The definition of crypto assets has changed significantly over the past decade. Assets are commonly used as an investment that can provide an economic benefit in the future, and crypto assets work similarly.
An estimated 106 million people worldwide have already bought their shares in bitcoins, per a survey conducted in 2021, and 22% of them are Americans. Crypto investment is becoming very important, and everyone should have a basic understanding of it.
The main point here is to understand what these crypto assets are and the different types of crypto assets that exist. What are some of the crucial advantages of crypto assets that make investing appealing?
And speaking of crypto trust, it is optional but essential since estate planning laws have not caught up to digital assets. Crypto trust will ensure that your cryptocurrency investment stays secure and that your loved ones do not have to face any problems. Let us delve deeper for a better understanding of crypto assets and crypto trust.
What are Crypto Assets?
Crypto assets are digital assets. The crucial thing to note here is that not all digital assets are crypto assets, only the ones that use cryptography are. Many people get confused because of this. Crypto assets use public ledgers over the internet to prove ownership.
Because crypto investing has had such a big boom in the past couple of years, it is safe to say that many people have started investing in cryptocurrency. And digital investments like NFTs, bitcoins, security tokens, utility tokens, etc, are Crypto assets.
Crypto assets are transferable and can also be stored or traded electronically without needing a third party such as the government, because crypto follows a decentralized system. And because cryptocurrency is decentralized, many people have bought into it because it is an excellent way to capitalize and maximize profits for those who have invested.
Some are investing in cryptocurrency because they have complete control over their digital assets, as it is not in regulation by the government, banks, or any central authority. However, if your assets get stolen, no one is responsible for helping you get them back.
Also, since 1 in 10 people in the USA is investing in crypto assets, according to CNBC, not everyone who is investing thinks about protecting their crypto assets using a crypto Trust.
Different Types Of Crypto Assets
Realistically, there are thousands of different types of crypto assets out there. Cryptocurrencies are one of the many crypto assets, but we will discuss the difference later. Let’s focus on how many types of crypto assets there are in a brief and generalized way.
Cryptocurrency is a digital currency that is not reliant on any authority, such as a bank or government. It is a decentralized digital currency. Bitcoin is the first decentralized cryptocurrency to come into existence.
Their value depends only on the market’s supply and demand because they have no inherent value. Some types of cryptocurrency are Bitcoin and Ether, arguably some of the best cryptocurrency to invest in.
Non-Fungible Tokens (NFTs)
Non-Fungible Tokens are unique cryptographic tokens on a blockchain that cannot be replicated. They have unique identification and metadata, which differentiate them from other NFTs. On the other hand, Cryptocurrencies are fungible.
NFTs can also be used to represent real-world items. And because these cannot be replicated, NFTs are primarily used to represent collectibles. NFTs are generally secure, as the distributed nature of the blockchain makes it harder to hack.
Security tokens are often confused with digital assets cryptocurrency such as Bitcoin or Ether because of how similar they are in their nature. However, the crucial difference is in the usage of both of them.
Security Tokens are digital assets created to represent transferred ownership rights or an asset value to a blockchain token. Unlike cryptocurrency, which is used as money, a security token is intended to be used as an investment, like cryptocurrency stocks, bonds, or certificates.
Why Protecting Crypto Assets Is Important?
After investing in cryptocurrency, you are now a digital asset investor, holding important crypto assets that must be protected. Keeping Crypto Investment safe and secure is a must. And because of the many advantages of crypto assets, hackers tend to target people who have highly invested in crypto to steal their assets.
Black hat hackers use “brute force attacks” to get into wallets where your digital assets like cryptocurrency are stored, and the number of these attacks is increasing daily. As the blockchain technology behind crypto keeps developing to make it secure, hackers are also improving their methods to get inside your wallets to steal your crypto assets, and then disappear into the void that is the internet.
One of the best ways to protect your digital asset investment or crypto assets is to keep them in Cold Storage. It could be like a hard drive or a USB that does not have any access to the internet, preserving it like a physical asset.
Difference Between Crypto Assets And Crypto Currencies
Now coming to an essential question, What exactly is the difference between Crypto Assets and Cryptocurrencies? Simply put, cryptocurrency is a subset of crypto assets, and crypto assets are a subset of digital assets that a person, company, or organization can hold.
As mentioned above, Crypto Assets can be of many kinds, like Fungible or Non-Fungible Tokens, Security Tokens, and much more, along with Cryptocurrencies. However, Cryptocurrencies are a decentralized digital currency that you can use to make transactions that are private, protected, and in some cases, claimed to be anonymous as well.
On top of that, your cryptocurrencies can also be put under a crypto trust, an optimal way for protecting your crypto assets.
What Is Cryptocurrency Trust?
A trust is a fiduciary agreement between the trustor, the trustee, and the beneficiary, and the Crypto trust handles your crypto assets so that it can avoid probate. This is one of the critical benefits of a trust, as probate courts can take several months or even years to pass digital assets like cryptocurrency to your loved ones.
Putting your cryptocurrency assets into a crypto trust will be beneficial for your loved ones to access them. Crypto Trust also is very private, only letting the trustee know because when the estate enters probate, the information becomes a part of the public record.
Advantages Of Crypto Assets
Let’s talk about fundamentals here. Why are Crypto Assets so crucial to some people but to some, they are not? The answer to this question is based on the perspective one has. Since everyone is entitled to their own opinion, some believe that crypto assets have advantages that make them a must for investing in cryptocurrency.
There is not just one but many advantages to crypto assets, like transparency, transaction speeds and transaction costs, security, privacy, and so much more. A simple transaction of cryptocurrency can take seconds, maximum a few minutes once the network confirms it.
This transaction speed is also because cryptocurrencies are decentralized, meaning any third party, like a bank, does not handle transfers between two parties. This speed, however, depends on the efficiency of the cryptocurrency involved and can vary compared to other cryptocurrencies.
Crypto assets investments can also generate massive profits. At one point, the cryptocurrency market skyrocketed to almost $2 trillion. In August 2022, the crypto market cap was at $1.06 trillion, and approximately $112 billion is traded in cryptocurrency daily.
DHFs and ETFs: Definitions to Know
Some terms, such as DHFs and Crypto ETF’s, are essential to know as an investor. Here is the crucial information that an investor should know.
Decentralized Hedge Funds
Decentralized Hedge Funds, or short for DHFs, are built on blockchains and are an investment vehicle of funds managed by smart contracts, just like traditional hedge funds. Since these are built on blockchains, investors can view all the transactions as they are entirely transparent.
Exchange Traded Funds
Exchange Traded Funds, short for Crypto ETF’s, are used to track an asset’s prices, which is vital for an investor. ETFs are similar in many ways to Mutual Funds, most of which are passively managed. Crypto ETF’s also have lower operating costs and expense ratios.
Cryptography is still new, only introduced a little over a decade ago. And already, crypto assets are just as important as real-world assets. And because of the many forms of crypto assets, protecting them using Crypto Trust so that your Crypto Investment stays safe is critical.
No doubt, crypto assets are a huge part of some people’s lives. Therefore knowing how to manage them is very crucial. However, a proper understanding of the risks involved is necessary before making a cryptocurrency investment.