For many countries, the benefits of owning Bitcoin, according to digital asset management, will outweigh the risks this year.
According to a new research by Fidelity, there’s a good probability that more sovereign nation-states will buy Bitcoin this year.
Last year was full of opposing events in terms of bitcoin adoption, according to the asset manager’s 2021 review. While it’s too early to say which method was the most successful, the company believes the high-stakes game theory at work will encourage more countries to follow El Salvador’s lead and adopt cryptocurrency.
The crypto business has been shaken by massive changes during the last year. Crypto has entered the mainstream thanks to the rise of NFTs, GameFi, and institutional acceptance, bringing the industry’s market cap to an all-time high.
Aside from pricing action, government and regulatory recognition had the most impact. Fidelity Investments stated in its 2021 Digital Asset roundup that the regulatory trends observed this year couldn’t have been more diametrically opposed.
Throughout the year, China imposed a number of restrictions, including a ban on Bitcoin mining in May and a blanket ban on all cryptocurrency transactions in September. Later that month, it banned all cryptocurrency mining in the country, thereby putting an end to a robust mining industry.
El Salvador, on the other hand, adopted a completely different approach. The South American country became the first sovereign nation to acknowledge Bitcoin as legal cash in September. The government purchased BTC for its reserves as part of its campaign to promote Bitcoin.
Fidelity believes that China’s attempt to outlaw all crypto-related activities will result in enormous wealth and opportunity loss. Given the decentralized and anonymous character of digital assets, it is unlikely that the country will be able to establish an absolute prohibition.
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