Have you ever been curious about the mechanics of a stablecoin or wanted to know how tokenized assets compared to nft?
Today we are going to explore the crypto arena and look at each asset class within the entire space. This page is likely to expand as new technologies and asset classes emerge, so keep checking back.
Cryptocurrencies:
Bitcoin, Ethereum, Xrp, Cardano are considered cryptocurrency.
A cryptocurrency is a form of money that is not controlled by any country. Cryptocurrency is a subset of digital currencies that uses cryptography to secure transactions. Cryptography is the process of sending and receiving information in secret code, done by way of solving algorithms to encrypt or decrypt data. Encryption is transforming information into a form unreadable to anyone except those possessing special knowledge, usually referred as “keys”.
The cryptocurrency sphere began with Bitcoin; its issuance is securely managed through cryptography. Transactions are recorded on distributed ledgers called blockchains which consist of linked list-like data structures. Each cryptocurrency has its own blockchain which records all transactions under it using public/private key pairs for security purposes. The history of all transactions are available online but personal identity attached to each specific transaction.
The cryptocurrency prices can go up or down based on supply and demand.
The most prominent coins have a finite supply, which means the cryptocurrency will run out at a certain point in time causing their price to increase relative to their scarcity. Cryptocurrency wallets are used for sending and receiving cryptocurrency payments.
Cryptocurrency exchange rate fluctuations are frequent. These fluctuations make cryptocurrency less attractive for users, who want to use cryptocurrency as a means of payment or looking for a reliable investment.
Stablecoin:
One way to solve this value fluctuation problem is by using a stable cryptocurrency, or stablecoin. A cryptocurrency whose price is pegged to a specific object or platform is called a stablecoin and can hold its value despite market fluctuations.
There are two forms of cryptocurrency stability: crypto assets which are based on external fiat currencies; cryptocurrency whose price is pegged to commodities like gold.
Ex: Tether (USDT) and USDC, which has its value pegged to US dollar at 1:1 ratio.
Commodity-backed cryptocurrency: A cryptocurrency whose price is tied to a physical commodity like gold or oil. There are now dozens of coin projects backed with real gold stored in an audited vault.
DeFi:
DeFi companies are on the rise with cryptocurrency technology disrupting traditional banking systems.
“Decentralized finance” applications are open-source, trustless platforms that have revolutionized the banking industry. You may now conduct business internationally and without border restrictions, removing pesky intermediaries and unnecessary expenses.
These DeFi services allow users to borrow money directly from cryptocurrency holders without the need for banks or other trusted third-party institutions.
This can be achieved by using cryptocurrency loans, cryptocurrency credit cards, cryptocurrency mortgages and cryptocurrency retirement plans.
DeFi can be divided into decentralized exchanges (DEXs), stablecoin protocols, margin lending and derivatives, cryptocurrency credit lending, payment services/money transfer protocols and more, all operating on cryptocurrency rails outside the traditional banking sector.
Nft:
Not only have we seen cryptocurrencies like bitcoin and ethereum reach all time high prices in 2021, we saw nft’s explode in value and popularity.
Nft stands for non fungible tokens and they are tokens with unique properties and values. Nft’s can represent real-world assets, such as items in games or a digital piece of art.
They are used for tracking digital ownership for multiple purposes; some nft projects allow their users to use nft’s as currency or a ticket to access a special show or event.
NFTs are changing the way we think about ownership, allowing for more secure digital ownership standards. Kevin O’leary, a well known watch collector has ambitious goals to leverage nft technology to catalog expensive watches to prevent counterfeit items entering into the marketplace.
These standards are expected to increase as time goes and further innovation occurs using nft technology. nft has made owning digital items possible without the need for a centralized authority or bank, allowing you to own your nft’s free from third-party risk. nft tokens are solving real world problems through blockchain technology and cryptography.
NFTs give people more control over their data, assets, art and creativity since they don’t have to rely on traditional banking systems who require one’s information to be stored privately by said institution. nft allows its users to access nft services without giving away their private keys if they choose not to do so, making nft companies fully decentralized in nature where there is no central entity controlling an individual’s data or assets.
Tokenized and fractionalized shared assets and securities:
If you thought nfts were wild, wait until you wrap your head around the future of tokenized assets.
Real estate, art, cards, collectibles etc, are tokenized through tokenization. Tokenization is the process where real-world assets are transformed into digital tokens that can be freely traded on decentralized exchanges.
One company expanding quickly in the tokenized art space is Masterworks, which buys authenticated works of art and sells shares of of ownership that can be sold or transferred at leisure.
You could potentially own 0.2% of an art piece through tokenizing it, or 10% or 20%. You could even sell off your digital tokens within seconds without having to go through brokers and purchase fractions of stocks like tesla, apple etc…
Now let’s see how far this can really go
Tokenization of real-world assets has created the door way for Artificial Intelligence (AI) and robotic process automation (RPA).
Artificial intelligence allows for robots to create digital art pieces with AI algorithms to tokenize themselves. Now let that sink in for a second; robots tokenizing themselves into an nft, giving them the ability to tokenize other robots in tokenized shares.
It’s truly mind-boggling.
Wrapping up
Cryptocurrency is solving some of the world’s biggest problems and leveling the playing field for billions of people that didn’t have access to basic banking. Nft’s have made ownership of digital items possible without a centralized authority or bank, allowing one to own property and transact free from third party risk. These technologies enable people to control their money, data, assets and ownership.
Cryptocurrency is empowering the individual and in the process, cryptocurrency and cryptocurrency tokens are changing the world we live in.