“Although the supply of Bitcoin is limited, there is potentially an infinite number of cryptocurrencies.” […] In fact, I expect better cryptocurrencies to emerge and replace it. This is how things are ”. […] “The functioning of Bitcoin being fixed, it will not be able to evolve and I presume that a better alternative will be invented. For these reasons, the ‘limited supply’ argument is not as true as it seems ”.
Ray Dalio does not seem to be familiar with the concept of a “fork”. Indeed, it is quite possible to change the bitcoin protocol. This has happened many times before. Most of the time it was about making improvements. We are talking about “soft” forks and “hard” forks (for those who want to dig into the question unlike Dalio).
The protocol of a blockchain is scalable. Its code can be changed. It would even be technically possible to rewrite the code to create well over 21 million bitcoins. With that blasphemy said, the question is not whether it is theoretically possible to create more than 21 BTCs but whether those who participate in the network will one day be “enticed” to do so.
The argument often put forward is: what happens when the last BTC is mined?
Indeed, the reward for each mined block is halved every 4 years. The last bitcoin will be mined in the next century, around the year 2140.
But that would be forgetting that minors also collect transaction fees… These will simply adjust accordingly.
On the other hand, breaking the rule of fixed money supply would be opening a Pandora’s box. This would lead to all the value accumulated in bitcoin being immediately sucked into gold. It would be a shame…
« Cyber-attack »
“Cyber risk is a risk that I cannot ignore. When we know that the Ministry of Defense fails to protect its systems against hacking, it would be naive to believe that cryptocurrencies cannot be hacked. Although I recognize that it is possible to keep bitcoins offline via a “cold wallet”, I understand that it is difficult to do so. “
What was Ray Dalio thinking? That bitcoin would be some kind of super power? It is obvious that a minimum of computer hygiene is required. Or more, because as Julian Assange says:
« Unless there is a change of course, world civilization will have become within a few years a postmodern surveillance dystopia from which only the most skillful will have a chance to escape. “- Julien Assange
As GAFA shamelessly censor and push the boundaries of mass surveillance ever further, it becomes truly crucial to use a VPN to hide your IP. But also an internet browser that does not store the search history (Tor). You have to know how to tame all these cookies and thus prevent Google, Facebook and others from gleaning more and more power.
But still, no need to have done math sup to understand how to use a “cold wallet”. Unless you’re a boomer, maybe …
And even without a “cold wallet”, it is also not complicated to keep the seed of a wallet in a safe place (the seed is a code allowing you to find your bitcoins, whatever happens, from anywhere. ).
The government threat
“It also seems to me that if the government wanted to prevent its use, that would drop its demand. It’s hard for me to imagine that states will let bitcoin be a better currency than theirs. It seems to me that the more successful bitcoin is, the more possible this possibility will be. “
Here is the argument of the weak, counting on governments to ban it. First, bitcoin already has a legal framework. So why keep asking this question?
But even if governments retrace their steps to declare bitcoin illegal, that will not prevent it from existing and functioning as if nothing had happened …
Its decentralized nature ensures that no one can ever destroy it. Neither the United States, nor the EU, nor China. Nobody.
Roosevelt had declared the holding of gold illegal in its day… And if history teaches us anything, it is well that gold always ends up taking its revenge.
The inflation that awaits us to pay off these freewheeling debts will be biblical, as will the loss of faith in this system designed to enrich a micro caste of billionaires. Those who own bitcoin know this. They won’t go back, Mr. Dalio.