Why investors need to consider Bitcoin separately from other digital assets
This blog summarizes the extensive research done by Fidelity Digital Assets and breaks down the report into key points.
1) Bitcoin is at the heart of it a computer code & Bitcoin the network is made up of millions of computers all running this identical Bitcoin software.
This code acts like a protocol & provides the rules that govern the Bitcoin network. The network operates a payment system, where users can send/receive BTC.
2) Characteristics of “Good Money” – 💰 | BTC | 💵
Bitcoin clearly 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 (even improving on it).
Source : Google
3) The invention of the wheel represented an entirely new technology that once invented could never be reinvented. Similarly, never before in human history had the problem of digital scarcity and a true peer-to-peer electronic cash been solved until Bitcoin was invented.
Source : Google
4) A non-exhaustive list of some of the negative events that Bitcoin has already endured that has not proven to be the death knell of the network:
Source : Google
5) Ethereum may be viewed as a more advanced network compared to Bitcoin, the additional capabilities & flexibility come at a cost, most notably a more complex network that increases the chance for software bugs as well as less decentralization & potential decline in security.
Source : Google
6) Will the future be a multi-chain world ?
Interoperability will be a key development for the success of the digital assets ecosystem if one is to assume that multiple chains will win due to various base layer tradeoffs, use cases, and value propositions.
Source : Google
7) The internet of information today Vs. The internet of value today by Croesus.
Source : Google
8) Almost every risk that Bitcoin still holds today can also be seen amongst every other digital asset: Protocols bugs, Nation-state attacks
Protocol Bugs:
The potential for a vulnerability in any code is always a present threat. This problem can be mitigated by keeping the particular software simple and engaging in thorough review and scrutiny of the code.
Nation-State Attacks:
Another valid risk to the bitcoin thesis is the potential for large countries to oppose the growth of the digital asset ecosystem. The geopolitical landscape to date has made proper regulation appear far more likely than outlawing these assets.
However, the risks Bitcoin faces today appear lower in comparison with all other digital assets given the lack of code complexity & emphasis on decentralization. There has been little to no true competition for its primary use-case in its 13 years of existence.
As a monetary good, Bitcoin is unique. Therefore, not only do we believe investors should consider bitcoin first in order to understand digital assets, but that bitcoin should be considered first & separate from all other digital assets that have come after it.
The above blog is for informational purposes only & is not to be taken as a recommendation, investment advice of any kind. Please perform your own research & consult a qualified advisor to see if digital assets are an appropriate investment option.
