But there are numerous kinds of digital assets that you can invest in. If you wish to know what these are and get started on investing in digital assets, here are some of the best options available:
1. Cryptocurrencies
If you’ve searched digital assets before, chances are crypto is the first kind of digital asset investment option that you’ll see. A growingly popular digital asset, cryptocurrencies are digital currencies that natively exist on a blockchain.
The main reason why others like crypto is because it’s decentralized, meaning its value isn’t controlled by any institution such as banks or the government. Instead, its value is influenced by its investors’ perceptions.
Known for their volatile pricing, others often trade or invest in cryptocurrencies to profit from it. Another way others profit from this is by swapping such as an SOL or Solana swap wherein, they trade one crypto for another. You may compare this to exchanging one fiat currency for another.
2. Digital Tokens
In discussing digital tokens, it’s worth noting that this shouldn’t be confused with cryptocurrency as crypto is a native asset of a blockchain while tokens are built on existing ones. With that out of the way, digital tokens are also a currency much like crypto but their behaviors are influenced by the implementation of smart contracts. These smart contracts would tally the number of units being transferred between accounts.
One way individuals also generate earnings with digital tokens is by staking such as Solana staking wherein, they assign a certain amount of token to a validator, increasing its voting weight. Consequently, they get rewards from this.
Subsequently, you may have heard of the three popular kinds of digital tokens: NFTs, security tokens, and utility tokens.
Unlike cryptocurrency whose value is fungible such as one Bitcoin is equal to one SOL, non-fungible tokens have a distinctive value. This means it can’t be replaced as it’s the only one of its unique kind. For instance, if you trade your digital painting for another person’s game, it won’t be the same thing.
NFTs are often used as a digital representation of physical assets wherein if you own the NFT for the asset, then it’s yours. Recently, NFTs are used for investing in digital art wherein while it can easily be copied, owning the NFT for the artwork means owning the original copy.
Security tokens or securities tokens on the other hand are often offered as a type of investment – a share in a company. Its name is derived from the securities offering that it’s tied to. In investing in security tokens, your money is tied to the value of the company. Consequently, you become a very important shareholder of the business you choose to put your money in because of this.
Utility Tokens on the other hand are often offered as an ICO or initial coin offering. Unlike security tokens, you don’t gain partial ownership of the company but instead access to special services. They often function as an investment only when what the token represents grows in value.
Conclusion
Digital asset investment has now been dubbed as a modern way to invest as the world becomes more digital. This is also because by using blockchain, digital investors now have a way to gain assets that are usually safe from economic disasters and just overall theft and fraudulent activity. Furthermore, you may also consider investing in digital assets to simply diversify your investment portfolio.
With that said, digital asset investment is certainly worth considering for its security and worth. With the list above, hopefully, you now know some of the best kinds to invest in, along with the appropriate toolsets to have ready.
