The financial service provider Fidelity is betting big on Bitcoin, publishing a report that describes the digital currency as a “monetary asset” and a unique store of value that every investor should consider.
According to the document, the company views Bitcoin as fundamentally different from all other digital assets, making it virtually impossible for any other cryptocurrency to surpass Bitcoin.
Before a society accepts something like money, Fidelity says, it must have several characteristics. Bitcoin has many of these characteristics, unlike other cryptocurrencies.
“Bitcoin clearly has many of the good qualities of money, combining (and even improving upon) the scarcity and durability of gold with the ease of use, storage and transportability of fiat money.”
Bitcoin is antifragile
Recognized as one of the largest investment management and financial services companies in the world, Fidelity claims that Bitcoin is antifragile, a concept popularized by Nassim Taleb that defines things that benefit from chaos.
“Every minute, hour, day and year that Bitcoin survives increases its chances of continuing into the future as it gains more confidence and survives more chaos. This also goes hand in hand with the property of antifragility, where something becomes more robust or stronger with every attack or instance in which the system experiences some form of stress.”
On this topic, the paper addresses the risks and criticisms associated with Bitcoin, such as protocol vulnerabilities and government attacks, as well as how such risks can be easily mitigated.
Fidelity researchers acknowledge that investing in bitcoin comes with risks, but argue that so do investors “Overestimating Bitcoin’s Downside Risks Compared to Other Digital Assets”given the longevity of cryptocurrency and its staying power amid crises in the traditional financial world.
The company also shows data proving that Bitcoin is the most secure decentralized network in the world, far surpassing all other competitors according to the system.
“Due to differences in hashing algorithms, Bitcoin’s hash rate cannot be directly compared to the hash rate of many other digital assets. Regardless, in terms of the computing power required to change the network consensus, bitcoin far surpasses any remaining proof-of-work competitor.”
Fidelity compares Bitcoin to the internet
Fidelity manages approximately $4.5 trillion in assets for more than 43 million clients who pay attention to what the company recommends. And according to the company Investing in Bitcoin is like investing in the internet in its early stages.
According to the company, one of the biggest concerns among investors regarding Bitcoin is that, as the first cryptocurrency on the market, it could be replaced by new competitors (such as the story of Orkut and Facebook).
However, according to Fidelity, this is virtually impossible because Bitcoin must be viewed in isolation from all other digital assets, and Bitcoin must be compared to TCP/IP – a basic layer of the internet.
The Internet protocol suite, TCP/IP, facilitates an open source base layer upon which numerous applications are built, making the Internet as we know it possible. Fidelity’s analogy is simple: owning Bitcoin is like owning the foundation of the internet.
“The interesting thing about this architecture is that an investor can own part of the base layer of this new technology and be relatively agnostic about what specific applications are built on top of it. It would be like owning the base layer of the Internet and exposing it to all the innovations that will be built on top of it (e.g. Google, Amazon, etc.) without having to try to pick specific winners and losers.”
Fidelity also explains why Bitcoin is already the next Bitcoin, comparing the invention of cryptocurrency to the invention of the wheel, which represented an entirely new technology that, once invented, could never be reinvented.
“Similarly, the problem of digital scarcity and truly peer-to-peer electronic money was never solved in human history until Bitcoin was invented.”
Finally, Fidelity claims that traditional investors often apply a technology investment framework to bitcoin, leading to the conclusion that bitcoin, as a breakthrough technology, will easily be outpaced by a superior technology or deliver lower returns.
However, the company says that bitcoin’s first technological innovation was not as a payment technology, but as a superior form of money.
“As a monetary asset, bitcoin is unique. Therefore, we believe that not only should investors consider bitcoin first to understand digital assets, but that bitcoin should be considered first and viewed separately from all other digital assets that have followed.”
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
