one would want to use it for daily transactions. The characteristics of a great store of value are different than that of a great currency - it seems naive to me to think that Bitcoin would ever act like a fiat currency that way.
  - ballofrubber 6y ago
    It's because the currency gold is priced in is going down year by year. Why should you spend your gold if your fiat is worth less tomorrow? That's besides the point that gold is practically unusable as a currency for convenience reasons (divisibility, verification, storage, transportation). A great currency is a currency that preserves your value over time, as currency is what you earn for spending your time and skill. You shouldn't be forced to take a risk to maintain your wealth. Today it's risky not to divest your fiat.

joubert 6y ago

> I should clarify what I said about its supply. Although Bitcoin is limited in supply, digital currencies are not limited in supply because new ones have come along and will continue to come along to compete so the supply of Bitcoin-like assets should, and competition will, play a role in determining Bitcoin and other cryptocurrency prices. In fact I assume that better ones will come along and displace this one because that is the way the evolution of everything works—i.e., new ways of doing things and new things always have and always will replace old ways of doing things and old things. Since the way Bitcoin works is fixed, it won’t be able to evolve and I presume that a better alternative will be invented and pass it by. I see that as a risk. For those reasons the “limited supply” argument isn’t as true as it might appear—e.g., if Blackberries were in limited supply they still wouldn’t be worth much because they were replaced by competitors that were more advanced. I still don’t know the answer to why that isn’t a risk, but I would welcome my naïveté being corrected.

Sargos 6y ago
It's taken decades for IPv6 to make inroads onto the internet. Network effects are extremely strong when it comes to protocols and it's not easy even after something better comes along.
- joubert 6y ago
  Agreed. Double edged: as the new entrant network effects of incumbent(s) can be the wall you hit. Can also be your moat if you innovate the space into a new, different direction.

kaycebasques 6y ago

MacroVoices #255 with Mike Green discussed another regulatory threat not mentioned in the Bridgewater post. Governments don't have to ban BTC outright. They have other tools for making it wildly unattractive to hold. I can't remember the details but they discussed a scenario where the US government classifies BTC as a commodity and requires K-1 style taxation. That would mean that you would have to pay taxes on any gains in BTC even if you haven't sold your shares.

ttul 6y ago
Absolutely. Governments have the power to make things unlawful or taxed even if you have ways to keep that activity secret. Sure, you can pay your builder cash to finish that deck, but it’s illegal. Making things illegal or taxed suppresses that activity.
playingchanges 6y ago
Mike Green is one of the most interesting thinkers in the finance space. His work on passive indexation is fascinating.
coinward 6y ago
How will they confiscate those BTC gains? They are literally relying on an honor system to report holdings today. Maybe this will change and they will come after those who are suspected to be holding BTC due to purchase records from KYC compliant services that IRS could get their hands on. Then what? Show up with their guns to coerce you or throw you in a cage until you fess up? The tax code mess becomes totally impossible post hyperbitcoinization. Bitcoin frees the tax slaves. You thought abolition was just for history books?
- kaycebasques 6y ago
  It's just an example and I'm not invested enough to defend it. The main idea is that governments have a lot of levers to add friction (as Consultant32452 said) and if you think that governments are just going to peacefully concede their ability to control something as fundamental as money to the crypto illuminati, you might be in for a surprise. Another possible lever is government control over regulated financial institutions.

throwaway4good 6y ago

Bitcoin will be gold-like store of value because people think it is like gold and financialize it with ETFs and a futures market. However should we change our mind and instead start thinking some other cryptocurrency or maybe just a registration in some more or less distributed database is gold. Then that can become gold. Or something like that? Or maybe only gold is gold because it has been like that for a thousand years and throughout multiple empires and wars.

gegtik 6y ago

<Ctrl-F> "environment" 2 hits, both "regulatory environment"

_han 6y ago
I went one step further and searched for "energy", which only appeared in the article's disclaimer in names of institutions. I then proceeded to close the browser tab.
- coinward 6y ago
  so you will only read content that confirms your belief that Bitcoin wastes energy? I see. Have fun staying poor.
  - gegtik 6y ago
    coinward has a nuanced opinion

jdcaron 6y ago

Store of value like gold & crypto currency is an idea that has a clear side effect. There will be inflation, it's how governments move the economy around. Yet, bankers and crypto fans keep talking how gold or bitcoin can help you evade it. Which it means, even more pressure will be put on people who don't have the ways of escaping inflation through such ways. It will be the poor that will pay the highest price while rich people will go around it.

mempko 6y ago

I think there is a huge tail risk that Ray Dalio missed about bitcoin. https://cbeci.org/ https://cbeci.org/ It's incredibility energy intensive and as the world works towards reducing the our impact on the climate, it's possible energy can get too expensive to operate a bitcoin farm mining farm. Or governments decide that using precious electricity production on hashing blocks is the same as other forms of pollution and regulates it away.

coolestguy 6y ago
Miners are incentivized to use renewable energy because it's cheaper and impacts their profit margins considerably. Is energy use a concern when you're primarily dealing with solar/hydro power?
mastermojo 6y ago
In the free market people will mine bitcoin if it's profitable. That is, if bitcoin is valuable enough and if energy is cheap enough and if the overall network hash rate is low enough. Any changes to network hash power, bitcoin prices and energy cost may cause miners to scale down operations and lower overall network hash. Then at a certain network hash rate it will become profitable again.

what_the_drew 6y ago

GPU miner go brrrr

josemwarrior 6y ago

- "Since the way Bitcoin works is fixed" Bitcoin's work is not fixed. Since it evolves depending on the wishes of the community You only need the 51% of the network has applied the changes in order to evolve. - "limited supply they still wouldn’t be worth” I think limited supply is one of the most attractive things of Bitcoin :)

bitcharmer 6y ago
I am struggling to understand this comment.

hootbootscoot 6y ago

What I think about bitcoin and crypocurrencies in general that are based upon a "proof of work" with no tangible production of anything useful in society? They are a giant waste of electricity. Even renewably-sourced electricity is in finite supply, even near large hydro-electric dams or geo-thermal plants, and thus this deprives the world of metal smelting or other energy-intensive activities we urgently NEED to adapt to electrically-driven processes. I should expect to see intelligent folk like those in tech to understand the multiple environmental crises we are in, and how bitcoin and it's ilk are not aiding resolution of this in any way, and indeed can be shown to be hampering efforts. Wasted CPU cycles have environmental costs. Proof of work is a giant waste of electricity that could be better spent. Introduce a cryptocurrency that actually incentivizes goodness through it's creation instead of further destruction and spare me the hypotheticals. As currently implemented= BAD FOR PLANET EARTH and a diversion of resources to literal waste. Imaginary money burning real joules of energy

MrMan 6y ago
These people don’t care

naveen99 6y ago

General AI will need a bearer asset.

Temasik 6y ago

Bitcoin is the MLM gor millennials

MrMan 6y ago

For my money buffet > Dalio, this superficial framing of The Whole topic is a case in point. Who challenges dalio on his submerged assumption that a gold-like store of value is really of any value to rank and file investors compared to the stock, bond and real estate markets? He should be equally criticized for obsessing about gold as for being attracted to Bitcoin.