The term “digital assets” has appeared recently and it is customary to understand it as any electronic resource that is considered valuable. For example, documents, accounts, etc. This article proposes to focus on cryptocurrencies, NFTs and government digital coins, as they are most often referred to in the context of digital assets.
What unites the concepts and what are the differences
Cryptocurrencies, NFT and government digital coins are united by a blockchain – a method of maintaining a register based on cryptographic algorithms, when records are sequentially “cling” to one another. These blocks are called tokens — a kind of accounting unit.
Despite the fact that all these things are based on one method of maintaining the register, further technical characteristics form features that affect the legal status and regulation. Let’s look at the specifics of each one separately.
Cryptocurrency
Since January 1, 2021, the law “On digital financial assets” has come into force, where the concepts of “digital asset” and “cryptocurrency” are clearly distinguished. Previously, they were often correlated and considered complementary, but this is not true.
Now digital currencies belong to property: you can use them to accumulate savings or investments, to impose a foreclosure in the event of bankruptcy. However, the use of bitcoins or altcoins as a means of payment is not possible on the territory of Russia, as well as mutual settlements.
Cryptocurrency cannot be classified as a digital asset, since their supply is limited, there is no provision for a real asset, and the scope of use is limited.
You should also pay attention to this feature of digital currencies: data about accounts and amounts on them are visible to everyone, but an outside observer will not be able to find out who it all belongs to.
NFT
NFT is an abbreviation for “non-fungible token”. If for any reason there is a loss of one bitcoin, then this will not have a significant impact on the network or the exchange rate. But if the NFT is lost, it will be noticed immediately, and there may be a problem.
According to the law mentioned earlier, NFT is not included in the concept of digital assets, but it is often implied. Take a look at the main features:
- tokens are created in a single instance;
- thanks to them, you can keep records of rights to individual electronic and not only objects;
- the NFT itself does not store specific information, but contains signs and facts that point to the object.
The market for non-fungible tokens is developing rapidly, but there is still a lack of legislative consolidation and clarification of the rules for the functioning of the market, areas of application, etc.
Government digital coins
State digital coins are not yet clearly defined, but electronic money is meant to be used as an alternative or supplement to the state currency. Often, the cost is linked to the national exchange rate.
Unlike Bitcoin and other digital currencies, this can legally be used to buy real goods and services directly. In Asia, state digital coins caused quite a stir, and in April 2020-2021, the first news appeared that the national banks of Japan and China began launching and testing state digital coins. Digital assets — an information resource that is accessed in a distributed registry in the form of a unique identifier. They can be inherited and used to make transactions, but many people, due to ignorance, confuse them with cryptocurrencies and NFT. The above information will help you understand the differences.