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. A year and half later since our report, Bitcoin continues to gain adoption and market share in the digital asset space, while other digital assets have faced separate headwinds. Read our latest paper, as we aim to revisit many of Bitcoin’s fundamental advantages while contextualizing Bitcoin’s progress and position within today’s current digital asset market. The information herein was prepared by Fidelity Digital Asset Services, LLC (“FDAS LLC”) and Fidelity Digital Assets, Ltd (“FDA LTD”). It is for informational purposes only and is not intended to constitute a recommendation, investment advice of any kind, or an offer to buy or sell any asset. Perform your own research and consult a qualified advisor to see if digital assets are an appropriate investment option. 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. Custody and trading of digital assets are provided by Fidelity Digital Asset Services, LLC, a limited liability trust company chartered by the New York Department of Financial Services (NMLS ID 1773897). FDA LTD relies on FDAS LLC for these services. FDA LTD is registered with the Financial Conduct Authority under the U.K.’s Money Laundering Regulations. The Financial Ombudsman Service and the Financial Services Compensation Scheme do not apply to the cryptoasset activities carried on by FDA LTD. To the extent this communication constitutes a financial promotion in the U.K.,it is issued only to, or directed only at, persons who are: (i) investment professionals within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO"); (ii) high net worth companies and certain other entities falling within Article 49 of the FPO; and (iii) any other persons to whom it may lawfully be communicated. This information is not intended for distribution to, or use by, anyone in any jurisdiction where such distribution would be contrary to local law or regulation. Persons accessing this information are required to inform themselves about and observe such restrictions. FDAS LLC and FDA 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. Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Digital Assets or its affiliates. Fidelity Digital Assets does not assume any duty to update any of the information. Fidelity Digital Assets and the Fidelity Digital Assets logo are service marks of FMR LLC. © 2023 FMR LLC. All rights reserved. 1012895.1.0