Fidelity Digital Assets (FDA), the digital asset arm of leading asset manager Fidelity Investments, said in its report that Bitcoin is a superior form of money compared to other digital currencies.
New Investors Should Consider Bitcoin
In a 26-page report published by the digital asset arm of Fidelity, new investors seeking to gain exposure to cryptocurrencies need to consider Bitcoin separately from other digital currencies.
The paper titled Bitcoin First largely espoused the differences between Bitcoin and other digital assets. Using these differences, it explains that Bitcoin is far above any cryptocurrency, and it’s unlikely for any other asset to overtake BTC in monetary value:
Bitcoin 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.
However, it stated that it wouldn’t go as far as to claim there won’t be any other money, but it seeks BTC as the monetary good that’ll dominate the digital asset ecosystem.
Bitcoin has “good qualities” of money, and traditional investors should consider putting it in their portfolios, said Fidelity Digital Assets.
The cryptocurrency’s enforceable scarcity and verifiability give it an advantage over gold and fiat currency.
Bitcoin’s dominance has declined as the rest of the digital asset ecosystem has grown.
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Bitcoin’s scarcity is among the characteristics that make the digital coin “good” money, and traditional investors should use it as an entryway into digital assets, said a Fidelity Investments subsidiary.
In a 26-page report published Monday, Fidelity Digital Assets said bitcoin is fundamentally different from any other digital asset, and its first technological breakthrough was not as a superior payment technology “but as a superior form of money.”
“No other digital asset is likely to improve upon bitcoin as a monetary good because bitcoin is the most (relative to other digital assets) secure, decentralized, sound digital money and any ‘improvement’ will necessarily face tradeoffs,” it said.
The cryptocurrency possesses many “good qualities” of money – “combining the scarcity and durability of gold with the ease of use, storage, and transportability of fiat (even improving on it),” wrote the director of research Chris Kuiper and research analyst Jack Neureuter.
The analysts noted that like other monetary goods, bitcoin isn’t a company, doesn’t pay a dividend or have cash flows. Therefore its value must be derived from its ability to better fulfill the characteristics of a monetary good compared with traditional alternatives.
Bitcoin’s advantage over both gold and fiat currency is its verifiability. The precious metal and money issued by central banks have been counterfeited. And while gold can be verified, that can only take place through a “cumbersome assay.”
Meanwhile, bitcoin’s enforceable scarcity, with a coded supply cap of 21 million bitcoin, is one of its greatest characteristics and another advantage over gold. Fidelity said bitcoin should be considered primarily as a “superior monetary good.”
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