Demystifying Crypto, NFT's & Tokens
So, what are Digital Assets?
Think of them as valuable items that exist solely in the digital realm. Imagine owning a unique digital artwork or a rare in-game item - these can be considered digital assets.
They are secured with the help of blockchain technology, a secure and transparent digital ledger that acts like a giant record book.
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Broad category: Digital assets encompass any digital representation of value.
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Examples: This includes cryptocurrencies, digital art, music, and even in-game items.
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Key features: They are tradable, verifiable, and often secured using cryptography.
What is crypto?
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Crypto specifically refers to cryptocurrencies like Bitcoin. They use cryptography (a complex form of coding) to:
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Operate without the need for central banks or institutions.
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Offer transparency and immutability (transactions can't be altered).
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Secure transactions and prevent counterfeiting.
Why are People Interested in Digital Assets and Crypto?
Innovation
Bitcoin created a different type of payment network with an increased level of resilience and redundancy. It can handle millions of dollars in trades without requiring military protection.
Attacking the network is difficult, with no central point of failure, such as a data centre.
Real World Utility
Real-world utility continues to differentiate between cryptos with futures and those without. The crypto winter put an end to rampant speculation and forced crypto projects to focus much more on real-world use cases.
Global Currency
It's a universal currency that holds the same value no matter which country it's used in. Let's think about traditional government-issued currencies for a moment. The paper bills you might have in your wallet right now can only be used in specific countries. By design, these fiat currencies are not borderless.
Dentralization
No single person or group has control—instead, all users collectively retain control. Decentralized blockchains are immutable, which means that the data entered is irreversible. For Bitcoin, transactions are permanently recorded and viewable to anyone.
Questions to consider before investing:
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Do you understand the specific digital asset you're considering?
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Are you comfortable with the potential for high volatility?
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Have you conducted your own research and consulted with a financial professional?
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Digital assets and crypto are still evolving, and regulations are constantly changing.
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Do your own research before investing in any digital asset.
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Beware of scams and only invest what you can afford to lose.
I'm not a financial advisor, and this is not financial advice.