The definition that digital asset have changed as time has passed from common digital objects (e.g. data, images, video, audio files, etc.) according to a more broad definition that encompasses entities that can be stored and created with blockchain technology. Blockchain technology is authentically unique, and may be used to create value.

Digital assets include a variety of cryptocurrency as well as non-fungible tokens (NFTs) and crypto assets like security or utility tokens, and much more. While trading in crypto is among the most popular ways of investing into digital assets plenty of alternatives to pick from.

What is What is a Digital Asset?

In addition to IRL types of digital assets which can be stored and created on computers (e.g. images, text or audio) The real breakthrough in the field of digital assets started with the development blockchain technologies.

Blockchain technology can be described as a distributed transparent digital ledger that can be appended only that is able to keep track of or record nearly every type of asset from services and goods including patents and smart contracts decentralized applications (dApps) and more.

Blockchain technology is built on cryptography and a system that uses peer-to-peer verification or consensus mechanisms, which are used to protect transactions, and for cryptocurrency mining, to extract tokens and coins.

Though many believe that cryptocurrency is associated to blockchain, blockchain technology is becoming more common to support a wide range of digital functions and products including creating and storing digital assets.

Different types of digital Assets

In general, the majority of digital assets are classified into two broad categories:

1. Cryptocurrencies

2. Cryptographic tokens

Cryptocurrencies

There are a myriad of kinds of cryptocurrency, including Bitcoin (these are commonly known as altcoins). In August 12th 2022, the most popular of the most popular cryptos include:

* Ethereum (ETH)

* Binance Coin (BNB)

* Ripple (XRP)

Tether (USDT)

* Solana (SOL)

* Cardano (ADA)

* Polkadot (DOT)

* Litecoin (LTC)

In general, cryptocurrency digital assets can be described as decentralized versions of currency. They exist through a Blockchain platform and are protected by the proof-of-work (PoW) agreement mechanism (which includes mining) or a proof of-stake system (PoS) that lets users can secure or invest some of their currency for the purpose of becoming authenticators.

Of the numerous kinds of cryptocurrency, the majority have been created by the creation of new projects. However, some are hard forks that are derived from the existing ones (e.g. Litecoin was created in 2011 following an unforgiving fork from Bitcoin).

Some are stablecoins, which means they’re tied on a fixed currency such as the euro, dollar, or yen, and are aiming to maintain a 1:1 ratio in relation to that currency.

Cryptographic Tokens

Tokens are digital currencies that serve a range of purposes within an exchange platform. The most well-known kinds of tokens is referred to as a utility, which has a particular purpose in a blockchain-based ecosystem.

For instance, as blockchain technology has improved and the space of DeFi (decentralized financial services) has grown, DeFi users generally require utility tokens that are that are native to the platform in order to carry out certain functions that are available on that platform.

One example of this is how ERC20 tokens are utilized to pay for goods and services on Ethereum. Ethereum platform to purchase items as well as services (e.g. Dapps and smart contracts).

Another instance of a utility token is one called the Basic Attention Token (BAT). BAT is the token of origin for Brave, the Brave Web browser. The browser is based on Ethereum and aims to safeguard the privacy of users with an innovative advertising model.

There are even digital assets available for social networks that pay users with cryptocurrency when they create and publish quality content as Steemit does using the STEEM token.

Digital Marketing Assets

Today, with the availability of many kinds of blockchain-based and digital assets, a lot of organizations are turning to Digital Asset Managers (DAMs).

DAM cloud software plays an essential role for businesses who require an efficient method to catalogue and organize all types of media and data pertinent to their business that includes images, video and audio files social media, and cutting-edge materials such as VR AR and AR.

Particularly marketers use DAM software to manage the company’s complete digital asset library, to simplify offline and online channels.

Digital Assets are used in Investing

The most crucial feature of investing in digital assets is the fact that every is distinct and is stored on a blockchain. Therefore, they offer a type of value that fluctuates as any other asset (e.g. bonds, stocks and mutual funds).

Digital assets provide a wide range of opportunities for investors. In addition to the ability to purchase and sell the various kinds of crypto, you can also trade NFTs and stake tokens and many more.

Traditional markets are not without their limitations which crypto markets in general and digital assets specifically can assist in solving, specifically with the area of cross-border transfers as well as minimum capital requirements in addition to the possibility of specific assets. Since digital assets are decentralized that is, they are created as well as stored, without need of intermediaries, there are exciting opportunities that all players in markets can benefit from.

Virtual Assets are different from Digital Assets

Digital assets are pre-dated by virtual assets in that the purchase and trading of virtual assets was integral to the industry of online gaming for a long time. It’s important to keep in mind the fact that gaming virtual assets couldn’t be traded on the first place, as they were not liquid in nature however, the market for digital assets allowed the trading of limited liquidity.

The History of Blockchain Digital Assets

The Bitcoin white paper, also referred to by the Satoshi Nakamoto white paper was released on October 31st of 2008. A little over two months later on the 3rd of January 2009, the Bitcoin network became operational and the first Bitcoin was invented and a brand new class of assets (cryptocurrency) was born due to the development of blockchain which is a peer-to-peer decentralized technology that was soon to transform the world.

The pioneering Bitcoin protocol established the market for digital currencies in crypto It wasn’t long before entrepreneurs and developers took advantage of possibilities of blockchain technologies to create new ideas in the DeFi sector.

In 2015 the Ethereum network was launched (following the release of a white paper in 2013). Since the beginning, Ethereum was meant to build on the Bitcoin foundation. It was designed to be more than a kind of cryptocurrency, but instead an open-source blockchain platform that had the ability to work with smart contracts as well as DAPPs (decentralized applications) and various additional DeFi projects.

Ethereum and similar projects that came out at the same time revolutionized the way blockchain was utilized and the way digital assets were constructed.

Pros and Cons of investing in digital Assets

What are the best ways for investors to evaluate the different opportunities that exist in the world of digital assets? Here are some pros and drawbacks.

Pros

Individual Sovereignty

Bitcoin lets people be your own financial institution. If they store assets at an traditional bank or financial institution, the user is at possibility of the institution becoming insolvent or mismanaging their money. This is known as the risk of counterparty.

Since crypto and digital assets are not centralized, they remove any risk of a counterparty.

With their private keys inside a crypto wallet, investors will be completely in control for their electronic assets as well as cryptocurrency. Apart from silver and gold there is no other asset that has this kind of quality.

Diversification

Bitcoin is the top performing asset class over the past decade, by far. In eight of those years, the profits of holding Bitcoin outperformed any other asset anywhere in the world. (That being said, just like any investment , past performance is not a guarantee of the future performance.)

Cryptocurrency can help diversify your investment portfolio in a way that no other asset class could. Crypto is referred to as an “non-correlated asset” that is, it can be in no way linked with other securities (although this may change at times and is not a assurance of the future’s performance).

Hedge against Inflation

Although all investments carry risk however, many investors overlook the only risk that comes with all investments that are based on fiat currency (stocks bonds, stocks mutual funds, ETFs and more. ): Inflation risk.

Demand and supply laws states that when the quantity of something is increased the price of it will fall in the absence of an equal or greater growth in demand. Central banks have created the tens of trillions of currency units in the last few years certain investors have started considering digital cryptocurrency and assets that have set supply limits, such as Bitcoin.

It is important to note that the only cryptocurrency that are suitable as in a hedge against inflation are ones with an established supply. As with gold, rare commodities tend to appreciate in value when there is inflation.

Additionally, the global uncertainties and turmoil can increase demand for assets that are safe.

Cons

Digital assets are very volatile, no matter if you’re discussing the ups and downs of cryptocurrency or the worth of NFTs.

Furthermore, even though digital assets are secure due to the fact that they are created and stored with peer-to-peer verification and decentralized technology systems, the truth is that if blockchain networks are compromised the digital assets can be affected. In addition numerous scams are based around counterfeit digital assets.

Markets for digital currencies are mostly not regulated. Investors should be careful, checking processes, networks, and procedures to prevent losses.

The Digital Assets Market and Risk

As we’ve mentioned as mentioned above, the vast majority of altcoins are speculated in the sense that they are highly speculative in. They typically have market capitalizations under $1 billion, or as low as $100 million. As such, they can be wildly volatile for short periods of time because of a shortage of liquidity. In the long term it’s not uncommon for altcoins to fall to zero, meaning that investors are left with nothing.

Bitcoin could be different as it’s one of the safest networks (due due to its most hashrate) as well as the longest track record and the largest market capitalization by far. However, past performance is not a assurance of future performance therefore it is crucial for investors in crypto to be aware of the risks associated with the investment in cryptocurrency.

Best Practices to Invest in digital Assets and Cryptocurrency

Anyone who is considering making a bet on digital assets or cryptocurrency is advised to learn about related topics.

The more the potential investor is able to familiarize their self with crypto terms such as bitcoin forks, bitcoin halving and the way that crypto exchanges function and how they work, the less complicated the investment may appear.

Because of the volatility of cryptocurrency and digital assets one investment strategy is to utilize dollar-cost-averaging. Instead of trying to predict the market, investors could buy fixed amounts of dollars at regular intervals. One example is the investor setting up a recurring purchase for an automatic purchase for $50 worth of crypto twice a week.