Research Study
Revisiting Persistent Bitcoin Criticisms
An updated response to common Bitcoin criticisms
by Fidelity Digital Assets
November 3, 2023 • 27 min read
In November 2020, we highlighted some of the most common Bitcoin criticisms that were sourced from our regular conversations with institutional investors and observation of public commentary on Bitcoin. More than three years later, Bitcoin not only remains the largest digital asset by market capitalization, but continues to grow as a monetary network.
In this piece, we address common Bitcoin criticisms and misconceptions—some legitimate, some debunked. First, we revisit criticisms we’ve covered in 2020, which have been refuted many times over:
- Bitcoin is too volatile to be a store of value.
- Bitcoin has failed as a means of payment.
- Bitcoin is wasteful and/or bad for the environment.
- Bitcoin will be replaced by a competitor.
- Bitcoin is not backed by anything.
The original criticisms above are those we believe can be refuted or are unlikely to be a serious concern. However, we believe that there are a few legitimate concerns that have some, even if small, probability of occurring and, therefore, investors should be aware. These include:
- A bug in Bitcoin’s code could render it worthless.
- Regulations will slow Bitcoin adoption.
- People could lose interest.
- There are “unknown unknowns."
The information herein was prepared by Fidelity Digital Asset Services, LLC (“FDAS LLC”) and Fidelity Digital Assets, Ltd (“FDA LTD”). It is for informational purposes only and is not intended to constitute a recommendation, investment advice of any kind, or an offer or the solicitation of an offer to buy or sell securities or other assets. Please perform your own research and consult a qualified advisor to see if digital assets are an appropriate investment option.
Custody and trading of digital assets are provided by Fidelity Digital Asset Services, LLC, which is chartered as a limited purpose trust company by the New York State Department of Financial Services to engage in virtual currency business (NMLS ID 1773897). FDA LTD relies on FDAS LLC for these services. FDA LTD is registered with the Financial Conduct Authority under the U.K.’s Money Laundering Regulations. The Financial Ombudsman Service and the Financial Services Compensation Scheme do not apply to the cryptoasset activities carried on by FDA LTD.
To the extent this communication constitutes a financial promotion in the U.K., it is issued only to, or directed only at, persons who are: (i) investment professionals within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “FPO”); (ii) high net worth companies and certain other entities falling within Article 49 of the FPO; and (iii) any other persons to whom it may lawfully be communicated.
This information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Persons accessing this information are required to inform themselves about and observe such restrictions.
Cryptocurrencies are volatile, highly speculative, and may be subject to market manipulation and liquidity constraints. Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money, possibly up to your entire investment.
Cryptocurrencies are not insured by the Federal Deposit Insurance Corporation or protected by the Securities Investor Protection Corporation (“SIPC”).
FDAS LLC and FDA LTD do not provide tax, legal, investment, or accounting advice. This material is not intended to provide, and should not be relied on, for tax, legal, or accounting advice. Tax laws and regulations are complex and subject to change. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.
This material may be distributed by the following entities, none of whom offer direct exposure, clearing or custody of digital assets: Fidelity Distributors Company LLC, National Financial Services LLC, Fidelity Brokerage Services LLC, and Fidelity Institutional Wealth Adviser LLC.
Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions.
Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Digital Assets or its affiliates.
Fidelity Digital Assets does not assume any duty to update any of the information.
Fidelity Digital Assets and the Fidelity Digital Assets logo are service marks of FMR LLC.
© 2024 FMR LLC. All rights reserved.