January 31, 2022 • 36 min read Introduction Once investors have decided to invest in digital assets, the next question becomes, "Which one?" Of course, bitcoin is the most recognized, first-ever digital asset, but there are hundreds and even thousands of other digital assets in the ecosystem. One of the first concerns investors have regarding bitcoin is as the first digital asset it may be vulnerable to innovative destruction from competitors (such as the story of MySpace and Facebook). Another common consideration surrounding bitcoin is whether it offers the same potential reward or upside as some of the newer and smaller digital assets that have emerged. Bitcoin First: Why Investors Need to Consider Bitcoin Separately from Other Digital Assets In this paper we propose: Bitcoin is best understood as a monetary good, and one of the primary investment theses for bitcoin is as the 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 tradeoffs. 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 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. Investors should hold two distinctly separate frameworks for considering investment in this 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. Download the full report. The information herein was prepared by Fidelity Digital Asset Services, LLC and Fidelity Crypto LC, 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. Services provided by Fidelity Digital Asset Services, LLC, a New York State-chartered, limited liability trust company (NMLS ID 1773897) or Fidelity Crypto LC, Ltd. Fidelity Crypto LC, Ltd. is registered with the U.K. Financial Conduct Authority for certain cryptoasset activities under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The Financial Ombudsman Service and the Financial Services Compensation Scheme do not apply to the cryptoasset activities carried on by Fidelity Crypto LC, Ltd. 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. Digital assets are speculative and highly volatile, can become illiquid at any time, and are for investors with a high-risk tolerance. Investors in digital assets could lose the entire value of their investment. Fidelity Digital Asset Services, LLC and Fidelity Crypto LC. 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. Fidelity Crypto LC and the Fidelity Crypto LC logo are service marks of FMR LLC. © 2022 FMR LLC. All rights reserved. {{ e Review }} 1012895.1.0