According to a new analysis from Fidelity, people saturate the world with dollars and cryptos. However, Bitcoin is unique, with the ability for large price growth.
According to the firm, Bitcoin is a scarce “monetary good“. It outperforms other cryptos, gold, and even state-issued money like the dollar in many respects. In an interview with Chris Kuiper, director of research at Fidelity Digital Assets and author of the analysis, said that they would expect BTC to be a lot higher five to ten years from now.
Fidelity Investments’ Development Plans
Fidelity Investments is a powerhouse in the unit trust, brokerage, and capital space. It has more than $11 trillion in assets under management and $4.2 trillion in assets under management. It is now dabbling in Bitcoin and has a broader financial interest in cryptos and blockchain technology.
The company is creating new crypto services. Examples of these are trading and collateralized loans, as well as an institutional holding business for BTC. It’s also working on crypto goods for everyday people, such as exchange-traded funds.
The Securities and Exchange Commission recently denied Fidelity’s proposal for an ETF-based on-the-spot price of Bitcoin. However, the firm has established a Bitcoin ETF and mutual fund in Canada. Moreover, it also established two crypto/metaverse ETFs that are awaiting SEC approval.
How Bitcoin Stands Out
The bull case for Bitcoin, according to Fidelity, is that it is a store of value asset in a progressively digital environment. No other blockchain network can match Bitcoin’s advantages as the safest, most decentralized, sound digital money, according to Kuiper. While alternative digital currencies and systems have some advantages, such as Ethereum’s programmable features, improving the BTC network requires sacrificing speed, scalability, or security.
While other tokens and networks compete, Bitcoin’s benefit as a store of wealth lessens its risk, according to Kuiper. On the other hand, some tokens may have greater upside potential. Bitcoin should maintain its value as more people use it around the world.
Bitcoin, he believes, offers benefits over gold. Both are rare, and the degree that users can mine them is limited. Ensuring the security of its underpinning blockchain network, the network readily carries and stores Bitcoin. In addition, he claims that it is impenetrable to forgery. He points out that Bitcoin’s supply-inflation rate of 1.8 percent is the same as gold’s yearly growth in supply.
Some Things to Consider About Bitcoin
Due to escalating levels of debt in the legacy banking system, negative real interest rates, and the potential for existing currencies to lose purchasing value, macro conditions may also favor Bitcoin. This is also according to Kuiper.
None of these statements are very original, to be sure. Bitcoin, on the other hand, has several disadvantages. One of them is that its price instability precludes it from serving as a medium of trade. This is one of the money’s primary purposes. Bitcoin mining is also costly to the environment, resulting in carbon emissions comparable to those of small countries. Governments that see Bitcoin as a danger to their monetary freedom and policies, such as China, have imposed restrictions on its use.
Kuiper responds with several counter-arguments. Investors should consider Bitcoin first and primarily as a store of value, according to him. Its volatility stems from the fact that the network limits its production and demand changes dramatically. He said that one would anticipate volatility to decrease as more people use it. Moreover, its use is a means of exchange to increase.
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