Bitcoin adoption for countries is a 'high stakes' game and more governments will buy the cryptocurrency this year to stay competitive, Fidelity says
- More governments and even a central bank could buy
bitcoinin 2022, according to Fidelity.
- The investment firm said a high stakes game theory is at play that could lead to further adoption.
- "If bitcoin increases, the countries that secure some bitcoin today will be better off competitively than their peers," Fidelity said.
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The investment firm believes a high stakes game theory is playing out that would leave early adopters of the cryptocurrency better off than their peers.
El Salvador became the first country in 2021 to adopt bitcoin, with the country giving free bitcoin to its citizens and making it mandatory that all businesses accept bitcoin as a form of payment, in addition to traditional fiat.
For now, El Salvador's adoption of bitcoin doesn't look like a home run, solely based on the price of bitcoin, which has fallen about 40% from its mid-November high. One report suggests the country has lost about $10 million on its bitcoin purchases due to the recent decline.
But China is taking the opposite approach by implementing various bans on the mining and
"It isn't surprising that we think an outright ban will be difficult to achieve at best, and if successful, will lead to a significant loss of wealth and opportunity," the note said.
One milestone that has the potential to validate bitcoin and other cryptocurrencies is recent regulations targeting the sector that was included in November's US infrastructure bill. The rules impacting
"But what we think is most notable is that digital asset regulation becoming law is another milestone as the asset class comes of age and establishes itself," Fidelity explained.
Ultimately, countries that are bitcoin curious could pay a small cost today and adopt it as a hedge compared to a potentially larger cost years in the future.
"We therefore wouldn't be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition," Fidelity concluded.
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