Ray Dalio says Bitcoin is a 'long-duration option on a highly unknown future'

"To have invented a new type of money via a system that is programmed into a computer and that has worked for around 10 years and is rapidly gaining popularity as both a type of money and a storehold of wealth is an amazing accomplishment."

Bitcoin's price surged 300 percent in 2020 and recently touched a record high of $42,000.

According to Dalio, the supply of bitcoin is known but the long-term demand is unknown.

"It seems to me that bitcoin has succeeded in crossing the line from being a highly speculative idea that could well not be around in short order to probably being around and probably having some value in the future. The big questions to me are what can it realistically be used for and what amount of demand will it have. Since the supply is known, one has to estimate the demand to estimate its price".

Dalio also said if the US government looks into bitcoin, then privacy will be impacted.

"Regarding privacy, it appears that Bitcoin will unlikely be as private as some people surmise. It is, after all, a public ledger and a material amount of Bitcoin is held in a non-private manner. If the government (and perhaps hackers) want to see who has what, I doubt that privacy could be protected," he said.