What is a Digital Asset? Guide for Beginners

What is a Digital Asset? Guide for Beginners

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Cryptocurrency that is currently owned by many people is one part of the development of the digital asset revolution. Digital asset is actually not a new term, but has been developing since the mid-1990s.

At that time, digital assets were known by the public as items such as videos, images, sound, and documentation. Along with the development of technology, digital assets not only include this, but include customer data, digital channels, and others.

What is a Digital Asset?
According to Securities.io, a digital asset is anything that is in binary data that is stand-alone, can be uniquely identified, and has a value or ability to be used. So, how can Bitcoin and other cryptocurrencies be called “digital assets”.

Digital AssetsThe simple explanation, Bitcoin is a commodity that can be traded but does not have a physical form. Apart from trading, Bitcoin and cryptocurrency can also be an investment medium for store of value. Thus, Bitcoin and other cryptocurrencies are referred to as digital assets stored in a crypto wallet because they have functions for payment, trading and investment.

In the world of cryptocurrency, a digital asset has a decentralized system, using cryptography to facilitate transactions. Cryptocurrency circulation is not the same as fiat currency which is supported by central banks or governments. This makes cryptocurrency attractive in that it has no third party.

Of course there are several factors why Bitcoin and other cryptocurrencies are considered digital assets of the future, including:

  • Price stability on cryptocurrency exchanges.
  • Demand Level.
  • Security.
  • Liquidity.
  • Decentralized.

These five things are the factors that support why Bitcoin and other coins are called “digital cryptocurrency assets”.

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Digital Asset Becomes Growing
The big names of blockchain technology emerged alongside the most phenomenal digital currency, Bitcoin.

With the blockchain, digital assets are growing rapidly. Do you already know how many cryptocurrencies are circulating in the world today? According to Coinmarketcap as of February 2019, there are more than 2,000 types of cryptocurrency. This is a very large number and has increased many times since 2009, when Bitcoin was just being introduced to the public.

Types of Crypto Digital Assets
In practice, the creation of a new crypto token can be classified into 3 types including:

Store of Value Asset
This type of digital asset includes cryptocurrencies such as Bitcoin and Litecoin. Stored value is an asset that from time to time can maintain value without reducing its price. To some extent, it is almost the same as usability. gold is stored to maintain the value of the asset.

Utility Tokens
Utility Token vs Security TokenHaving a wider functionality than Stored Value, this Utility Token was created for crowdfunding purposes. This token was not created as an investment but as a tool to finance the development of crypto projects and can also be used to buy goods or services offered by the token issuer. For example, a game development company issues utility tokens for its investors to buy which are then used to purchase in-game products. This token will make it easier for game players to transact in the game than through the banking system.

Securities Tokens
Securities tokens are tokens that are purchased as investment assets where the buyer hopes that the value of the token will increase thanks to the efforts of the token manager. In simple terms, this type of token is a token whose value is pegged to a particular security asset.

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With blockchain technology, digital asset transactions no longer require the role of third parties. Transactions made by users become easier and faster, even in minutes. Like, when you send Bitcoin and crypto assets from an application. You only need to know the public key of your friend’s wallet address as the recipient of Bitcoin to make the transfer.