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What Are Digital Assets?

August 22, 2022

Learn what digital assets are, why we use them, and why they’re important. Fun Fact: Digital assets are evolving as you read this.

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Digital assets are the lifeblood of today’s technological world.

We interact with them every time we use a modern device. What is a digital asset? A digital asset is simply just a file. Not that important, right? Well, no. Files can contain data such as text, images, videos, music, software, games, and this list goes on.

Digital assets make it possible for intelligent ecosystems to function, such as social media, instant messaging, file sharing, and modern finance.

The internet would be nothing without digital assets. Today, they’re even more unique, thanks to blockchain technology.

Contents

Digital Asset Examples

Media Content: Images, spreadsheets, PDFs, audio, video, slide shows, presentations, documents, and zip files. These assets can be stored on user devices and be easily transferred between users through the web or internet.

3D Content: These are files containing the instructions of polygonal shapes to visually display a 3D item. 3D content can be humans, objects, pets, environments, landscapes, or anything with 2D/3D architecture. As 3D files are literally polygonal instructions, websites, games, and apps know how to interpret the instructions to display and interact with them.

Domain Names: They are essentially identifiable names that are associated with a web files (mostly HTML or PHP files). Domain names are independent of hosting sites so they can be auctioned, sold, and transferred to change ownership.

Blockchain: A blockchain is a database that stores transactions in the form of a file. In other words, a blockchain is a digital asset. The application of a blockchain allows us to send and receive money or data in a convenient way. Bitcoin and other crypto currencies are classed as digital assets too.

Smart contracts: They’re another unique type of digital asset. In essence, they’re self-fulfilling contracts that run automatically on the blockchain. A popular example would be stablecoins. It’s a contract that algorithmically inflates or deflates its supply to keep the price stable. Another example is a DeFi protocol – these are self-executing programs that autonomously solve issues in the financial sector.

But now, blockchain’s advancement has led to the invention of NFTs (non-fungible tokens), better described as digital files with a built-in foolproof way of verifying ownership – due to their historical ownership record being published on the blockchain.

NFTs Are The New Digital Assets

NFTs are the most convenient way of digitizing assets because it has a framework capable of keeping assets secure and recognizable. Someone can identify and verify an asset by checking the address and seeing when it was minted. Duplication is a significant issue with digital assets, and NFT technology presents the ideal solution to counter this.

Also, once a digital asset becomes listed on a website, it becomes vulnerable to duplication and exposure. On the other hand, NFTs still maintain their independence as owners aren’t required to relinquish their private keys.

Within NFTs is metadata to define it and establish its properties. For example, NFTs may contain a title, description, image URL, and properties about the NFT, such as height, width, depth, etc. While NFT ownership can’t be edited, the creators can update NFT metadata if the policy isn’t locked.

Metadata is the gateway between NFTs and large files.

Because storing files on the blockchain is difficult, files have to either be stored on a centralized or decentralized storage solution and then linked to the NFT through its metadata – this allows NFTs to store movies, games, 3D content, and other types of media.

A major benefit of NFTs using metadata to store content is that ownership of assets can be transferred quickly. Large files often take time to send and download, especially when it's hundreds of gigabytes or terabytes.

Aside from NFT’s ability to encapsulate digital assets and store small to large files, they can be transferred from one party to another without 3rd party intervention. Traditional digital assets lack this feature, which requires them to use an intermediary to make the transfer. Digital assets can be compromised in the event of a middleman service being compromised.

NFTs have the capability of generating yield too!

They can be staked into a pool to earn a share of tokens. Think of it as proof of stake, but using NFTs instead of the native cryptocurrency to reap the rewards. Generating yield on NFTs incentivizes people to hold them.

How Are Digital Assets Bought, Sold, and Held?

This can be divided into two sections: Traditional and Blockchain.

Traditional Methods:

Blockchain Methods:

Blockchain’s Impact on Digital Assets

Without a doubt, blockchain changes the way we see and use digital assets. Just being able to yield farm digital assets through NFTs and democratize real assets into fractional NFTs invites a world of new use cases for digital assets.

Blockchain enhances digital asset protection and sovereignty, makes them more accessible, and provides a financialization aspect.

The success of blockchain’s intervention in digital assets could make it a necessary dependency in the near future.

As of now, we appear to be in a transitionary and experimental period where blockchain-based digital assets are stress-tested to see what works and what doesn’t.

To Wrap Up…

Digital assets are an essential part of our world. They are vital pieces required to make the systems we use meaningful. Their ability to retain and transfer value across the internet is priceless.

In due time, we’ll see blockchain’s influence on them and more elaborate ecosystems we thought weren’t possible.

FAQ - Frequently Asked Questions

Digital asset definition?

A digital asset is a file that contains data such as a document, text file, audio, tv-show, or 3D object. It’s literally anything that can be stored and retrieved based on its uniqueness.

Is crypto a digital asset?

Yes — its functionality proves to be a digital asset. A blockchain ledger is a digital asset too. Crypto assets are generally classed under web3 assets.

How can I buy digital assets?

Depending on what you’re looking for, you can find digital assets on marketplaces and exchanges. If you’re interested in buying digitized real-world assets, Jupiter Exchange is your destination.