Digital assets are assets that exist primarily in the digital world. With the advent of blockchain technology, new types of digital assets with great capabilities have been created. For example, NFTs in general. Prior to the existence of Non Fungible Tokens (NFTs), digital artists couldn’t properly monetize their artworks and were at the mercy of intermediaries or art dealers.
There is an ongoing debate about the usefulness of NFTs and the value they provide. I think most on the other side of aisle are just missing the point. It’s all about the perspective and just because the NFT image bubble has popped doesn’t mean its over for NFTs. NFTs are more than just images, they are more than just ‘visuals’. Documents can become NFT, certain products can become NFT and even properties can become NFT. Image NFTs are just a subcategory of NFTs.
Cryptocurrency is also a digital asset because it’s mainly used in the digital world both as a means of transaction and a store of value. By Robert Kiyosaki’s simple definition, assets [add] money to your pocket [through the appreciation of its value]. Of course, the reverse also holds true.
Benefits And Utilization
One of the main benefits with digital assets is that they’re easily manageable, accessible and movable when compared to their physical counterpart. With only a few clicks of a button one can easily move an asset from one single account to another regardless of whether the user of one of the accounts is located in China and the other user in Brazil.Let’s assume the asset is an NFT artwork (bear with me!). In the physical world, moving that same artwork would at least take some days and carry a steep price. In the digital world, it’s near instant and costs far less.
From an owner’s perspective, managing an asset(s) tends to reduce its definition as a passive income. And managing physical assets is not always an easy task, they need ongoing attention. That’s why there are fund managers, property managers, business managers etc. Their job is to manage the asset while the owner of the asset cash in on the ROI and takes a trip to the Galapagos. Isn’t that the perceived definition of passive income?
Uses cases for digital assets have seen an explosion in the gaming industry (blockchain games) due to the ability to incorporate more value to in game assets. It also enables the trading of those assets within the game ecosystem. Up until recently, games were mostly linear and one directional but with blockchain they can become multidimensional. One of the most impressive blockchain game out there (and in here) is Splinterlands.
Another utilization mechanism for digital assets is in the Decentralization Finance (DeFi) space. DeFi consist of open financial tools that are accessible to all and have no centralized entity behind them. For example, Decentralized Exchanges (DEX) and Decentralized Autonomous Organizations (DAO). Here digital assets can be utilized in trading (like mentioned above), funding, lending etc.
A Major Shift
As humans move more into the digital world, new digital assets will continue to rise with greater utilities. Overall, this will increase their value. I believe that digital assets will eventually surpass physical assets both in market value and popularity.I few months ago, I heard (probably in a video) that a DAO was currently being worked on about buying a share of a property on the other side of the globe (without having to visit it) and receive quarterly dividends based on the shares bought. This property could be a hotel, a stadium or even a commercial building.
It’s one of the characteristics of this space and the potential it has. If you can think it, the technology can build it. These powerful technologies will make it possible to build a ‘digital twin’ of almost anything on Earth. Maybe its time we take the digital world more seriously.
What’s your thought on digital assets? Do you own any?
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