Living in the 21st century is an asset in itself. In the old times, assets referred to tangible things like cars, land, gold, etc., but this scenario has changed.
What Are The Digital Assets?
Digital assets are nothing complex but digitally storable content/assets. Content could be referred to as documents, videos, presentations and any other content viewed digitally.
What Could Be Referred As an Asset?
Things that can be assigned a value, monetary or intangible, can be called Digital Assets. These are increasingly important as they gradually become a part of our personal and professional lives.
The Money-Making Digital Assets
On cryptocurrency platforms, there are newer assets based on blockchains and similar technologies, such as:
1. NFTs (Non-Fungible Tokens)
These are unique and can’t be replaced with something else, unlike bitcoins which can be traded one for another. Most NFTs are a part of Ethereum blockchains, though other blockchains have implemented their version of NFTs. Ethereum is a cryptocurrency that remains one of the top cryptocurrency.
What’s In It For Us?
NFT marketplaces have a feature where you can ensure you get paid a percentage every time it is sold or changes hands.
If you’re a buyer, it lets you financially support other creators you like!
These can also be referred to as private currency, as no regulatory body exists. It gives every user a unique address to keep up with its security so that no other user can have any account of your asset.
The first crypto was Bitcoin which is the most preferred to date. The most popular after bitcoin is Ethereum, also called ‘Ether.’
How Can They Be Bought?
- Traditional Brokers: These are the online brokers who offer us a way to buy and sell cryptocurrencies, as well as other financial assets such as stocks, bonds, etc.
- Cryptocurrency Exchanges: Wallet storage, interest-bearing account, etc., are crypto exchanges to choose from, each offering us different cryptocurrencies.
Where Do We Store Them?
- Hot Wallet Storage: These use online software to protect the private keys to our assets.
- Cold Wallet Storage: Also known as Hardware Wallets, these rely on offline electronic devices to securely store our private keys.
Recently the White House released the first-ever framework for Digital Asset Development.
Millions of people, including United States residents, have acquired digital assets. The US government agencies have developed frameworks that lay down several key priorities. These include consumer and investor protection, financial stability, countering illicit finance, financial inclusion, and responsible innovation.
The Accounting Challenges
As these digital assets need a governing body, there is also limited control, leading to a lack of legislation.
On the other hand, they also provide business benefits by making transactions and processes cheaper, faster, more efficient, and inclusive. Also, they are classified as intangible assets for accounting purposes and measured at costless accumulated amortization and impairment losses. However, this is only sometimes an accurate representation.
The broad and ever-changing scope of digital assets and the variety of uses, even for individual assets, complicate them. For example, Bitcoin, which remains the best crypto to buy now, was intended to be used as a form of exchange, similar to the role played by cash. It is often held as a speculative investment, but it can be used that way.
Depending on how these assets are used, the appropriate accounting treatment varies. Also, more clarity on the rights and obligations associated with different digital assets is often needed, making accounting easier.
Digital assets are also referred to as “the future of capital markets’’.
The sole reason is the worldwide connectivity via the internet, and also provides us with extra income intangibly. More and more countries, such as the US, are changing their critical policies toward keeping digital assets. Keeping in mind the recent pandemic which caused nearly most economies to shrink and a few even to financial emergencies, the digital assets here are often seen as one of the ways to revive and grow their economies.
Also, one should be careful while dealing digitally as it becomes easier to be duped by hackers.