According to Digital currency market news and analysis of Coindesk, Fidelity, one of the largest investment companies in the world, has responded to criticism of Bitcoin.
Fidelity Digital Assets is the digital asset arm of Fidelity Investments Group. In a note, the institute responded to some of the criticisms leveled against Bitcoin. Given that we are now witnessing more and more public attention to this emerging phenomenon, the institute has called for greater transparency in the concepts of digital currencies.
According to the same report, Ria Bhutoria, director of Fidelity Research, wrote in a blog post that she is now responding to criticisms and misconceptions about digital currencies. According to her, there are still some critics’ whispers about Bitcoin, such as:
- It has very volatile fluctuations,
- This can’t be a good tool for storing value,
- It has no efficiency at all to facilitate payments,
- Ultimately its mining is very harmful from an environmental point of view.
What is the response to criticism of Bitcoin?
Bhutoria writes in response to these criticisms:
Bitcoin fluctuations are the price paid to eliminate any interference in the bitcoin market. However, some of the reasons that reduce these fluctuations are:
- With the growing popularity of digital currencies and their acceptance,
- The introduction of Bitcoin-based derivatives and investment products.
“The most important function of Bitcoin is not to use it as a payment tool,” says Bhutoria. However, due to the limited capacity of this digital currency, it can be used to settle transactions that are very expensive to process in the way of traditional banks. The Bitcoin network has limited operational capacity due to its decentralized nature. It has cheap and simple transaction validation.
Bhutoria said in another note: “Despite criticisms claiming that Bitcoin has harmful effects on the environment. It can be argued that a significant portion of the bitcoin network’s energy needs come from clean and renewable sources. Besides, the energy consumption of Bitcoin has a valid and important reason behind it.”
What is the answer to other Bitcoin criticisms?
Bhutoria writes in response to another criticism leveled at Bitcoin. The number of Bitcoin transactions related to criminal and illegal activities is very small. Bitcoin is just like cash and has a neutral nature. So it can be a valuable tool for both good and bad actors.
Another criticism leveled against Bitcoin by some is that the digital currency lacks any real financial backing. In response to this criticism, Bhutoria says that the existing codes and consensus among Bitcoin stakeholders are its real support. Bhutoria adds: Bitcoin is on the rise. Because people now know that honesty, production constraints, irreversibility of transactions, and resistance to confiscation and censorship are traits that not found in any other asset.
“More powerful rivals are likely to emerge to oust Bitcoin,” Bhutoria concluded. He said that although other currencies have emerged to improve bitcoin capabilities, we need to be aware that Bitcoin limitations stem from the same inherent capabilities that make it a valuable asset.