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An Introduction into Investing in Digital Assets

Coming from once being a fairly unknown digital asset group, it now seems like cryptocurrency is absolutely everywhere online. Especially when looking at the adoption of cryptocurrency, there has been a radical shift, with 14% of Americans holding cryptocurrency in 2021, up from only 1% in 2016.

This figure is predicted to continue to grow as more and more people flock to the world of DeFi. But, just investing in cryptocurrency is far from the only digital asset investment users can currently make.

In this article, we’ll be explaining what digital assets are, as well as looking at some popular, innovative, and unique methods of investing in the digital space.

Let’s get right into it.

What Are Digital Assets?

A digital asset is anything that is stored digitally, meaning that almost anything could count as a digital asset. While most people’s minds will instantly move towards cryptocurrency, even things as arbitrary as a word document or a photo can count as a digital asset.

One central feature that unites digital assets when we’re specifically talking about financial assets is that they’re stored on the blockchain. The blockchain is a set of data blocks chronologically ordered. As a transaction is made, it is inscribed on the block, which is then essentially set in stone – not being able to be changed once it’s processed. This electronic data ledger system has seen incredible progress over recent years. 

The immutability of the blockchain is what has led to the rise of NFTs, which are digital assets where the proof of ownership is stored on the blockchain. 

As stated, digital assets come in a variety of forms. However, not all of them are going to add value to your financial portfolio. Due to this, we’ll be specifically focusing on financial digital assets that you can invest in.

What Financial Digital Assets Are Currency Available?

The development of the fintech and decentralized finance industries has exploded in recent years, with the total transaction value of digital payments moving from $4.1 trillion in 2019 to an incredible $5.2 trillion in 2020. This was only the beginning for these industries, with digital assets increasing in value every single year.

Due to the continuous influx of capital into these markets, traditional financial institutions are feeling the pressure. 88% of financial institutions predict that they will lose a portion of their business to fintech solutions over the coming years, demonstrating the extent to which these industries are making waves.

Instead of traditional streams of acquiring assets, like investing in the stock exchange or in real estate, investors are turning to:

  • NFTs
  • Cryptocurrency trading and staking
  • The Metaverse
  • Digital asset management platforms

Let’s break these down further.

NFTs

An acronym which stands for Non-Fungible Tokens, NFTs are digital assets ranging from GIFs and digital art to in-game items and digital trading cards. These assets have taken the world by storm in recent months, having passed a total value of $40 billion USD. Many people around the world are turning to this digital medium to expand their portfolio into a new stream, achieving even further diversification.

By using an NFT exchange platform like OpenSea, a user is able to buy an NFT that they find interesting. From there, they’ll be able to hold it and sell it at a later date, hoping that it goes up in value. Additionally, depending on the format of the NFT you’ve bought, you could also rent it out to other people, generating yourself a passive income over time. This is especially true within NFT gaming, where many people will rent out powerful in-game items for money online. 

If you’re particularly talented at creating – or even if you’re not, judging by some of the NFTs being sold – you’ll also be able to start to mint and to sell your very own NFTs. These can be sold on NFT marketplaces to generate an income from their sales. 

Cryptocurrency Trading and Staking

Two forms of digital asset accumulation that have become incredibly popular online are cryptocurrency trading and staking. Currently, there is about $3 trillion in cryptocurrency, demonstrating the extreme reach that this digital asset has created for itself. On major cryptocurrency exchanges, users are able to trade their own currency for any crypto they desire.

The plan with trading, just like with stock trading, is to buy the crypto when it’s at a low price and then sell when it’s at a considerably higher price.

While this is a traditional method of trading digital assets, cryptocurrency staking has also become a very popular medium. Many cryptocurrencies require transactions to be verified to then become processed and locked into the blockchain. Users can stake their cryptocurrency, essentially locking it away for extended periods of time in order to help with this verification process.

Users will then earn a passive income from their cryptocurrency, gaining anywhere from 5-20% per year in returns. With the hype around creating passive income streams, this has become an incredibly popular method of growing digital assets online.

The Metaverse

Perhaps the most off-the-cuff of the methods selected on the list, investing in Metaverse real estate is also a method that investors are turning to. Recently, a user even spent $450,000 to buy a virtual plot of land next to where the famous rapper Snoop Dogg had bought a plot for his virtual house.

Over the last few months, plots of land in the Metaverse have soared as much as 500%, demonstrating the hyper that is starting to pick up steam around the Metaverse. Users are able to buy real estate plots of land in the Metaverse with the hope that their value goes up and that they can be sold at a later date.

While this is a method of growing your digital assets, it’s definitely one to be a little wary of as the Metaverse is still a very new concept and could very easily be just hype.

Asset Management Leverage Platforms

One of the largest barriers that stop people from investing in cryptocurrency is the fairly high knowledge base that needs to be acquired by a user before they feel comfortable trading in this market. While the most direct solution would be to spend time researching cryptocurrency markets, pairs, and leverages, innovative new asset management platforms are arising to help users enter the market.

An example of said digital asset management platform is HyperDex, a DeFi platform that allows anyone – despite their background knowledge – to invest in digital assets. This robust platform pushes user-friendly investing to the max, offering three ‘cubes’ for investors to select from.

Each of these cubes offers a different type of trading, giving way to different strategies, distinct returns predictions, and unique ways of investing your capital. As a beginner investor, you’ll be able to read about which strategy is used by which cube, allowing you to then invest based on the risk you’re willing to take.

Due to many investors entering into these cubes, the application provides a more stable form of trading than is achieved when investing alone. Additionally, by using these pre-set systems, an investor is able to make the whole process of investing in cryptocurrency completely passive.

If you’re looking for one of the easiest ways of investing in digital assets that don’t require much pre-learning, then HyperDex could be the platform for you.

Final Thoughts

When looking to invest, the modern investor has infinitely more options to choose from than the typical stock exchange user of 20 years ago. In fact, the rise of digital assets has made the investing space much more complicated, but also much more lucrative. 

From NFTs to leveraging cryptocurrency with blockchain systems, there is a vast avenue of potential digital assets to pursue. If you’re looking to diversify your portfolio and take a step into digital assets, then one of the options on this list is likely to be the best bet for your investing journey. 

Not only will you be diversifying your portfolio, but you’ll be expanding into an exciting new market that has seen, and is seeing, incredible growth.