Fidelity Investments describes Bitcoin as a superior form of money
On Jan. 31, Fidelity Digital Assets, the crypto division of Fidelity Investments, released a new report titled “Bitcoin First.” The crypto giant explains his views on Bitcoin and why it is treated differently than all other cryptocurrencies.
The report begins with a basic and non-technical overview of how the Bitcoin ecosystem works. It also explains Bitcoin’s “enforceable scarcity” and why Bitcoin’s “monetary network effects” are unbeatable:
“Bitcoin is fundamentally different from all other cryptocurrencies. None of them will be able to surpass bitcoin as a monetary asset as bitcoin is the most secure, least centralized and most solid digital money compared to other digital assets.”
The Fidelity report also states that the main reason for Bitcoin’s value is that it is scarce. Bitcoin’s fixed supply also gives the cryptocurrency the ability to become a store of value.
Fidelity believes Bitcoin’s scarcity is a result of its decentralization and censorship-resistant properties. The report states: “These properties are hard-coded into bitcoin and will almost certainly never be changed because the same people who attribute value to and own bitcoin have no incentive to do so. In fact, network customers have an incentive to defend these very qualities of a scarce asset and an immutable ledger.”
Bitcoin – A superior form of money
The report goes on to say that what is special about Bitcoin is not its technological framework, but that Bitcoin is a superior form of money. This contrasts with views of other analysts and governments, which refuse to recognize Bitcoin as a form of money. It goes on to say:
“Traditional investors typically apply a technology investment approach to bitcoin, leading to the conclusion that as a pioneering technology, bitcoin could easily be supplanted by a more superior technology or exhibit lower returns. However, as we have argued here, Bitcoin’s first technological breakthrough happened not as a superior payment technology, but as a superior form of money.As a monetary good, Bitcoin is unique. Therefore, we believe not only that investors should look at Bitcoin first to understand digital assets, but also that Bitcoin should be looked at first and separately from all other cryptocurrencies that have come after it.”
The report also addresses the risks associated with using bitcoin, but adds that this applies to all cryptocurrencies and not just bitcoin. He further highlights some of the risks such as protocol failures, attacks from nation states, growth of the digital asset ecosystem and the potential instability of traditional macro conditions. Bitcoin’s governance structure is also highlighted as it offers a higher level of decentralization.