Digital assets would not only bring a sense of new confidence across industries but would also unlock major potential for investors in terms of growing their portfolio.
‘Digital Assets’ was a completely unheard term at least a decade ago. Bitcoin was invented in the year 2009 and started gaining popularity only post 2015-16. However, since then, digital assets have not only entered the mainstream, but have also become a part of our lives. This incredibly rapid evolution of digital assets from fringe to the future has set the narrative of a completely digital economy not only for financial organisations but also for the entire population at large
Reasons behind the rapid evolution of digital assets
As mentioned earlier, Bitcoin was introduced back in 2009, and terms like tokenization, crypto, etc. have been buzzwords for over a decade now. So, what has propelled this sudden rise in the interest of digital assets now? This is led purely by regulatory bodies taking notice and creating guidelines for the new age fintech platforms to disrupt the traditional methods. There has also been consistent innovation in the technology and the infrastructure setup, which ably supports the demand growth from both individual investors and financial institutions. This rapid change will have a profound effect on global economy.
Digital Assets and its usage
Digital assets are nothing but digital avatars of anything of value or files that are created electronically and stored digitally or on a computer. It could be digital images, videos, data related documents, etc. Since they could be transferred digitally to any part of the world, they have significantly reduced the time taken to execute financial transactions and have also improved the overall safety and security of such transactions. A classic example of this is the way the financial industry has changed the way it functions. Traditional investment instruments like Mutual Funds, Stocks, Insurance and Bank securities could be bought or transferred in a matter of seconds. Apart from digitising traditional assets, technological innovations would also allow creation of completely new types of asset classes which could be revolutionary in nature.
Crypto as a digital asset
The crypto market has been constantly evolving over the last decade and will continue to evolve, going forward, with the help of multiple regulatory updates. Institutional investors have started realising the power of blockchain and its long terms propositions. Large scale investors have started including crypto currencies as part of a larger diversified portfolio which would also include traditional assets like gold, equities, etc.
However, digital assets in the crypto world go way beyond just Bitcoin. Yes, Bitcoin is the most valuable and thereby most famous crypto currency. Having said that, there are over 7,000 crypto currencies in the world, a testament of the fast evolving digital asset ecosystem.
Cryptocurrencies, Central Bank Digital Currencies and Stablecoins currently constitute the main frame of digital assets globally. The next round of evolution of digital assets will come by way of NFT (Non-Fungible Tokens). Non-fungible basically means the uniqueness of the asset or that it cannot be replaced by anything else. For example, while any currency in any denomination is fungible (the value is exactly same as the other); a piece of art or a musical composition is completely unique (non-fungible). Many known celebrities and CEOs have gone ahead and created their own NFTs, which could be bought as an asset by any investor.
The major shift from tradition to digital assets is already here and is here to stay for the long term. This new crop of assets has already started attracting a new breed of investors who are willing to leverage the power of blockchain disrupting the current methods of traditional investments. Digital assets would not only bring a sense of new confidence across industries but would also unlock major potential for investors in terms of growing their portfolio.
Source: Business World