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Bitcoin chose decentralization and immutability over payments, says Fidelity

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“Bitcoin has failed as means of payment” is one of the prevalent criticisms of Bitcoin (BTC) that Fidelity Digital Assets is seeking to rebut. In a blog post published on Nov. 13, the firm took on six “persistent” criticisms, including Bitcoin’s volatility, environmental wastefulness and use in illicit activities.

Regarding the coin’s purported failure as a means of payment for everyday transactions, Fidelity’s argument is that this criticism fails to understand Bitcoin’s core purpose. The currency is outperformed, Fidelity accepts, by conventional payment rails like Visa, Mastercard and PayPal, all of which can offer higher throughput. However, Bitcoin has been designed with other priorities in mind, including “perfect scarcity,” Fidelity argues. 

“Bitcoin makes deliberate trade-offs, such as limited and expensive capacity, to offer core properties such as decentralization and immutability. Given its high settlement assurances, Bitcoin optimizes its limited capacity for settling transactions that aren’t well served by traditional rails.”

While the coin is, in theory, viable as a payment tool, its limitations mean that everyday use is not necessarily the end goal for the asset. As well as price volatility, Bitcoin’s tax definition as property in some jurisdictions — meaning that users have to calculate gains and losses for every payment or purchase in Bitcoin — renders it impractical for many payments.

Fidelity claims that users should be aware that the coin’s design has prioritized aspects such as decentralization, finite supply and immutable settlement. These should be valued on their own terms, with the acceptance that they do come with downsides on the daily transactions front.

Related to payments, Fidelity tackles the criticism that Bitcoin’s extreme volatility compromises its use as a store of value. Here, Fidelity again reframes the terms of the criticism, claiming that volatility is the price paid for an “intervention resistant market”:

“No central bank or government can step in to support or prop up markets and artificially subdue volatility. Bitcoin’s volatility is a trade-off for a distortion-free market. True price discovery accompanied by volatility might be preferable to artificial stability if it results in distorted markets that may break down without intervention.”

Fidelity provides further, detailed arguments surrounding volatility as well, relating it to the asset’s “perfectly inelastic supply.” 

The last four criticisms tackled in the blog post are environmental wastefulness, Bitcoin’s use for illicit activity, the asset “not being backed by anything,” and its potential overtaking by a competitor.



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Bitcoin

Traders look for Bitcoin price daily close at $41K to confirm bullish reversal

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Bitcoin started the week with a strong breakout to $40,900, but today bulls are trying to hold Bitcoin price above the $40,000 level. 

As the price broke from the $31,000 to $39,000 range on June 14, traders speculated that setting a daily higher high and a close above $41,000 would set BTC up for a move to $47,000, but a lack of sustained buy volume and the much-discussed possibility of a death cross between the 50- and 200-day moving average are factors that could be keeping traders cautious.

BTC/USDT daily chart. Source: TradingView

According to Simon Peters, an analyst at eToro:

“Bitcoin is at its highest level since May, a notable recovery but the crypto asset has yet to convincingly break through – and most importantly, close above – the $41,000 mark.

While sentiment has improved and futures premiums have recovered after nearly entering backwardation last week, analysts are unable to confirm that the bull trend has resumed.

Peters said:

“We’ve seen the price face resistance earlier in the year at this level when it was trading around what was then an all-time high, and I would really need to see a stronger increase to feel optimistic about the price recovering and possibly pushing onto $50,000 and beyond.”

Sentiment has improved but the market is flat

Deribit Bitcoin options 25% delta skew. Source: laevitas.ch

Regarding the lack of follow-through from Bitcoin’s June 14 pump, Cointelegraph analyst Marcel Pechman shared the above chart and said that while the 25% delta skew is no longer signaling that extreme fear exists in the market. 

Pechman said:

“Arbitrage desks and market markers are currently uncomfortable with Bitcoin’s price as the neutral-to-bearish put options premium is higher. However, the current 7% positive skew is far from the 20% exaggerated fear seen in late May.”

Even though day traders are on the fence about the status of the trend, a number of on-chain metrics, including the Hodler Net Position Change, show that investors still view the recent dip to $30,000 and Bitcoin’s current price at $40,250 as excellent purchasing opportunities.