Fidelity Make Case For "Bitcoin First"

Fidelity, the $4.5 trillion asset manager that recently filed an application for a spot Bitcoin ETF, has published a new document explaining how Bitcoin is different to other digital assets, and why investors should think about allocating funds to BTC.

Fidelity's dedicated digital assets site says that the company has been researching bitcoin and blockchain technology since 2014, and considers itself an early mover in the space.

Their research, Bitcoin First Revisited, makes the case that "Bitcoin is best understood as a monetary good and one of the primary investment theses for bitcoin is as the store of value asset in an increasingly digital world", and that "Bitcoin is fundamentally different from any other digital asset"—without undermining the use cases for other cryptos.

Fidelity's research, alongside its ETF application and other digital asset products, suggests that the company is positioning carefully for the coming years, anticipating a boom for digital assets.

Bitcoin First Revisited

Twitter/X user Documenting ₿itcoin pulls out a number of key points.

• Bitcoin is a good form of money, "combining the scarcity and durability of gold with the ease of use, storage, and transportability of fiat".

• Bitcoin's network effect is likely to result in a "winner takes all" scenario.

• Fidelity compares the step-change of the invention of peer-to-peer online transactions to the invention of the wheel: An entirely new technology that can never be uninvented.
• Bitcoin's survival to date is impressive, given the challenges it has faced—and every additional day it survives makes it stronger.
• Bitcoin's security is far greater than that of any other PoW network.
• Bitcoin is compared to the internet. Owning bitcoin "would be akin to being able to own the base layer of the Internet".
• Bitcoin's market cap continues to dominate that of any other cryptocurrency.
• Bitcoin's utility is "as a scarce, store of value asset at the very least".

More Than Tech

The report concludes that, as a superior form of money, Bitcoin should not be evaluated purely as a technology investment.

Traditional investors typically apply a technology investing framework to bitcoin, leading to the conclusion that bitcoin, as a first-mover technology, will easily be supplanted by a superior one or have lower returns. However, as we have argued here, bitcoin’s first technological breakthrough was not as a superior payment technology, but as a superior form of money. As a monetary good, bitcoin is unique. Therefore, not only do we believe that investors should consider bitcoin first to understand digital assets, but that bitcoin should be considered first and separate from all other digital assets that have followed it.

Positioning For 2024 And Beyond

Fidelity and other major asset managers are evidently looking forward to a time when the regulatory situation for digital assets is much clearer. This is an inevitability, perhaps on a timescale as short as months. Their new document is a part of their work to prepare their 43 million customers for that moment—and that sentiment is echoed in the actions of other major financial institutions, with tens of trillions of dollars under their collective management.

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