Digital assets have steadily grown in popularity in the last 10 years. There are several different types of digital assets (i.e., cryptocurrencies) in circulation with the most popular being Bitcoin. Bitcoin was created to be a trustless, decentralized, peer-to-peer version of electronic cash that allows online payments to be sent directly from one party to another without going through a financial institution (1). Proponents of digital assets argue that the underlying blockchain technology is superior to existing financial systems because it is theoretically un-hackable and beyond the control of one entity. Skeptics argue that Bitcoin has no fundamental value, is not legal tender, lacks regulation, and is incredibly volatile (2).
It will likely take several years to fully understand how blockchain technology could impact our lives, but the rate of growth of this nascent industry is undeniable. One of the other popular technologies spawned from this industry is Ethereum. Unlike Bitcoin, Ethereum is not a digital store of value. It is a decentralized software platform that allows developers to create financial products that anyone in the world can freely access (3). A plethora of different financial products have been created for banking, insurance, and variety of other financial applications.
Software applications are critical to the functionality of the industry as there are now more than 4000 cryptocurrencies in existence, many of which can be purchased on an exchange (4). A popular cryptocurrency exchange is Coinbase. Coinbase acts as an online broker that allows users to purchase Bitcoin, Ethereum, and several other cryptocurrencies. Coinbase went public in April 2021 via a direct listing at an initial market cap of $85.8 billion (5). Another financial product is Lumina. Lumina helps digital asset owners visualize and understand their digital asset portfolio. It’s very similar to how one might view equities in a stock portfolio, but instead of stocks the holdings are cryptocurrencies. Lastly, Fold has developed one of the first Bitcoin rewards debit card. Most credit card companies reward miles and/or points, but instead of points Fold rewards Bitcoin. Fold represents an innovative approach to integrating cryptocurrencies into the stream of everyday commerce and is another example of how digital assets are making their way into our society.
As stated previously, the industry for digital assets continues to grow especially regarding the use cases for blockchain technology. While there are still many unknowns for how this industry will pan out, it’s exciting to watch how the technologies are evolving.
(4) Coinmarket Cap
(5) Coinbase IPO
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