Fidelity Investments, one of the world’s largest investment firms with $3.3 trillion in assets under management, is studying cryptocurrencies in depth. The company has been experimenting with bitcoin internally and is now bringing some of those features to its wider customer base.
Fidelity’s sales head recently revealed that the company has been mining cryptocurrency since 2014.
Now, this particular statement right here reflects how giants analyzed the potential of the cryptocurrency and where it would take them in future 8 years ago.
The firm has however from time to time given multiple statements on the worthiness of bitcoin.
Recently, a fidelity investment subsidiary said, Bitcoin has “good qualities” of money, and traditional investors should consider putting it in their portfolios
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,” according to a 26-page report released Monday.
“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, decentralised, sound digital money, and any ‘improvement’ will inevitably involve tradeoffs,” the report stated.
The cryptocurrency has many “good qualities” of money, according to director of research Chris Kuiper and research analyst Jack Neureuter, “combining the scarcity and durability of gold with the ease of use, storage, and transportability of fiat (even improving on it).”
Bitcoin, like other monetary goods, isn’t a company, doesn’t pay a dividend, and doesn’t have cash flows, according to the analysts. As a result, its worth must be determined by its ability to better meet the characteristics of a monetary good when compared to traditional alternatives.
The verifiability of Bitcoin gives it an advantage over gold and fiat currency. Central bank-issued precious metals and money have been counterfeited. While gold can be verified, it can only be done through a “difficult assay.”
Non-bitcoin projects should be evaluated differently than BTC, according to the report’s authors, because the rest of the digital asset ecosystem can address different needs or solve issues that bitcoin cannot.
According to Fidelity, bitcoin is best understood as a monetary good, and it will most likely serve as “the primary monetary good,” with “no other digital asset likely to supersede bitcoin in this role.”
The report also compares BTC to Ethereum, the second-largest crypto asset by market capitalization (ETH).
“While Ethereum may be viewed by some as a superior or more advanced network compared to Bitcoin, the additional capabilities and flexibility come at a cost, most notably a more complex network that increases the chance for software bugs as well as less decentralization and potential decline in security,” according to Fidelity Digital Assets.
In contrast to the BTC network, the ETH network is fast and responsive to user demand, but it is also more centralized and expensive, according to the report.