Digital assets are items that exist, can be owned, and are used in a digital format. They can be bought, sold, and traded like any other asset. Their value can increase or decrease just like physical assets, but they exist and can be accessed through the internet or specialized digital platforms.
In simple terms - Digital assets are things that exist in a digital form and include the ‘ right or ability of use.’
Digital files, online accounts, and virtual currencies are all examples of digital assets.
Why is getting a better understanding of what digital assets represent when trying to get a grasp on what cryptocurrencies are?
Because cryptocurrencies are a type of digital asset that uses encryption algorithms for security and is decentralized, meaning no governments or financial institutions control them. They are created through a process called mining, which involves using specialized computer hardware to solve complex mathematical problems. Mining is important because it ensures that the cryptocurrency's network remains decentralized, meaning that any one person or organization does not control it.
In simple terms - Cryptocurrency is a class of digital assets created using encryption algorithms that enable people to buy, sell, or trade.
Transactions using cryptocurrencies are anonymous and secured through the use of complex codes called blockchains. This is what makes cryptocurrencies like Bitcoin and Ethereum so appealing, as they offer a secure and decentralized way to transfer value.