Bitcoin Should Be Considered Separately From Other Digital Assets, Says Fidelity Digital Assets

Investment firm Fidelity Digital Assets classified Bitcoin as "fundamentally different" from other digital assets and said it should be considered separately.

"No other digital asset is likely to improve upon Bitcoin as a monetary good because Bitcoin is the most (relative to other digital assets) secure, decentralized, sound digital money and any “improvement” will necessarily face tradeoffs," Fidelity Digital Assets said in a report released Tuesday.

Bitcoin was the first cryptocurrency and the investment firm says that the coin has maintained its first-mover advantage over time.

At 2.42 a.m. ET, Bitcoin was trading 3.56% higher at $38,327, CoinMarketCap data showed.

While the dominance of the top coin has shrunk around 50%, the firm notes that "this is not due to it shrinking in size but rather the rest of the ecosystem growing."

The report noted that the Bitcoin network and other digital asset networks can solve entirely different problems.

"There is not necessarily mutual exclusivity between the success of the Bitcoin network and all other digital asset networks," it said.

Further, the report noted that it is unlikely for Bitcoin to be replaced by any other "improved" digital assets for several reasons.

"One of the biggest reasons is that any improvement in one characteristic of Bitcoin, such as improving its speed or scalability, leads to a reduction in another characteristic, such as Bitcoin’s level of decentralization or security. This tradeoff is known as the blockchain trilemma," it said.

Earlier this month, the investment firm had suggested that countries and central banks should take advantage of low cryptocurrency prices and invest in Bitcoin, predicting that those who purchase the digital coin while the price is low will have a competitive advantage in the future.