Digital assets have experienced exponential growth in recent years thanks in part to wider media coverage, increased understanding amongst the broader public, and a much more central role in many areas of life.
“Anything in a digital form that can create value” is the simplest definition of a digital asset, and they take multiple forms and have many uses.
In the financial world, there are blockchain-based assets which include cryptocurrencies, tokenized assets, non-fungible tokens (NFTs), security and utility tokens. Then there are financial digital assets such as digital securities, tokenized shares and bonds, and central bank digital currencies (CBDCs).
Why have digital assets become so relevant? There are a number of key reasons…
Growing importance:
Technology’s increasing integration into our personal and professional lives means digital assets are becoming fundamental elements of many of the actions and processes we undertake on a daily basis.
Market potential:
The global digital asset market (DAM) is projected to grow to a valuation of $16.8 billion by 2032, from $4.59bn in 2024.
New investment opportunities:
Huge opportunities are constantly being developed, with tokenization in particular creating many possibilities for investors. It’s an area that’s also shaping capital markets’ future developments.
Value creation:
Digital assets have the potential to create value, either in monetary terms or intangibly.
Cost savings:
Elimination of intermediaries is already leading to a reduction of administrative and transaction costs, as processes get streamlined.
The descriptions provided above are all based on publicly available information, and cannot be considered as financial advice or encouragement to invest. Sources of information used in this post include Fortune Business Insights and Investopedia. All transactions involving digital assets involve certain risks, which you should familiarize yourself with prior to any investment.