Digital assets are gaining popularity in the current era of technology. But what exactly are digital assets? This simple guide will explore basic digital asset concepts, touching on convertible virtual currencies, stablecoins, and non-fungible tokens (NFTs).
Convertible Virtual Currency and Cryptocurrency
Cryptocurrencies are digital assets that use cryptography to secure transactions and control the creation of new units. They are, in essence, digital or virtual currencies. Bitcoin, Ethereum, and Litecoin are examples of this type of convertible virtual currency. What makes these cryptocurrencies attractive is their ability to facilitate owners’ making secure and anonymous transactions without needing an intermediary, such as a bank or government.
Stablecoin
Stablecoins are another type of digital asset. Like cryptocurrencies, they are digital currencies but with a slight modification. These digital currencies are pegged to a stable asset like gold or the US dollar to reduce their volatility. Tether, US Coin, and DAI are examples of Stablecoins. The underlying idea behind Stablecoins is to provide a conventional currency’s stability but with a cryptocurrency’s transparency and security. This makes Stablecoins an attractive option for those who want to avoid extreme market volatility associated with other cryptocurrencies.
Non-Fungible Tokens (NFTs)
Non-fungible tokens, or NFTs, are a unique type of digital asset. Unlike fungible cryptocurrencies, which can be exchanged equally, NFTs are unique and cannot be exchanged at par. This means that each NFT has a different value and cannot be replaced by another. The uniqueness of NFTs has led to their use in digital art and collectibles, creating a booming market for digital artists and collectors.
Need Advice on Digital Assets?
The world of digital assets can indeed be complicated and overwhelming. But you don’t have to navigate it alone. If you have any questions about digital assets or need advice on how digital assets are taxable in the United States, do not hesitate to reach out. I’m here to help you understand and get the most out of digital assets. For more information, visit our
website:
www.wiligent.com
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