Bitcoin may be used as a form of portfolio insurance, according to Fidelity Digital Assets, a subsidiary of Fidelity Investments.
Fidelity believes that bitcoin will “stand in stark contrast to the path that the rest of the world and fiat currencies may take — namely the path of increased supply, additional currency creation, and central bank balance sheet expansion.”
The article also highlighted a recent study that Fidelity Digital Asset put out. It looks at the current state of bitcoin. According to the research, the current financial system relies heavily on the U.S. dollar. And, with the strength of the dollar continuing to increase, it’s “wreaking havoc among other countries.”
And the differences between the U.S. dollar and bitcoin is what sets the cryptocurrency apart, per Fidelity. The company noted that:
“Comparatively, bitcoin remains one of the few assets that does not correspond to another person’s liability, has no counterparty risk, and has a supply schedule that cannot be changed.”
The maximum number of bitcoins that a person can issue is 21 million. The inflation rate for Bitcoin is 1.7%. Many expect it to drop further.
Although cryptocurrency adoption is growing, there are some investors and businesses that are proceeding with caution. As we have previously covered on our site, cryptocurrencies are very attractive to some investors that are less risk-averse and are willing to make a substantial return on investment at an unprecedented speed.
