The Outlook of Digital Assets
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The role of digital assets in today's financial climate can no longer be ignored. Although the International Monetary Fund (IMF) warns of their potential risks, it stated in a research note that digital assets are now mainstream and should no longer be considered a fringe asset class in the financial sector. It’s not just the IMF either, as countries like Singapore, Russia, and more are deterred by the lack of definition. However, as the asset class continues to become more pervasive, all players in the financial market, including proponents and cynics, can see the influence digital assets have in the industry.
A digital asset is a virtual representation of value with unique identifiers and use cases. Digital assets exist on several different platforms and are usable as mediums of exchange, stores of value, or more. In today's financial market, digital assets are available in different categories, each one with unique features and varying legal and financial implications.
The major difference between native and fiat-based options is the presence of fiat-based collateral. Native currencies generally do not have an asset backing their value, while fiat-based tokens have their value clearly pegged to another asset. For instance, USDT and BUSD are examples of cryptocurrencies with values pegged to the US dollar. Also called stablecoins, fiat-based cryptocurrencies are not volatile and only fluctuate based on the value of the underlying fiat collateral.
On the other hand, native cryptocurrencies have no fiat backing and are available to the general public via decentralized blockchains. Native cryptocurrencies can be very
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