The director of research at Fidelity Digital Assets responded to the most frequent criticisms about bitcoin to clarify the increased interest in cryptocurrencies.
a blog post, Ria Bhutoria, director of research at Fidelity Digital Assets, said she wants to address the constant “criticism and misconceptions” about cryptocurrency. This includes questions about the instability of bitcoin for the implementation of the function of a savings tool, its ability to act as a means of payment and environmental friendliness.
“Bitcoin’s volatility is a trade-off that leads to a lack of supply flexibility and a market without intervention,” Butoria said.
According to her, the “main” use case for the largest cryptocurrency is not in the field of payments. However, Bitcoin’s capabilities are used to settle transactions that are not served by traditional mechanisms.
“Limited bandwidth is a tradeoff that Bitcoin has for the sake of 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 part” of the electricity for mining comes from renewable sources.
“The number of BTC transactions related to illegal activities is very small,” Butoria said, responding to widespread criticism of cryptocurrencies in general. Like cash, bitcoin is “neutral and has properties that can be valuable to good and bad people,” she said.
As for the argument that bitcoin is not backed by anything, such as real assets, Butoria wrote that it is actually ” backed by the code and consensus that exists between the key stakeholders of the network.” The price of bitcoin is rising because people are recognizing the benefits of “perfect supply deficits… transaction irreversibility, and resistance to confiscation and censorship,” she said.
In conclusion, she wrote that Bitcoin is unlikely to be replaced by another cryptocurrency. While alternatives have already emerged that try to eliminate the” limitations ” of Bitcoin, such as limited bandwidth and volatility, “this has come at the expense of 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 increased interest from institutional investors. Earlier, analysts at Fidelity Digital Assets said that bitcoin has the basic characteristics of a means of accumulation and can become an insurance against the problems of the existing financial system.