You hear all the time about asset classes and investments but has anyone really broken that down for you before?
If this article I'm going to over over a bit of history of asset classes and what asset classes we currently have and wrap it up as to why crypto / blockchain very well should be considered an all new asset class which opens up tons of possibilities.
Equities (Stocks)
This is an area that most people are involved with in some way but often are not actively in it. What I mean by that is most people invest into stocks via their 401ks and not with personal accounts so in a way they invest into stocks but don't really know or understand it.
The general idea here is if you own a stock of a company you essentially own a part of that company. If it does well your asset value goes up, if it does poorly or goes bankrupt you'll lose some or all of your investment into that company.
Fixed Income (Bonds)
Considered the safest investment by main. These bonds come in three core shapes. Government backed (the safest), Corporate bonds (Investments into company's also rather safe but comes with higher risks) and Municipal bonds.
Real Assets
This mainly is physicals and would be Real estate REITS, utilities, oil, gold and agricultural. A great asset class for sure that often has some very lucrative asset growth and dividends. However is highly volatile and risky.
Cash or Cash Equivalents
If you love your FIAT then you have this for sure Treasury Bills, Money market funds CD's.
Alternative Investments
I like to call this the asset group that kind of groups in everything else Hedge Funds, Venture capital Managed futures.
Digital Assets
The world we are starting to live in today Crypto, stablecoins, RWAs, NFTs. This is an area that is growing and its growing rapidly with massive world wide government adoption in order to try and stay ahead of the game in terms of super powers competing.
You see I believe we are already in world war three and have been for a while but this war isn't like world war two instead it's fought with money, electronic and proxy wars. Honestly it's a page right out of the book 1984 and those factions are China, Russia and the USA all battling it out.
Derivatives
Here's where it gets interesting Options, Futures, Swaps.
This last on along with Digital assets is where I believe the future is. I don't believe much value will come from crypto being in RWAs in terms of real estate etc but in terms of derivatives I believe this is the core direction of where crypto will find it's place and in doing so massive amounts of wealth will be generated. It's just a matters of time and predictions are currently putting this at massive adoption within the next 3 -10 years with a strong pressure on the next five as the worlds wars continue to heat up and pressure needs to be put on other countries as they battle for dominance.
That being said Crypto for sure but really blockchain/digital assets is a brand new massive asset class that is still rather small in size and scale compared to what it offers and what it can do with Bitcoin being at the core of it as a store of value.
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Great article. I forsee digital assets as the future and more adoption to happen.. Cheers
I think tokenization not just of physical assets but also of digital assets like IP and media could also be a huge unlock for blockchain networks. For me, RWAs are mostly understood as having the possibility to buy a fraction of a hotel somewhere in Bali, for example, without ever stepping foot at that location. In theory, it looks pretty cool and useful.
Although crypto wasn't an asset when I first encountered it, I now clearly understand that it is a digital asset. In today's world, we need to own and accumulate things in some way. The way to do this while staying as far away from inflation as possible is through crypto.