Over the past 10 years, digital assets have become popular for investment. The number of investors is constantly growing, and interest in such assets as tokens, NFTs, and cryptocurrencies is very high. But why do people invest in these assets? In this article, you will learn why digital asset investment is worth considering.
What do you need to know about digital assets investment?
A digital asset is any digital object that has value. For example, it could be a photo on your phone, a document, etc. However, in recent times, people have become used to referring to digital assets primarily as cryptocurrencies, tokens, and other assets issued or stored on the blockchain.
In just 13 years, cryptocurrencies have gone from unknown "coins" to one of the leading investment assets in the world. The world's first cryptocurrency, Bitcoin, was created in 2009 against the global financial crisis. Until 2017, cryptocurrencies remained little known, although other crypto projects appeared in addition to Bitcoin, such as Litecoin or Ethereum. In 2017, the first cryptocurrency boom took place, due to which digital assets significantly increased in price for the first time. Since then, they have received a lot of attention, despite the price dips that happen from time to time (now is exactly such a time).
In parallel with cryptocurrencies, various types of tokens gaining attention from digital asset investors began to develop. For example, since 2019, security tokens have become popular. Essentially, they are digital analogs of ordinary shares, rights to receive dividends, etc. In spring 2021, the NFT boom rocked the world. And these are just a few examples of digital assets.
Why is digital asset investing beneficial?
Digital assets have gained immense popularity among investors. There are many benefits to such an investment. Let's consider the main ones.
Excellent return on investment
Digital assets are investments that provide an excellent return on investment (ROI). The benefits of investing in digital assets are comparable to the real estate sector. However, the advantage of such assets over real estate as an investment asset is that the entry threshold is much lower. For example, during the STO, you can issue any number of security tokens; one token can cost from $100.
Opportunity to earn passive income
Investing in digital assets can provide an excellent passive income. The return on these assets is much higher than traditional bank deposits or any other investment assets. The exact figure of a passive income depends only on the digital assets investor and his strategy.
The COVID-19 pandemic has given a new impetus to the development of digital assets. In addition to cryptocurrencies and different types of tokens, other technologies like NFT began to evolve. The non-fungible token's development gave rise to a new generation of projects and collaborations.
Full control over investments
Unlike traditional investment accounts or bank deposits, digital asset investors completely control their investment. You can make decisions about whether to hold digital assets or convert them to fiat currencies, as well as when is the best time to buy them. Any factors can influence your decision – fundamental analysis, technical analysis, news about digital assets, etc.
Investing in digital assets means you do not rely on other people's decisions and act autonomously. At the same time, digital assets provide flexibility. Unlike real estate, they can be sold very quickly. Thus, digital asset investing allows quick exit if needed.
An essential factor for any investment is risk diversification. There is a famous saying: "don't put all your eggs in one basket." This is important because investing in only one asset increases the risks significantly. Investing in digital assets, however, makes diversification possible. For example, you can buy several different cryptocurrencies and tokens. Or you can invest in different assets such as cryptocurrencies, tokenized stocks, and gold. Even if some investment turns out to be unprofitable, you can profit from the increased price of other investment assets.
Growing interest in digital asset investing
The global financial crisis of 2008 showed that the world needs to look for new economic and investment solutions that meet technological requirements. And in 2009, Bitcoin appeared. Cryptocurrencies gained popularity gradually but eventually became one of the most interesting assets for investors.
Over the 12 years of its existence, the technology of blockchain and cryptocurrencies has made a huge leap in development and continues to improve. This improvement also leads to the emergence of new types of tokens, which are backed by tangible assets and are not as volatile as classic cryptocurrencies. Blockchain innovation has enabled a new wave of online finance like DeFi and NFT.
DeFi is decentralized finance. Previously, this area was known as "open finance." Thanks to the development of the blockchain, several types of DeFi have appeared, such as:
- Decentralized cryptocurrency exchanges.
- Crypto lending platforms.
- Prediction markets and more.
NFTs are non-fungible tokens. These are unique tokens or groups of them that contain unique identifier codes that distinguish each digital asset from the other. You can buy, sell, resell, donate, or exchange NFTs.
NFTs have found wide applications in the field of digital art. They allow you to preserve the uniqueness of certain objects of art. For example, the painting Morons by the famous American artist Banksy exists only as an NFT form. It was bought by enthusiasts and transferred to the blockchain, after which the original painting was destroyed. There are also other examples of the use of NFTs. For example, the first tweet of Twitter CEO Jack Dorsey was tokenized. The NFT was sold for $2.9 million. NFTs have great prospects in digital art, and attention will only continue to grow.
During their 13 years of existence, digital assets have become one of the leading investment assets in the world. The industry is evolving at a rapid pace, and today digital assets are a broad ecosystem. There are many reasons why digital asset investing is worth it, which we have discussed above. If you are interested in creating your own digital assets and attracting investments, please contact our managers – they will be happy to provide you with a free consultation.