Ray Dalio, the founder and co-chairman of Bridgewater Associates, the world’s largest hedge fund, said he sees three main problems with bitcoin and other cryptocurrencies that will limit their future, including that governments will “outlaw” them should they start to become “material.”

In an interview with Yahoo Finance, Dalio said he expects more digitized versions of government-issued currencies in the future than bitcoin and other cryptocurrencies for three reasons:

• A lack of venues that will accept cryptocurrencies for purchase. "I today can't take my bitcoin yet and buy things easily with it."
• Bitcoin and other cryptos are too volatile to be considered an effective store of wealth. That volatility also hurts bitcoin's use transactionally because vendors won't know how much they're getting, Dalio said.
• If bitcoin or other cryptos become "material," Dalio predicted governments will "outlaw" it. "They'll use whatever teeth they have to enforce that."

“I don’t think digital currencies will succeed in the way people hope they would,” Dalio said.

The comments are at odds with comments made by other billionaire investors including Paul Tudor Jones and Stanley Druckenmiller who say they’ve invested in bitcoin.

“Would I prefer bitcoin to gold? No,” Dalio said.