- Fidelity Investments, published a report titled Bitcoin First.
- The Report claims Bitcoin to be a fundamentally distinct digital asset and as a superior form of money.
- Bitcoin has “good qualities” of money, and traditional investors should consider putting it in their portfolios, said Fidelity Digital Assets.
Fidelity Investments, a multinational brokerage firm, recently produced a 26-page report on Bitcoin (BTC) titled Bitcoin First. The subsidiary of US-based mutual fund giant Fidelity Investments said that BTC “is the most (relative to other digital assets) secure, decentralized, sound digital money and any ‘improvement’ will necessarily face tradeoffs.”
According to the published report, Bitcoin is fundamentally distinct from any other digital asset and its initial technological breakthrough was not as a superior payment mechanism “but as a superior form of money.”
The paper read, “Bitcoin clearly possesses a lot of good qualities of money, combining the scarcity and durability of gold with the ease of use, storage and transportability of fiat.”
Fidelity believes that “Bitcoin is best understood as a monetary good” rather than a technology. This is crucial. They also feel that “for various reasons,” “it is highly improbable that bitcoin will be replaced by a ‘better’ digital asset.” The remainder of the document is devoted to stating and examining those arguments.
The study begins with a non-technical description of how the Bitcoin network functions. It demonstrates how Bitcoin’s “enforceable scarcity” and “monetary network effects” are unrivalled. It even goes so far as to say that “any subsequent monetary good would be “reinventing the wheel.”
It delves into well-known Bitcoin issues like “The blockchain trilemma” and its trade-offs. “The Lindy Effect, often known as Lindy’s Law, a theory that states that the longer anything non-perishable endures, the more probable it is to survive in the future”, and a lot more.
BTC, according to the company, possesses all of the characteristics of a sound form of money because it is not managed by an organisation and does not pay a dividend or have cash flows. Bitcoin’s scarcity and decentralised nature only add to its qualities as an ideal monetary tool.
The verifiability of Bitcoin gives it an advantage over gold and fiat currency. Central bank-issued precious metals and money have been counterfeited.
Fidelity sees BTC as a way for traditional investors to get into the digital asset market, and recommends that they use two different frameworks for investing in digital assets: one focused on Bitcoin as a monetary good (asset class), and the other on the rest of the digital assets with venture capital-like characteristics.
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