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What are Crypto Assets?
Crypto assets are purely digital assets that use public ledgers over the internet to prove ownership. They use cryptography, peer-to-peer networks and a distributed ledger technology (DLT) – such as blockchain – to create, verify and secure transactions. They can have different functions and characteristics: they may be used as a medium of exchange; a way to store value; or for other business purposes. Crypto assets generally operate independently of a central bank, central authority or government.
A distributed ledger is a type of database that stores electronic records shared and replicated across many locations and maintained by members of this decentralized network. Each new transaction must be agreed upon by all members of the network before it is added to the ledger. Blockchain is one type of distributed ledger that arranges the data in chunks and chains them together. This unique way of structuring data gives blockchain transactions additional security as they are irreversible. Blockchains can be used to store many types of data but have recently become popular for their use of storing cryptocurrency transaction history.
Some of the more common types of crypto assets you may encounter are:
Cryptocurrency Utility Tokens Security Tokens Non-Fungible Tokens
Cryptocurrency (or virtual currency) is likely the most well-known type of crypto asset. Cryptocurrency is a digital currency or medium of exchange. It can be used:
* To exchange for products or services, like fiat currency (such as Canadian dollars or US dollars)
* For speculative purposes, such as trading on a crypto asset trading platform (CTP)
* As a store of value