2 November 2024
Fidelity Explains Why Bitcoin Is a Superior Form Of Money
This week Fidelity Digital Assets released a report with a title- “Bitcoin First: Why investors need to consider bitcoin separately from other digital assets.”
The report talks about investors' concerns, whether bitcoin “may be vulnerable to innovative destruction from competitors (such as the story of Myspace and Facebook) or whether the cryptocurrency offers the same potential reward or upside as some of the newer and smaller digital assets.”
Author of report Chris Kuiper and Jack Neureuter explained: “Traditional investors typically apply a technology investing framework to bitcoin, leading to the conclusion bitcoin as a first-mover technology will easily be supplanted by a superior one or have lower returns.”
They stated, “Bitcoin is currently the most secure and decentralized network but, at the base or native network layer, it is not the most scalable.” This has caused a boom in the digital asset ecosystem.
The report further states the two dominant narratives for envisioning the future of the digital asset ecosystem.
1. Multi-chain world narrative
The report authors explained, "in a world of multiple winning chains, it still appears that Bitcoin is likely the best equipped to fulfill the role of the ecosystem’s non-sovereign monetary good with relatively less competition than other digital assets attempting to fulfill alternative use cases.”
2. Winner-take-all or most world narrative
The report discussed the second narrative, “Given that Bitcoin is arguably the most decentralized and immutable blockchain in existence, it appears as a prime candidate to be one of, or perhaps even the sole winner if this situation were to play out.”
After talking about various aspects of Bitcoin, the authors wrote: “Bitcoin’s first technological breakthrough was not as a superior payment technology but as a superior form of money. As a monetary good, bitcoin is unique.”
Lastly, Fidelity report authors said, “therefore, not only do we believe investors should consider bitcoin first in order to understand digital assets, but that bitcoin should be considered first and separate from all other digital assets that have come after it.”
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