Digital assets simplified- top facts you need to know

Gone are the days when digital assets were mostly reserved for niche sectors. Cut to 2022, digital assets are fast gaining traction in the mainstream world and for all the great reasons. If market stats are to be believed, organizations are now investing around 150 million - 250 million USD on digital asset related activities annually. The worldwide market capitalization volume of cryptocurrencies was over 2 trillion USD in 2021 (August), more than 2x of the volume witnessed in December 2020. It won’t be exaggerating to say companies and also individual investors are showing growing interest in digital assets today.

Put simply, digital assets can be defined as valuable contents that exist in digital format. These are mostly content that are developed digitally- however, contents crafted offline and stored on Digital server later can also be dubbed as “digital assets”. 

The term “digital assets” encapsulates a broad umbrella- examples include digital audio files, video files, PDF documents, websites, photos on social media, and so on. However, the most significant digital asset today is undoubtedly cryptocurrency. As of now, the most valuable digital asset is Bitcoin (BTC), holding over 60% dominance in crypto zone, commanding the highest rate of market capitalization (over 1 trillion USD).

NFT aka Non Fungible Token is also another highly potential digital asset today.

Before getting into the reasons, here is a snippet on why crypto digital assets are fast garnering attention from all across the globe.

Crypto digital assets have brought a disruptive force to the traditional financial ecosystem and for better. A major reason behind the increasing adoption of cryptocurrency is its guarantee of censorship-resistant and safe value stores. Unlike the fiat counterpart, the majority of cryptocurrencies come with limited supply and that too capped by complex mathematical algorithms. No government entity or political party has the power to dilute the value of cryptocurrency through inflation. Also, thanks to the advanced cryptographic aspect of cryptocurrencies, no government entity can levy tax or even confiscate crypto tokens without permission from the owner.

Then, crypto digital assets assure secured payments at low cost. Two things should be mentioned here- the underlying blockchain technology and ease of cross-border payments. Advanced digital assets like crypto are powered by blockchain technology – the DLT technology is immutable and nullifies any attempt of hacking data stored on blockchain. Then, the scope of cryptocurrency is not bound by a particular national border. Unlike the usual daunting and expensive traditional cross-border payment system, crypto digital assets assure a hassle-free, cheaper, faster and more efficient cross-border payment alternative. 

Spearheading a breakthrough technology, crypto digital assets have been showing dramatic growth in the last few years. The worldwide market size of crypto assets was something like 1.49 billion USD in 2020. By 2030, the market is predicted to reach a colossal volume of 4.94 billion USD, growing at the rate of around 12.8% CAGR.

The figures mentioned above testify to the rising importance of crypto in the investment market and strong ROI investment potential of digital assets.

Bitcoin has already won the crown for being the topmost performing asset consecutively for the past 12 years. Despite a slow start in maiden years, Bitcoin has grown to offer massive ROI in recent years. In other words, the ROI potential of crypto digital assets, especially Bitcoin, has far surpassed that of traditional stocks returns. 

Now, of course, one cannot undermine the volatility quotient of the crypto digital space that can lead to hefty losses. But, then, investment is subjected to due diligence. The onus is largely on the investors to take a careful study of the market before taking any major decision to avoid losses. 

Inflation occurs when governments or central banks print out more money, thereby growing the supply. But, they can’t do the same with digital assets like crypto since they come with finite supply. In fact, this scarcity aspect of digital assets serves as a catalyst and helps to power up the value of crypto-coins further. 

Besides, with the supply of crypto-coins decreasing with each passing year and with a rising volume of dollars chasing them, the value of crypto digital assets are all set to reach a high in the near future.

This is another major area where crypto digital assets score over traditional stock markets. While the conventional stock market operates only on weekends, the crypto counterpart is open for trading 24/7. The round-the-clock availability makes investment in crypto digital assets far easier and more convenient compared to conventional investment areas. 

Modern digital assets like crypto or NFT offer a bunch of legitimate ways to make good money with them.

The idea is to buy high value crypto digital assets and wait for them to attain higher value in the market. When they will show a considerable rise in prices, all you will have to do is to sell them to enjoy a massive ROI.

NFT creators will be able to earn money by selling unique NFT pieces at a NFT marketplace. NFT investors can also make money by selling high value NFTs they purchase.

Staking is a process where you will lock in a certain volume of coins in a wallet for a particular time period. In return, you will receive dividends just as you receive on traditional savings accounts.

The same process applies with NFT staking. NFT holders will gain rewards if they lock in the digital assets in a DeFi platform for a set period of time.

Lending crypto digital assets can often fetch higher interest rates for the lender compared to those attained by conventional banks.

This approach of earning money allows NFT holders to lock their digital assets for some period in decentralized finance (DeFi) platforms to gain rewards.

In the light of growing interest in digital assets, institutions are looking forward to integrating the assets in the mainstream ecosystem. There is a rising need of incorporating fair and just regulations to increase the credibility of the overall asset lifecycle. The coming years beckon a more proliferating embrace and adoption of these state-of-the-art assets.