States will be forced to hoard bitcoin: Fidelity

According to the analysis of the investment company Fidelity, states will be forced to hold bitcoin (BTC) in their treasuries.

“Countries that secure some bitcoin today will be in a better competitive position among their peers,” says the company specializing in digital assets. For that reason, according to their analysts, “even countries that do not believe in the investment or adoption thesis of bitcoin will be forced to acquire it as a form of insurance.”

The analytical firm forecasts that, in 2022, several national states (even some Central Bank) will acquire bitcoin, just as El Salvador has done throughout 2021.

Related to the previous point, the company Fidelity is convinced that the total ban on bitcoin, although it is already a reality in several countries, will not be the trend. As has been said, countries that say “no” to bitcoin could find themselves at a considerable economic disadvantage in the future and, according to Fidelity, they will not be able to ignore this reality.

It is worth mentioning that This Government Adoption of Bitcoin Won’t Come Without Greater Regulatory Clarity. Although government interference is not usually to the liking of many bitcoiners, it will be necessary for public treasuries to hold BTC.

Fidelity dedicates a few lines of text to a particular law: the Infrastructure Law. This US regulation, written for collection purposes, caused enormous controversy in the cryptocurrency ecosystem, because it taxes miners, hardware wallet sellers, developers and those who run a node, among others, as if they were brokers.

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The Infrastructure Law is not due to come into force until 2024 and multiple amendments are already being proposed, so time will tell what will happen to the legislation itself. But we think it’s a remarkable milestone that digital asset regulation becomes law, as these assets come of age and become established.

Fidelity, investment company in digital assets.

It will be a year of optimism for Bitcoin mining

Another aspect of Bitcoin that Fidelity spoke out about is mining. For the company, 2022 is a year of optimism after the recovery of the hash rate, which had fallen in mid-2021 due to the ban in China.

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The hashrate reaches higher values ​​than it had before the mining ban in China. Source: Coin Metrics – Fidelity.

In any case, Fidelity assures that it is a risk that a State repeats a similar prohibition. Such a situation could cause a shock throughout the industry.

Just because it’s a risk doesn’t mean it’s likely. As has already been said, this investment company opts for favorable predictions towards the acceptance of bitcoin by the states. If this is fulfilled, a significant attack on the network by a government does not seem plausible.

In addition, Fidelity refers to a fact that CriptoNoticias has widely reported throughout 2021: the greater geographical decentralization of mining. “Bitcoin’s hash power has now been distributed around the world, making it even more secure and resilient against such nation-state attacks,” the company says.

Growth of stablecoins and definitions on NFT

Lastly, Fidelity provides its perspective on what’s to come in 2022 regarding stablecoins and non-fungible tokens (NFTs).

About the first company forecasts growth of algorithmic stablecoins. These, according to their promoters, are the only truly decentralized stablecoins that cannot be censored by national governments.

As explained by Criptopedia, an educational section of CriptoNoticias, these currencies maintain their parity with the dollar (or any other fiat currency) by automatically increasing or burning their currency.

Among them, Terra USD (UST) currently stands out, which ranks 20th among crypto assets by market capitalization. It overtakes DAI, the stablecoin collateralized by other tokens, which is in 23rd place.

What will drive the growth of the adoption of these cryptocurrencies will be, according to Fidelity, the increasingly demanding regulations towards stablecoins collateralized by fiat money, por ejemplo, Tether USD (USDT) o USD Coin (USDC):

As stablecoin regulation and scrutiny of reserves increases, we also believe that the dawn of decentralized algorithmic stablecoins has officially begun. Regulators have increasingly started asking questions about the reserves of many of the large stablecoin issuers and whether the rapid expansion of these assets could pose a threat to the legacy financial system.

Fidelity, investment company in digital assets.

Regarding NFTs, Fidelity is convinced that 2021 left more questions than answers. As detected by CriptoNoticias, several questions that haunt the ecosystem about these tokens are: are they overvalued? can they really represent property rights over digital creations? are they really decentralized if the linked file is located on the centralized server of a person or company?

Fidelity suspects that 2022 will be a year of definitions, which would bring more clarity on the development and future of the non-fungible token industry.

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States will be forced to hoard bitcoin: Fidelity

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