Investment opportunities come in many shapes and forms, with traditional investment avenues now decreasing in popularity compared to their digital counterparts that provide numerous benefits for both casual and high-frequency traders. The most popular trading platform nowadays is Binance. Read review about it here.
In this article, we will discuss the difference between traditional investments and digital investments, such as cryptocurrency or digital securities. In addition, we will also provide an overview of the benefits provided by blockchain technology and how you can make a start with your own digital investments.
What Is The Difference Between Digital Assets and Traditional Assets?
In some cases, there is little difference in the instrument that is being traded as Digital Securities represent digitized versions of financial assets, with the main differences lying with the speed and efficiency of trades.
Cryptocurrency, however, is a digital currency and a lot of these crypto tokens hold value in their own right, without being tied to a physical asset or a Fiat currency. There are many different types of tokens that serve different purposes, but almost all of them are open to investment.
Traditional assets include; stocks, bonds, cash funds, commodities, real estate, and more. These assets are traded on the Stock Exchange via brokers, and this provides certain time constraints and in some cases a less than efficient process.
This is why Digital Securities are gaining in popularity, improving on the traditional Stock Exchange. Using blockchain technology, trades can be instantaneous, completely efficient, and provide immediate verification. We will discuss these benefits in more detail later in the article.
What Are The Different Types Of Digital Investments?
In this section, we will provide a quick breakdown of the different types of digital assets you can invest in.
Digital Securities – Digital Securities can also include crypto known as Equity Tokens and Asset-backed Tokens, with all three representing digital forms of a valued asset that can be traded on the blockchain.
Examples include; bonds, stocks, shares, commodities (including precious metals), funds, real estate, equities, and pretty much anything that holds financial value.
Cryptocurrency – Crypto token is quite a broad term, as there are many different kinds, each serving different purposes, some are intended as a digitized currency, and others serve a specific function.
Bitcoin, the most well-known form of cryptocurrency, is of course designed to be purely an online currency, allowing people to make quick and secure online payments without dealing with a centralized bank. As well as speed, Bitcoin also provides a level of anonymity if the user wishes, thanks to the Blockchain.
Decentralized Digital Currency is one form of crypto and there are many others that have followed in Bitcoin’s footsteps, but let’s move on to the other forms of crypto.
Utility Tokens – As previously mentioned, there are some crypto tokens that have been developed to serve a specific function, making them valuable to anyone who requires that service, thus making them tradeable.
Examples of this are a Filecoin (FIL) or (SIA) which enables the owner to store files quickly and securely, while a Civic token (CVC) is used for verification, allowing a person to quickly identify themselves online, kind of like a digital passport.
Non-Fungible Tokens (NFTs) – These tokens are used to represent one-of-a-kind digital assets, such as digital art, video, or music. This NFT confirms ownership of the said asset, and it is then the holder to do whatever they wish.
This type of token has paved the way for a new kind of art collecting and trading, granting the artist a new source of income, allowing buyers to support artists, and giving collectors/ investors a new way of generating profit.
An NFT relating to a single piece of digital art once sold for $69m at auction.
Stablecoins – Stablecoins is a cryptocurrency that correlates with the value of a Fiat currency, or another instrument that maintains a constant price. For example, Tether is one of the most popular forms of a stablecoin and its value is tied to that of the US Dollar.
Other stablecoins are linked to affiliated cryptocurrencies and each time that stablecoin is purchased, the equivalent crypto token must be destroyed to maintain a set value.
Memecoins – Memecoins, the most popular being the Dogecoin, are crypto tokens that were originally developed as a joke but eventually developed a large online community that purchased the coins, giving them value. Read more about memecoins here.
What Is The Blockchain, and Why Does It Improve On Traditional Investing?
The Blockchain is an intelligent system that records information in an extremely secure way, preventing criminals from hacking into it or making unauthorized changes. It can be described as a digital ledger that is then distributed across each system linked to it.
The 4 key benefits of the Blockchain are:
1. Advanced Security
The way the Blockchain manages critical data is one of its major strengths, providing unrivaled security to keep important information safe. Every transaction has end-to-end encryption and the record of this data cannot be altered, preventing fraud and any access that is not authorized.
Any data that is sent over the Blockchain can also be anonymized, with permissions set to determine who can access the information.
2. Traceability
Each step of a transaction is recorded on an audit trail, ensuring everything can instantly be traced and verified.
3. Transparency
As a digital ledger that is distributed across the entire network, all transactions are completely transparent, in stark contrast to traditional trading where each organization stores records on separate databases – opening the door for corruption.
4. Speed, efficiency, and automation.
The Blockchain has eradicated the need for processes that are paper-heavy, and therefore, time-consuming, open to human error, and required third-party verification. Transactions made on the Blockchain can be completed instantaneously with automated verification using smart contracts.
How Can I Invest In Digital Securities?
For maximum security and ease of use, it is always recommended to use a trusted crypto trading platform that can ensure your cryptocurrency and digital securities investments are safe and can be managed easily.
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Trading platforms allow complete control over your investments, with 24/7 online and mobile access, as well as resources such as analytics and charts to make informed decisions.
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