Crypto asset is a term that generally refers to all the different cryptocurrencies. Ever since Bitcoin’s debut, there are now only 1644 different types of altcoins with different types of functions and utilities for each of them. These are normally used for trading, but they come with the added advantage that they can be used in other applications. There are three main types of tokens: equity, utility, and security. Utilities are almost viewed as coupons for startup services while security has some other intrinsic external value tied to it. Equity tokens are exactly what it sounds like, it is for companies to issue their shares of the company usually through Ethereum based smart contracts. A crypto asset exists in a digital form with its value being derived from the current supply and demand forces.
Crypto assets are becoming a popular way of not only making investments across the globe, but also as a way to store value. Steve Wozniak, the cofounder of Apple, stated that Bitcoin is the digital gold. But unlike traditional gold, which could not be traded and used as payments, Bitcoin could be used to trade for other cryptocurrencies on most secondary exchanges on the internet. Some businesses are even accepting Bitcoin as a valid form of payment. But one of the big reasons why it is used as a standard is because most secondary exchanges accept Bitcoin instead of dollar to start trading, they accept Bitcoin for most altcoins. Then, each of the altcoins are measured up against Bitcoin instead of the dollar value. For example, Ethereum is currently worth 0.079 of a Bitcoin.
This in a way could be compared with the gold standard, which used to be a thing in the United States before 1971. However, gold standard was a more stable and centralized method as 1 dollar was equal to exactly 1/35 ounce of gold. This was used as a concept to protect its citizens against inflation or deflation. Currently, no government in the world uses the gold standard anymore.
For investors and traders in the cryptocurrency world, an altcoin is considered profitable when it is traded back for more Bitcoins than before the trade. This is what it usually means when investors state that they are making Bitcoins. It is the investor’s job to find a coin that rises faster in value than Bitcoin to make a healthy margin.
Benefits of Crypto Assets
The use of cryptocurrency also comes with several advantages as opposed to other monetary options. These include:
Eliminates Fraud Cases
Cryptocurrency is digital and as such makes it difficult to produce fake or counterfeit substitutes. This goes a long way into boosting safety. Also, with the use of smart contracts, it is easier to enforce trades in a trusted way.
This network operates on a user-to-user interface thus making it accessible to everyone who can access a computer or similar device. Many computers use blockchain technology which jointly manage the database for cryptocurrency. In this, none of the central authorities can control its operations. Well, luckily, quantum computing is currently very expensive, making 51% attacks very hard to do on major blockchains.
A key factor to keep in mind is that cryptocurrency is not bound by factors such as exchange rates, transaction charges, or interest rates. This makes it ideal for use at an international level while at the same time minimizing on any possible problems. The lowered fees make transactions a lot easier and faster.
With smart contracts powered by Ethereum, confirming equity and assets is easier than ever. This cuts out the middleman of transactions.
Crypto assets are accessible to right about everyone who has an interest and can access internet services. This has reduced the barrier of entry and thus a great benefit to all. With the advancement in technology, this means that everyone can again access to crypto assets. Crypto assets are gaining popularity in the world for the above benefits. In addition, many are embracing it as they can be used in a number of ways to boost investments as well as purchases. More importantly, this is the only electronic system where you are the sole owner of your account (no interruption or interventions).
Not all cryptocurrencies are created the same in terms of confidentiality. Monero is the best use case for people who want absolute confidentiality over the internet.
Identity Theft Could be a Thing of the Past
With seperate address for receiving and sending, it makes the asset more secure. Instead of giving your credit card to a merchant who could save it for later use, you could just send your asset to the merchant as a one time transaction. For added security, get a hardware wallet for bigger amounts of crypto assets.
Of course, with so many benefits, there are also some downsides to using crypto assets as well. The price of cryptocurrency is not very stable, causing it to not be adapted by the masses yet. People don’t want to purchase a beer using their crypto assets as of yet simply due to the price stability. However, with more development of the cryptocurrency world, this could soon be a solved issue.
lllustration by Marina Demchenko (Mamihlapinatana Studio)
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