Fidelity Digital Assets has released a new report stating the investment thesis for the company's first cryptocurrency, Bitcoin. According to the finance firm, the crypto asset is a "demanding value store". They also call it an “insurance policy” that can protect welfare against “unknown consequences”.
That's why the cryptocurrency acts as the best insurance policy against various potential scenarios, all of which revolve around long-term wealth protection.
How Side Stacks Against Cryptocurrency Gold
Before Bitcoin, there was no other asset like this. Attempts to create a digital currency successfully failed to resolve the double spending issue Bitcoin finally overcame. Satoshi Nakamoto also tried to establish a decentralized network supported by an entity that mimics certain aspects of gold.
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The result is the creation of a non-physical being that shares several similarities with the precious metal used to preserve wealth for generations. Cryptocurrency not only stands with gold in most of its best features, but BTC is designed to have benefits beyond what precious metal offers.
The two beings have made neck and neck for the past two years. For all these reasons, Bitcoin provides an ideal store of value and long-term protection of wealth.
BTCUSD Versus XAUUSD Comparison Chart | Source: TradingView
Loyalty: Bitcoin Maturing To Be An "Insurance Policy" To Protect Long Term Wealth
These two critical factors have recently appeared in Fidelity Digital Assets' new report. New report about Bitcoin.
The firm's "investment thesis" is based on an even more evolving asset as a store of value – for now it is just a "desired store of value".
“A rising store of value is growing purchasing power until it stabilizes. "The key features that refer to good value stores are famine, portability, durability, and divisibility."
The report points to digital scarcity as a key component that gives Bitcoin its value as a potential long-term wealth protection tool. However, the asset protects wealth in a number of other critical ways in the long run.
Available beyond the reach of third parties and governments, Bitcoin can protect wealth from forms of intervention possible with today's national currency system. For example, tax branches freeze assets to cover back taxes.
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The asset can be protected from the final collapse of the fiat-based monetary system. Gold kept such a system steady, but in the 1970s, unlocking the dollar began to rapidly lower inflation, and today gold is around $ 2,000 to $ 2 an ounce. rose to.
According to billionaire hedge fund manager Paul Tudor Jones, the cryptocurrency reminds him of the role played by gold. He also said that Bitcoin is probably the “fastest horse in the race against inflation”.
Fidelity indicates the abundance of financial stimulus as a possible catalyst for further BTC growth. Additional points in the thesis summarize the potential impact of deglobalization and a large wealth transfer that takes place in the middle of the pandemic.
Market Cap Comparison | Source: Fidelity Digital Assets
There is also an argument for reversing potential compared to other assets. Gold has a market value of $ 11 trillion. The stock exchange is $ 89 trillion. Global real estate has exceeded $ 281 trillion.
The market value of Bitcoin is $ 200 billion. With just 21 million BTC and trillions of dollars that can flow to the scarce asset, upside per BTC is incredible. However, since Fidelity's report is clearly stated, it is just one of many reasons Bitcoin has made the best "insurance policy" for "long-term wealth protection".