Fidelity Digital Assets has commented on common criticisms of Bitcoin.
The statement „Bitcoin has failed as a means of payment“ is one of the biggest arguments of critics of Bitcoin (BTC). Fidelity Digital Assets tries to refute this. In a blog post on November 13, the company took up six „stubborn“ points of criticism and refuted them.
These include the volatility of Bitcoin, its harmfulness to the environment and its use in illegal activities.
About the „failure“ of coin as a means of payment for everyday transactions, Fidelity says that this argument failed to understand the true purpose of Bitcoin. According to Fidelity, the currency ranks behind conventional payment systems such as Visa, Mastercard and PayPal, as they all have higher throughput. However, when Bitcoin was developed, different priorities were set. Among other things, Italian Formula is more concerned with „complete scarcity,“ according to Fidelity.
„Bitcoin makes deliberate compromises, such as limited and expensive capacity, to provide other important features, such as decentralization and immutability. In view of the high level of processing security, Bitcoin optimizes its limited capacity for handling transactions that are not given much attention by traditional providers“.
The coin is theoretically suitable as a means of payment. But the restrictions are designed so that everyday use is not necessarily the ultimate goal for it. In addition to volatility, Bitcoin is impractical for many payments because of the tax definition of Bitcoin as property in some regions. Such a definition means that users must calculate gains and losses for each payment or purchase in Bitcoin.
Fidelity claims that users should be aware that the design of the Coin has been based on decentralization, a fixed offer and unchanging processing. These should be evaluated separately. However, one must admit that they have disadvantages in everyday transactions.
On the subject of payments, Fidelity also expressed criticism that the extreme volatility compromises the use of Bitcoin as a store of value. Fidelity also addressed the conditions surrounding this point of criticism, claiming that volatility is the price for an „intervention-resistant market“:
„No central bank or government can intervene to support or inflate markets and thereby artificially dampen volatility. The volatility of Bitcoin is a compromise for a distortion-free market. Real pricing with simultaneous volatility may be better than artificial stability if it leads to distorted markets that may collapse without intervention.
Fidelity also provides other detailed arguments related to volatility. The firm also mentions the „completely inelastic supply“.
The last four points of criticism addressed in the blog post are the harmfulness to the environment, the use of Bitcoin for illegal activities, the fact that the asset is „not linked to anything“ and the fact that it could be overtaken by a competitor.