Digital Asset
AdvancedA digital asset is any asset that exists in digital form and can be owned and transferred, most commonly used to describe cryptocurrencies, stablecoins, tokens and other assets recorded on a blockchain.
In a broad sense, digital assets can include digital photos, music files, domain names and software. In finance, the term usually refers to blockchain-based assets.
The main categories include cryptocurrencies, such as Bitcoin and Ether; stablecoins, designed to keep a stable value; security tokens, which represent ownership of traditional financial assets such as shares or bonds; utility tokens, which give access to a product or service; and non-fungible tokens, which represent unique items.
For example, a fund might offer tokenized shares, where ownership of fund units is recorded on a blockchain and can be transferred digitally.
Digital assets can be transferred quickly across borders and traded around the clock. However, they raise questions about legal ownership, custody, security, valuation and regulation. Many digital assets are highly volatile, and investors have lost money through hacks, scams and the collapse of exchanges. Regulators in several regions have introduced or are developing specific rules for digital assets.
For worked examples and full lessons, visit notesbysara.org.