"Bitcoin has failed as means of payment" is one of the prevalent criticisms of Bitcoin that Fidelity Digital Assets is seeking to rebut.
In a blog post published on Nov. 13, the firm took on six "Persistent" criticisms, including Bitcoin's volatility, environmental wastefulness and use in illicit activities.
Regarding the coin's purported failure as a means of payment for everyday transactions, Fidelity's argument is that this criticism fails to understand Bitcoin's core purpose.
Bitcoin has been designed with other priorities in mind, including "Perfect scarcity," Fidelity argues.
"Bitcoin makes deliberate trade-offs, such as limited and expensive capacity, to offer core properties such as decentralization and immutability. Given its high settlement assurances, Bitcoin optimizes its limited capacity for settling transactions that aren't well served by traditional rails."
As well as price volatility, Bitcoin's tax definition as property in some jurisdictions - meaning that users have to calculate gains and losses for every payment or purchase in Bitcoin - renders it impractical for many payments.
Related to payments, Fidelity tackles the criticism that Bitcoin's extreme volatility compromises its use as a store of value.
"No central bank or government can step in to support or prop up markets and artificially subdue volatility. Bitcoin's volatility is a trade-off for a distortion-free market. True price discovery accompanied by volatility might be preferable to artificial stability if it results in distorted markets that may break down without intervention."
Fidelity provides further, detailed arguments surrounding volatility as well, relating it to the asset's "Perfectly inelastic supply."
The last four criticisms tackled in the blog post are environmental wastefulness, Bitcoin's use for illicit activity, the asset "Not being backed by anything," and its potential overtaking by a competitor.
Bitcoin chose decentralization and immutability over payments, says Fidelity
Published on Nov 16, 2020
by Cointele | Published on Coinage
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