Financial giant Fidelity responds to 9 common misconceptions and criticisms about Bitcoin

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Financial services giant Fidelity has addressed nine common criticisms and misconceptions about Bitcoin, highlighting that some of them are “unfounded or unlikely to be serious issues.” These include volatility, suitability as a payment method, environmental impact, competition, lack of support, potential coding bugs, regulatory hurdles, waning public interest, and hidden concerns. The quantity is unknown.

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Fidelity responds to 9 criticisms of Bitcoin

Fidelity Digital Assets is a subsidiary of financial services giant Fidelity Investments. Announce Last week’s study was titled “Revisiting Persistent Bitcoin Critics.”

Fidelity addressed nine criticisms and misconceptions about Bitcoin in its 13-page document, which included updates on five criticisms it had previously addressed in November 2020. The company revealed that such criticism stems from “regular conversations with institutional investors and observations of public commentary on Bitcoin,” adding that the responses outlined in the study “can be adapted to address other common misconceptions.”

Noting that some of the common criticisms and misconceptions about Bitcoin cited in its new research are valid, and some have been debunked, the financial services giant said:

“More than three years later, not only does Bitcoin remain the largest digital asset by market capitalization, it continues to grow as an online currency.”

The first criticism of Bitcoin is that it is “too volatile to serve as a store of value.” Fidelity explained:

“Bitcoin’s volatility is a trade-off between perfect supply elasticity and immunity to market disruptions. However, as Bitcoin and related derivatives and investments become more widely adopted, volatility will historically continue to decline.”

The second criticism is that “Bitcoin fails as a means of payment.” Fidelity noted:

“Contrary to what some may think, data from Coin Metrics shows that more than $3.1 trillion in transaction volume was processed on the Bitcoin network, which is only 40% of what Mastercard processed last year. This shows that the use of Bitcoin as a payment method is at a relatively low level. Low limit.”

The third criticism is that “Bitcoin is wasteful and/or harmful to the environment”. Fidelity replied:

“Most Bitcoin mining relies on renewable energy or energy that would otherwise be wasted. Furthermore, the energy consumed by the Bitcoin network is arguably an important and sensible use of resources.”

The fourth criticism is that “Bitcoin will be replaced by competitors.” Fidelity emphasized that “Bitcoin uses trade-offs to capture core assets that the market deems valuable,” explaining:

While Bitcoin’s software is open source and can be forked and improved, the stakeholder community (users, miners, validators, developers, service providers) and network impact cannot be easily replicated.

The fifth criticism is that “Bitcoin has no backing.” However, Fidelity believes:

“Bitcoin is not backed by cash flow, industry utilities, or fiat. Bitcoin is backed by code brought to life by a social contract of stakeholders.”

The company has yet to address four more criticisms and misunderstandings in 2020. Fidelity Warning:

“We believe that some legitimate concerns are likely to arise, however small, and investors should be aware of them.”

The next criticism raised in Fidelity Digital Assets Research is that “Bitcoin’s code could render it worthless.” Fidelity highlights:

“While it cannot be ruled out that another failure or unforeseen consequences of the upgrade could occur, we expect that as the network becomes more resilient and active and many developers continue to work on it, the likelihood of such an incident will be low Much more.”

A seventh criticism states that “regulation will slow down Bitcoin adoption.” While acknowledging that unclear regulations could hinder Bitcoin adoption, Fidelity said:

“Recently, it has become increasingly popular to discuss digital asset regulation with policymakers, and we believe that digital asset regulation is increasingly important and attentive for government representatives.”

The eighth criticism of Bitcoin is that “people may lose interest.” However, Fidelity noted:

“On-chain data shows little to no interest in Bitcoin weakening. As the price has increased so much since Bitcoin’s inception, the number of wallets that continue to accumulate and hold balances has also increased.

A ninth criticism raises concerns about Bitcoin’s “unknown unknowns.” In addition to “known unknowns” such as “bugs in Bitcoin code or Bitcoin’s anonymous creator Satoshi Nakamoto suddenly reappearing and selling all Bitcoins,” services giant Finance also warned of “unknown unknowns.” factors or possible risks that we don’t yet know about” or even imagine. ” The company recommends:

“Investors in any asset should be aware of these and humbly accept that not all risks can be known in advance, let alone quantified, and therefore should be quantified. Position investments and portfolios accordingly.

Fidelity concluded:

“Bitcoin is a unique digital asset for an increasingly digital world that requires digging deeper to understand its core characteristics and trade-offs.”

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