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Fidelity Anticipates That More Sovereign Countries Will Embrace Bitcoin In 2022

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Digital asset management predicts that for many countries this year, the benefits of owning Bitcoin will exceed the risks.

According to a recent Fidelity analysis, there is a significant likelihood that additional sovereign nation-states will acquire Bitcoin this year.

According to the asset manager’s 2021 report, last year saw polarising advances in bitcoin usage. While it’s too early to determine which method was more effective, the company believes the high-stakes game theory at work will lead to more countries following El Salvador’s lead and adopting cryptocurrency.

The previous year was highlighted by significant upheavals that shook the crypto business to its core. The advent of NFTs, GameFi, and institutional usage has propelled crypto into the mainstream, bringing the industry’s market capitalization 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 could not have been more diametrically opposed.

Throughout the year, China imposed a number of limitations, including a crackdown on Bitcoin mining in May and an outright ban on all cryptocurrency transactions in September. Later that month, it shut down all bitcoin mining in the country, thereby eradicating a vibrant mining industry.

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El Salvador, on the other hand, took a completely opposed approach. The South American country became the first sovereign nation to make Bitcoin legal cash in September. The government purchased BTC for its reserves as part of its endeavour to promote Bitcoin. It will also issue a $1 billion Bitcoin bond, with half of the proceeds going toward increasing its crypto reserves.

Fidelity believes that China’s attempt to outlaw all cryptocurrency-related activities will result in a considerable loss of money and potential. However, given the decentralised and anonymous character of digital assets, it doubts that the country would be able to impose an outright prohibition.

All of this has prompted Fidelity to conclude that when it comes to Bitcoin adoption, there is a high-stakes game theory at work:

“If Bitcoin adoption increases, the countries that secure some Bitcoin today will be better off competitively than its peers. Therefore, even if other countries do not