Fidelity Addresses Common Bitcoin Criticisms
Fidelity Digital Assets, a subsidiary of financial services giant Fidelity Investments, has recently published a research study titled “Revisiting Persistent Bitcoin Criticisms.” The 13-page document aims to address nine common Bitcoin criticisms and misconceptions.
The criticisms were sourced from Fidelity’s interactions with institutional investors and public commentary on Bitcoin. The financial services giant emphasized that the responses outlined in the study “may be adapted to address other common misconceptions.”
Addressing Volatility and Suitability as Payment Method
The first criticism addressed by Fidelity is that Bitcoin is “too volatile to be a store of value.” They explained that with greater adoption, bitcoin’s volatility will continue to decrease. The second criticism, “bitcoin has failed as a means of payment,” was countered by significant transaction volume data on the Bitcoin network.
Environmental Impact and Competition
Fidelity responded to the third criticism stating that “Bitcoin is wasteful and/or bad for the environment” by highlighting that most bitcoin mining is powered by renewable energy. Regarding the criticism that “Bitcoin will be replaced by a competitor,” they emphasized the community of stakeholders and network effects unique to Bitcoin.
Lack of Backing and Potential Code Bugs
Another criticism addressed was that “Bitcoin is not backed by anything.” Fidelity argued that Bitcoin is backed by its stakeholders’ social contract. They also stressed that while it cannot be ruled out that another bug may happen, the probability is much lower as the network has become more resilient over time.
Regulatory Hurdles, Waning Public Interest, and Unknown Unknowns
Fidelity acknowledged that unclear regulations could hinder BTC adoption. They also pointed out little evidence of interest in bitcoin waning despite price fluctuations. Finally, Fidelity warned about potential risks not yet known or imagined, advising investors to position their investment accordingly.
Hot Take: Understanding Bitcoin’s Core Properties
Fidelity concluded: “Bitcoin is a unique digital asset for an increasingly digital world that requires digging deeper than the surface level to understand its core properties and trade-offs.” If you want to read Fidelity’s full responses to these criticisms and misconceptions, you can access the document here.
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