Fidelity’s crypto arm responds to 6 common criticisms of bitcoin


Fidelity Digital Assets, a subsidiary of Fidelity Investments, has responded to some of the most frequent criticisms of bitcoin, suggesting that clarity is needed amid the heightened interest in cryptocurrency.

In a blog post Thursday, research director Ria Bhutoria said she was facing persistent “criticism and misconceptions” about cryptocurrency. These include whether bitcoin is too volatile to be a store of value, has failed as a means of payment and is an environmental waste.

“Bitcoin’s volatility is a trade-off [that] it creates perfect supply inelasticity and an uninterrupted market, ”he said, 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, it uses its limited capacity to settle transactions that are not well served by traditional binaries 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 responds to bitcoin’s reputation for absorbing huge amounts of energy in the mining process, claiming that a “substantial portion” of its energy consumption comes from renewable sources. Furthermore, the energy it consumes is a “good and important” use.

“Bitcoin transactions related 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 to good actors and bad actors,” he said.

As for the argument that bitcoin is not supported by anything, such as real world assets, it is actually “supported by the code and consensus that exists among its main stakeholders” was Bhutoria’s response.

Bitcoin is growing because people recognize that it offers “perfect scarcity … irreversibility of transactions and resistance to seizure and censorship,” he said.

Finally, on the threat that a competitor might someday replace bitcoin, he argued that while alternatives sought to improve bitcoin’s “limits” (such as limited transaction throughput and volatility), “it was at the expense of core properties that making bitcoin valuable. “

[ad_2]Source link