The Pomp Podcast - #810 Fidelity Thinks Bitcoin Can't Be Replaced

Starting point is 00:00:00 What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Today's episode is all about Fidelity and a recent research paper on Bitcoin that they published. I really enjoy reading the thoughts of multi-trillion dollar asset managers when it comes to this new industry. Before we get into this episode, I want to quickly talk about our sponsors. Today's episode is sponsored by the Bitcoin 2022 Conference. Bitcoin 2022 2022 is the largest Bitcoin event in the world that takes place April 6th through the 9th in Miami Beach, Florida. All four days will be jam-packed with exclusive content, exciting

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Starting point is 00:03:27 Download Brave at brave.com slash pomp and click the wallet icon to get started. Again, go download Brave at brave.com slash pomp and click the wallet icon to get started. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments.

Starting point is 00:03:48 you should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Good morning, everyone. Bang, bang. Fidelity, which has trillions of dollars under management, published a report yesterday that is taking the internet by storm. The paper is titled Bitcoin First, Why Investors Need to Consider Bitcoin Separately from Other Digital Assets. and it highlights a framework that investors can use to evaluate Bitcoin and other digital assets as they begin to invest in the crypto economy. The summary clearly outlines the main differences

Starting point is 00:04:25 between Bitcoin and other assets along with which perspective each asset should be viewed through. Those include Bitcoin is best understood as a monetary good and one of the primary investment thesis for Bitcoin is as a store of value asset in an increasingly digital world. Bitcoin is fundamentally different from any other digital asset. 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 trade-offs. There is not necessarily mutual exclusivity between the success of the Bitcoin network and all other digital asset networks. Rather, the rest of the digital asset ecosystem can fulfill

Starting point is 00:05:06 different needs or solve other problems that Bitcoin simply does not. Other non-Bitcoin projects should be evaluated from a different perspective than Bitcoin. Bitcoin should be considered an entry point for traditional allocators looking to gain exposure to digital assets. An investor should hold two distinctly separate frameworks for considering investment in the digital asset ecosystem. The first framework examines the inclusion of Bitcoin as an emerging monetary good, and the second considers the addition of other digital assets that exhibit venture capital-like properties. I have previously discussed a similar framework in a letter that I wrote titled

Starting point is 00:05:41 Monetary Maximalism and Technology Competition. In the piece, I stated, quote, the identification of two separate revolutions is important because it gives us a framework to discuss the importance of monetary maximalism while still acknowledging tremendous value accrual to non-monetary assets, end quote. There are two different bodies of work going on here.

Starting point is 00:06:00 If you attempt to evaluate both of them through the same lens, you will miss the value and potential of each of them. Fidelity had a number of great points in their research paper. The first was a comparison between gold, Bitcoin, and fiat currencies to call out why they believe Bitcoin is a superior monetary good. They compared those three assets along the durability, divisibility, fungibility, portability, verifability, scarceness, and track record. Bitcoin is superior in every single one of those fronts,

Starting point is 00:06:30 except for the track record. They then explicitly call out that any future creation of another digital monetary good would simply be a reinvention of the wheel. They stated, quote, the invention of the wheel represented an entirely new technology that once invented could never be reinvented. Similarly, never before in human history had the problem of digital scarcity and a true peer-to-peer electronic cash been solved until Bitcoin was invented. Solving this problem was not merely an incremental improvement, but a leap forward or an unlocking of the puzzle of how digital scarcity could exist, end quote. Lastly, Fidelity acknowledges that there are thousands of developers building various technologies and protocols. They understand that

Starting point is 00:07:11 the other ecosystems are pursuing non-monetary good use cases. It appears they are less excited about these opportunities at the present moment. They stated, quote, in a world of multiple winning chains, it still appears that Bitcoin is likely the best equipped to fulfill the role of the ecosystem's non-sovereign monetary good with relatively less competition than other digital assets attempting to fulfill alternative use cases. The explicit emphasis on security and maximum decentralization reinforces its rule set and enforces all users' rights equally. Furthermore, as a result of its scarcity and enforced supply limit, Bitcoin is the closest a digital protocol could be to enforcing absolute scarcity. In other words, any project or other

Starting point is 00:07:51 blockchain network that requires its users to believe they are transacting with a token that has real monetary value likely needs to be directly or indirectly connected to Bitcoin as the ultimate monetary good. For example, people use tokens at an arcade for ease of use and utility and attribute value to them because they know they represent a certain dollar amount or can be traded for other goods and prizes. However, outside of the native arcade environment, the tokens have little to no value. This world leaves non-Bitcoin tokens battling to prove other viable use cases for their technology. They're aiming to find the right trade-off for some particular level of base layer scaling and encountering vast competition for development and

Starting point is 00:08:32 functionality enhancements. This is not an indictment of those building on or investing in non-Bitcoin chains, but merely an observation that Bitcoin's clear advantage as a store value asset reduces its risk even in a world that contains an ecosystem of many vibrant digital assets. Assuming this outcome, Bitcoin is still a clear beneficiary of flows into the overall digital asset space given that it is viewed as the ultimate monetary digital asset, making it arguably the greatest risk-adjusted and easiest investment to understand and allocate towards across all of the digital asset landscape. Fidelity has been researching and participating in the Bitcoin ecosystem for years. It is still surreal to see a multi-trillion dollar asset

Starting point is 00:09:12 manager writing these types of research papers, including the level of detail and nuance that included in this specific piece. I highly recommend you read the full report that I've linked to if you haven't already. I hope you have a great day and I'll talk to you guys tomorrow. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to palmscryptocourse.com. We've developed a curriculum with the top teams across the industry it's a three-week intensive training program with over 50 events packed into

Starting point is 00:09:51 that three-week time period go to pompscryptocourse.com to learn more and i'll meet you guys for the next episode

The Pomp Podcast - #810 Fidelity Thinks Bitcoin Can't Be Replaced

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