What Are Virtual Assets? 4 Things You Need to Know

Are you hearing a lot about virtual assets and wondering what they are? Do you want to understand more before you invest?

The total value of the cryptocurrency virtual asset market is more than 3 trillion US dollars. This is a deregulated space, so it’s essential to know how to keep your assets safe.

Money as we know it isn’t the only way to become rich. Virtual assets are another way to grow your investment portfolio. Here are four tips to help you understand them.

What Is a Virtual Asset?

A virtual asset is something of value represented digitally. These assets include virtual currencies such as Bitcoin or Litecoin.  Altcoins or utility tokens, such as Ether (ETH), are also considered virtual assets.

Virtual asset management should focus on asset security because the crypto space doesn’t rely on third-party regulations. As the investor, it’s up to you to securely record and store your keys and passwords.

Examples of Virtual Assets

Virtual financial assets include coins and tokens. Coins include Bitcoins and Altcoins. a term which came from ‘alternative coin,’ or an alternative to Bitcoin.

Coins take a long time to create or mine, and they are usually capped or limited in quantity. The scarcity factor makes them more valuable.

Tokens are not digital money in the same way as a coin. Programmers create them on a blockchain, and they usually aren’t limited in quantity or capped. A token has value, and you can trade or exchange it.

More About Tokens

There are three main types of tokens:

  1. Value tokens
  2. Utility tokens
  3. Security tokens

Value tokens store the value of a specific use on their own blockchain.

Security tokens have a value that represents a digital program on a specific blockchain. They can represent a share of a digital contract that gives ownership of a tangible asset to the holder of the token.

Software applications used to record ownership or track products use utility tokens. The utility token might allow access or establish ownership of assets outside of their specific blockchain. Utility tokens function in smart contracts.

An example of a popular token is Enjin (ENJ). Enjin is an Ethereum token. Its primary function is to help people use NFTs (non-fungible tokens). ENJ has plans to enable carbon-neutral NFTs in 10 years.

Users create new NFTs on the Enjin platform, and a bit of ENJ goes into the NFT, giving it built-in value.

Find the Enjin coin price here.

Are NFTs Considered Virtual Assets?

There’s a lot of discussion about this question. Most people consider them virtual assets because they are digital, have value, and are not tangible.

The Financial Action Task Force focuses on global money laundering. They do not consider most NFTs to be virtual assets. If the NFT is a collectible rather than a payment or investment, they are not a virtual asset.

If the NFT is an investment, it might be a virtual asset. The jury is still out on this matter.

Understand Before You Invest

When you take the time to learn about virtual assets, you’ll be more comfortable deciding to add them to your investment portfolio.

Did you find this article helpful? If so, be sure to use the simple search feature to check out more proactive ways to learn about virtual assets.