Fidelity Digital Assets, a section of Fidelity Investments, has responded to some of the more frequent criticisms circulating about bitcoin, suggesting that more clarity is needed given the growing interest in cryptocurrency.
Fidelity Investments responds to criticism that Bitcoin is too volatile, not environmentally sustainable, used for criminal purposes and more
In a post last week, Fidelity Digital Assets research director Ria Bhutoria said she was struggling with persistent "criticism and misconceptions" about cryptocurrency. These included the fact that bitcoin (BTC) is too volatile to be a store of value, that it has failed as a means of payment and is not ecologically sustainable.
It has argued that bitcoin's volatility is a trade-off for cryptocurrency independence, but with increased adoption and introduction of derivatives and investment products, volatility could continue to decline.
According to Bhutoria, the world's first "main" use case for cryptocurrency is not in payments. However, bitcoin uses its limited supply to settle transactions that are not well served by traditional payment systems and offers "high settlement guarantees".
"Limited throughput is the trade-off between bitcoin and decentralization, which is the direct result of simple and inexpensive validation," he wrote. The post also responds to bitcoin's reputation for absorbing huge amounts of energy in the mining process, arguing that a "substantial portion" of its energy consumption comes from renewable sources.
Furthermore, the energy it consumes is for a "good and important" use. “Bitcoin transactions linked to illicit activities are very low,” Bhutoria continued, addressing a common criticism of cryptocurrencies in general. Like cash, bitcoin is "neutral and has properties that can be valuable for good and bad purposes," he said.
A unique cryptocurrency of its kind
Regarding the argument that bitcoin is not supported by anything as opposed to what happens to real world assets, Bhutoria replied that bitcoin is actually "supported by the code and consensus that exists among its main stakeholders. ".
Bitcoin is growing because people recognize that it offers "perfect scarcity ... irreversibility of transactions and resistance to attack and censorship," he said. Finally, regarding the fact that one day, a competing cryptocurrency could replace bitcoin (find out how buy Bitcoins in our guide), it argued that when alternative currencies sought to improve bitcoin's "limits" (such as limited transaction throughput and volatility), it "was at the expense of the main properties that make bitcoin so valuable. " Bitcoin proves to be a one-of-a-kind cryptocurrency.
