The global economic model is undergoing an enormous transformation, thanks to the internet and innovations like blockchain. The transformation is generating new and impressive opportunities for businesses and investors. But terms like "digital assets" are still new to many investors. A lack of understanding can hold investors from taking advantage of the opportunities available to them in this digital transformation of the world's economy.
Digital assets are a new asset class based on blockchain technology. Though relatively new, blockchain technology has become one of the most transformative innovations in modern times. Indeed, some have called blockchain the currency of trust.
Blockchain Technology is Transforming Industries
Technology is transforming industries like logistics, manufacturing, and finance. For instance, in logistics and manufacturing, businesses are deploying blockchain technology to build more transparent and efficient platforms and processes, hence speeding up operations and cutting costs. Walmart, the world’s largest retailer, has adopted blockchain technology to trace the origin of fresh farm produces sold at its stores. Walmart turned to blockchain because it believes the technology can help it address food safety issues and minimize its risks.
In finance, blockchain has given rise to a range of digital products like cryptocurrencies and decentralized finance service or DeFi. Moreover, businesses are using blockchain to cut transaction costs.
Notably, DeFi projects provide financial solutions like credit outside the control of governments or central banks and without the involvement of intermediaries like commercial banks. Therefore, DeFi lending is free of government control and promises cheap loans for borrowers and better returns for lenders.
The blockchain economy is poised to explode as the adoption of the technology accelerates. The global blockchain market will hit $3.0 billion in 2020 and grow to $39.7 billion by 2025.
Digital Assets And Blockchain Technology Investing
Investment in digital assets has gained popularity in recent years. Indeed, interest in digital assets investing is only continuing to grow. More and more people realize that digital assets investing can deliver high returns in a short time compared to conventional assets. And the coronavirus disease outbreak is bringing even more attention to digital assets investing as investors look for opportunities to augment and diversify their traditional portfolios.
There are different types of digital assets and more continue to emerge. Cryptocurrencies and crypto commodities are some of the common types of digital assets.
A crypto commodity can be a digital platform. Ethereum, the platform that developers plug into to build a range of digital products, is an excellent example of a crypto commodity. A cryptocurrency is a type of digital asset designed as a medium of exchange outside the traditional central bank system. Bitcoin and EtherEther are some of the popular cryptocurrencies today.
Bitcoin, the best-known cryptocurrency, has a strong following. Some think Bitcoin is more than a currency to facilitate transactions. Here’s what Twitter and Square CEO Jack Dorsey has said about bitcoin: “The peaks and troughs [of bitcoin] are like an investment asset and are equivalent to gold.”
Many cryptocurrencies have emerged, and even more, will continue to come to market. For example, Facebook has assembled a group of like-minded companies to develop a cryptocurrency called Libra.
Notably, Libra will belong to a class of cryptocurrencies called stablecoins, which exhibit stable prices because their value is pegged to a single or a basket of government-issued currencies like the dollar or euro.
As way from cryptocurrencies and crypto commodities, yet another investment opportunity enabled by blockchain technology is decentralized perpetual futures contract. Notably, investors can take advantage of perpetual contracts to hedge risks or for speculative investing in digital assets.
Lack Of Technical Knowledge Of Blockchain And Digital Assets No Longer A Limiting Factor For Investors
Digital assets investing being a relatively new concept; some have approached it with skepticism while others still don't understand what it entails. But anyone looking to venture into digital assets investing in 2020 needs to have a problem. Just as new digital assets have continued to emerge and expand the investment option, some companies have dedicated themselves to digital assets investing, allowing investors to participate in digital assets investing without requiring them to have a technical understanding of how digital assets are created.
The ability to transfer digital assets without intermediaries is one of the appeals of digital assets investing. Cutting out intermediaries ensures superior returns for investors relative to conventional assets investing. Indeed, digital assets investing will only become more attractive as more investors and businesses embrace the transformative blockchain solutions and products and the opportunities they present. Moreover, frustrations with investing in the government-controlled economic space would only drive more investors to digital assets.
Indeed, now is a time when savvy investors turn to digital assets to diversify and hedge their portfolios during these uncertain economic times brought about by the coronavirus pandemic.