„Bitcoin has failed as a means of payment“ is one of the most common criticisms of Bitcoin (BTC) that Fidelity Digital Assets intends to refute. In a blog post published on November 13, the company responded to six „persistent“ criticisms, including volatility, energy waste, and the use of Bitcoin Evolution for illegal activities.
The cryptocurrency is overcome, Fidelity admits, by conventional payment channels such as Visa, Mastercard and PayPal, which offer higher capacities. However, Bitcoin was designed with other priorities in mind, including „perfect scarcity,“ says Fidelity.
„Bitcoin makes deliberate compromises, such as limited and expensive capacity, to offer basic properties such as decentralization and immutability. Given its high settlement guarantees, Bitcoin optimizes its limited capacity to settle transactions that are not effectively served by traditional channels.
Although currency is, in theory, valid as a payment instrument, everyday use is not necessarily the ultimate goal of the asset, given its limitations. In addition to price volatility, the fiscal definition of Bitcoin as an asset in some jurisdictions, according to which users must calculate gains and losses for each payment or purchase in Bitcoin, makes it impractical for many transactions.
According to Fidelity, users should be aware that currency design has given priority to factors such as decentralization, limited offer and unchangeable settlement. These aspects should be valued according to specific terms, accepting that they have disadvantages on the front of daily transactions.
Moving on, Fidelity addresses the criticism that Bitcoin’s extreme volatility compromises its use as a store of value. In this case, Fidelity again reformulates the terms of the criticism, arguing that volatility is the price to pay for a „market resistant to intervention“:
„No central bank or government can intervene to support or protect the markets and artificially control volatility. Bitcoin volatility is a compromise for a distortion-free market. The true price discovery accompanied by volatility could be preferable to artificial stability if it results in distorted markets that could disintegrate without intervention“.
Fidelity offers other detailed arguments about volatility, linking it to the „perfectly inelastic offer“ of the asset. The last four criticisms addressed in the blog post are environmental waste, the use of Bitcoin for illegal activities, the „lack of guarantees“ of the asset and the potential overtaking by a competitor.