Digital Assets in 2024: Understanding Blockchain Benefits and Asset Categories
The digital asset ecosystem has experienced substantial growth in recent years, and we anticipate that this trend will persist with vigor in the coming years. This optimism is underpinned by two key factors:
This year, companies are actively innovating and implementing new technologies and protocols within blockchain environments. From our perspective, this surge in activity parallels the early days of internet protocol development. Notably, developer engagement in these technologies surpasses that of other open-source programming environments.
Secondly, digital assets, which serve as the economic backbone of these blockchain-based development platforms, are gaining increasing acceptance within investors' portfolios, alongside traditional assets like equities and credit-related investments, both in public and private markets.
Exploring Cryptocurrencies: Volatility vs. Blockchain Advantages
We have conducted a thorough assessment of the long-term potential of blockchain technology and its transformative impact on asset management operations. We firmly believe that it will serve as a foundational technology in the financial services industry, particularly in managing vast volumes of data records. With this foundational understanding, we recognize the versatile applicability of blockchain technology across various industries and global business endeavors. In our view, blockchain technology adoption will emerge as a prominent theme that investors will increasingly focus on in the years ahead.
In the coming 12 months, we anticipate three significant developments within the digital asset sector:
1. Regulatory measures are poised to progress as policymakers aim to safeguard consumers of digital assets and foster the productivity and efficiencies associated with their deployment. Notably, the United States is expected to take significant strides in clarifying its regulatory framework, albeit lagging behind other global regulators in encouraging exploration and development of these technologies.
2. During periods of sluggish economic growth, business leaders often turn to innovation and technology as competitive tools while awaiting more favorable revenue-generating conditions. Given the presence of various global macroeconomic constraints constraining overall growth, we foresee a heightened pace of development and deployment of blockchain technology in the next 12 months. This represents one of several strategic investments that businesses will make to enhance efficiency.
In the coming year 2024, we anticipate a surge in education and awareness regarding the advantages of blockchain technology compared to the price volatility seen in various digital assets.
Emerging Asset Categories: Blockchain-Powered Innovations
Our perspective categorizes digital assets into three primary groups:
1. Native tokens, which serve as the backbone of blockchain "tokenomics" and are commonly known as cryptocurrencies. These assets have exhibited significant price fluctuations in the evolving landscape.
2. The second category comprises assets developed on existing blockchain infrastructure by various firms. We foresee substantial growth in this category, encompassing traditional financial instruments utilizing blockchain technology and novel assets emerging from metaverse and virtual environment advancements. It's crucial to distinguish this category from the first when exploring the digital asset landscape.
3. The third category encompasses central bank digital currencies (CBDCs), which governments are developing to replace conventional monetary systems worldwide. Currently, progress in this area remains limited.
Central Bank Digital Currencies (CBDCs): The Future of Monetary Systems
Are CBDCs the same as cryptocurrencies? No, CBDCs are different from cryptocurrencies as they are issued and regulated by central banks, while cryptocurrencies are decentralized and independent.
How will CBDCs impact traditional banking? The introduction of CBDCs may prompt traditional banks to adapt to the changing landscape by offering new services and products.
What are the security measures in place for CBDCs? CBDCs are designed with robust security features and encryption to ensure the safety of transactions.
Will CBDCs replace physical cash entirely? While CBDCs may reduce the use of physical cash, it's unlikely that they will replace it entirely in the near future.
How can I access CBDCs? Access to CBDCs will likely be provided through digital wallets and financial institutions once they are officially launched.
In our view, digital assets are on the brink of maturing significantly. This evolution will unveil the benefits and opportunities that investors can tactically harness to pursue their long-term investment objectives.