Blockchains as Emerging Economies
This report by Fidelity Investments introduces a fundamentals-based framework for evaluating digital assets and constructing portfolios, aimed at asset allocators and financial advisors. Cryptocurrencies are defined as native currencies of blockchain networks, functioning as the primary unit of account and medium of exchange within their respective digital economies. Drawing parallels with traditional macroeconomics, the value of these digital currencies is driven by demand for access to network services and their resilience against theft, network failure, or inflationary policies.
To assess blockchain activity, Fidelity proposes using a GDP-like model that examines investment, consumption, government-related expenditures, and net exports within a blockchain ecosystem. Using Ethereum and its native token, ether (ETH), as a case study, the report demonstrates how this economic lens helps evaluate value accrual and investment potential in decentralized networks.
In a rapidly evolving landscape of asset types—spanning cryptocurrencies, NFTs, tokens, and stablecoins—Fidelity acknowledges the lack of standardized classifications. The firm employs a proprietary taxonomy and integrates third-party data to navigate this complexity and inform portfolio construction. This foundational approach provides institutional investors with the tools to understand the economic dynamics of blockchains and make informed decisions in the emerging digital asset space.
