Cryptocurrency and digital asset are used interchangeably although not all digital assets are crypto.
What is Cryptocurrency?
Cryptocurrency is a digital currency built on blockchain technology; transactions are traceable and verifiable in real time on decentralized exchanges. Compared to fiat currencies, it is not controlled by central bank of any nation.
What is Digital Asset?
Things that exist in digital format with exclusive rights of usage can be termed digital asset. Examples of digital assets are websites, documents, spreadsheets, cryptocurrencies, NFTs, content in audio and videos.
Types of Cryptocurrency and Digital Assets on Blockchain
Though there are two distinct types of cryptocurrency- The Bitcoin and altcoins; altcoins are other cryptocurrencies that are not Bitcoin; there are 5 categories of digital assets on blockchain.
- Security Token: Security tokens are monetary instruments that reflect a stake in an asset’s ownership. It is an accessory tool called used to access a resource that is electronically controlled. IMPT, Meta music token, Advanced Robotics, ParkinGo are unique STOs.
- Non Fungible Token (NFT): NFTs are tokenized physical asset. In order to differentiate them from other tokens, they are given identification codes and metadata. For example, photography; music; real estate property and rights are issued as NFTs. For instance the JPGold Coin gold certificate is issued as NFT, this means holders can trade their gold an/or exchange it for physical gold.
- Central Bank Digital Currencies (CBDCs): These are digital currencies issued by a country’s central bank however most of it is not built on blockchain for example eNaira.
- Stablecoins: Stablecoin is a cryptocurrency whose value is designed to be linked to a reference asset, which may be fiat money, exchange-traded commodities, or another cryptocurrency. Although there are several stablecoins such as USDT, USDC, BUSD, SOL, BNB etc.. all stablecoins are in three categories- Fiat-Collateralized Stablecoins; Crypto-Collateralized Stablecoins; and Algorithmic Stablecoins.
- Crypto: Cryptocurrency is a type of digital money that uses encryption techniques to function as an alternate payment mechanism. Due to the use of blockchain technology, cryptocurrencies function as a virtual accounting system. Transactions are transparent and immutable therefore challenging the status quo of fiat currencies.
The gold and JPGC tokens both digital assets. While the gold value increase is assured since it is issued at $10 lower than market price of gold and can be traded on OpenSea, the JPGC is volatile. However, the JPGC will be use for gaming while the gold NFT certificate Defi is lending and collateral.