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Ria Bhutoria, research director of Fidelity Digital Asset, disputed six common criticisms and misconceptions aimed at Bitcoin.
In a new report, Bhutoria says that while arguments against the largest cryptocurrency have been raised many times in the past, it is time to provide an updated answer that reflects the rapidly growing interest in Bitcoin from both traditional and retail investors.
First, Bhutoria addresses the claim that Bitcoin is too volatile to be a store of value.
According to the Fidelity executive, Bitcoin’s volatility is a result of the cryptocurrency’s inelasticity of supply and intervention-resistant ownership. Bhutoria explains that increased demand cannot force the network to produce more BTC due to the fixed supply of the cryptocurrency. Furthermore, the network cannot generate BTC at a faster rate as the difficulty adjustment ensures that blocks are produced on average every 10 minutes.
Furthermore, Bitcoin is an intervention-free market, says Bhutoria, as no central bank or government can artificially support or restrain the market to control volatility.
Another criticism of Bitcoin is its failure as a means of payment. Bhutoria points out that BTC was not designed to facilitate point-of-sale payments in the first place. What it lacks in day-to-day transaction capability, says Bhutoria, Bitcoin makes up for with immutability, transparency, and decentralization – unique properties best used for international payments like remittances and global business deals.
Regarding claims that Bitcoin mining is a waste of limited resources, Bhutoria says that “a significant number of operations are powered by renewable sources” such as hydro, wind and solar power, as well as energy in excess that would otherwise be wasted.
Despite fears that Bitcoin has made it easier for criminals to launder money and finance illicit activities, Bhutoria points out that less than 1% of all Bitcoin transactions are linked to illegal activities. Conversely, Bitcoin’s transparency feature allows law enforcement to track BTC transactions.
“Bitcoin is pseudonym, not anonymous, and blockchain analytics companies have developed sophisticated techniques to track criminal activity via Bitcoin to real-world identities.”
Furthermore, Bhutoria faces the problem that Bitcoin is not supported by anything. Fidelity’s head of research points out that BTC is indeed backed by the code and a consensus among its users who understand and trust its unique attributes.
Finally, Bhutoria disputes the argument that BTC will be replaced by a competitor.
“While competitors have attempted to improve Bitcoin’s limits (e.g., its limited transaction throughput or volatility), it has been at the price of the core properties that make Bitcoin valuable (e.g., perfect scarcity, decentralization, immutability) This explains why Bitcoin continues to dominate in terms of market capitalization, investors and users, miners and validators, as well as infrastructures and retail and institutional products. “
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Disclaimer: Opinions expressed in The Daily Hodl do not constitute investment advice. Investors should do their due diligence before making high-risk investments in Bitcoin, cryptocurrency or digital assets. Please note that transfers and trading are at your own risk and any losses you may incur are your own responsibility. The Daily Hodl does not recommend buying or selling cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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