Digital Asset as an Upgrade of Crypto Currency
Digital Asset as an Upgrade of Crypto Currency
From the moment of their emergence, crypto currencies have received mixed feedback. When describing this phenomenon, representatives of the financial world (bankers, major investors and economists) used the name “speculative bubble”. At the same time, the creators of the cryptographic alternative to paper money predicted for their creation the fate of a revolutionary financial instrument, which was supposed to become the foundation for the new digital economy.
What are the weaknesses of crypto coins?
First and foremost, crypto currencies are not backed by real assets. When it comes to price, they are supported only by the interest of sellers and buyers.
Their high volatility makes it difficult to predict price fluctuations and gets in the way of expanding crypto currencies to the real sector of economy.
Also, there is no legal base to regulate the circulation of crypto coins. Today, only Bitcoin is recognized as means of payment in China, Japan and South Korea. There are no legal guarantees that the services, which need to be paid for with crypto money, will be provided according to the agreement between the parties.
If the hash key has been lost, it is almost impossible to restore access to the electronic wallet.
Another issue is that the area of application of crypto currencies is limited to the sale of goods and services.
Lastly, there are still a lot of questions regarding the safety and vulnerability of crypto currencies. Fraudulent schemes with crypto payments, theft of users’ private keys and occasional hack attacks are frequent topics of discussion.
How did digital assets come about?
The idea of a blockchain-based decentralized currency and the technology itself open limitless opportunities for the development of digital economy. Most crypto currencies have smart contract algorithms, which help to reduce the time for making a deal and automate the process of supervising the fulfillment of the specified clauses. Digital assets, i.e. digital money backed by real assets (securities, real estate, automobile, share in a business, etc.), guarantee the compliance with the terms of the contract.
Main properties of digital assets
Digital assets work on the basis of a protocol that explicitly specifies the terms and conditions of their use.
There is a digitization procedure, which means that a unique digital copy of an existing asset is created, and the relevant record in the blockchain registers the fact of acquiring the property right to the digitized asset.
The hash code used to access digital assets is impossible to lose. Mechanisms for its restoration are not just in development, they are already being implemented, besides, digital assets can also be inherited.
The evaluation procedure of a real asset is conducted according to the appropriate methodologies of the country where the evaluated asset is located or registered.
Reliable security and accounting of real assets are guaranteed for the entire existence period of their unique digital copies.
Being backed by assets broadens the possibilities of the use of digital assets in the economy of a new hi-tech format.
The developers of crypto currencies are actively searching for ways to lower the risks of using coins and alt coins, more and more often the term “crypto currency” is replaced with “digital asset”, but in most cases, the changed name does not give the coins any properties of true digital assets.
It is safe to say that “crypto currency” is becoming a thing of the past, which has prepared the users and laid down the technological foundation for the infrastructure of digital economy. The future of the financial field and business is with digital assets.
Learn more about a new digital asset following the link
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