Research Director of Fidelity Digital Assets has responded to the most frequent criticisms of bitcoin to clarify in the face of increased interest in cryptocurrencies.
In a blog post, Fidelity Digital Assets Research Director Ria Bhutoria said she wants to address the ongoing “criticism and misconceptions” about cryptocurrency. This includes questions about bitcoin’s instability to function as a store of value, its ability to act as a means of payment, and sustainability.
“Bitcoin volatility is a trade-off that leads to a lack of flexibility in supply and a market without intervention,” Butoria said.
According to her, the “main” use case for the largest cryptocurrency is not in the area of payments. However, Bitcoin’s capabilities are used to settle transactions that are not handled by traditional mechanisms.
“Limited bandwidth is a trade-off that Bitcoin has for decentralization, which is a direct result of cheap and easy transaction verification,” she wrote.
The article also discusses the issue of energy consumption of Bitcoin mining. According to the director of research at Fidelity Digital Assets, “a significant portion” of the electricity used for mining comes from renewable sources.
“The number of BTC transactions associated with illegal activities is very small,” Butoria noted, responding to popular criticism of cryptocurrencies in general. Like cash, bitcoin is “neutral and has properties that can be valuable to good and bad people,” she said.
Regarding the argument that bitcoin is not backed by anything, such as real assets, Butoria wrote that it is in fact “backed by code and consensus among the key network stakeholders.” The price of bitcoin is rising because people are recognizing the benefits of “perfect supply shortages … irreversible transactions, and resistance to confiscation and censorship,” she said.
She concluded by writing that Bitcoin is unlikely to be supplanted by another cryptocurrency. While alternatives have already emerged that have tried to eliminate the “limitations” of Bitcoin, such as limited bandwidth and volatility, “this has been done by changing the basic properties that make Bitcoin valuable.”
Recall that recently, Fidelity Digital Assets (FDAS) attracted more than 20 developers to expand cryptocurrency services due to the increased interest of institutional investors. Earlier, analysts at Fidelity Digital Assets said that bitcoin has the basic characteristics of a store of value and can become insurance against the backdrop of the problems of the existing financial system.
