November 18, 2020

5 Indicators for a Promising Future of Digital Assets

Here at Blocktrade, we firmly believe in the future of digital assets. But don’t take our word for it. Here are 5 strong indicators for the growing adoption and popularity of digital assets. 

1. A growing number of jurisdictions pass regulations for the issuance of digital securities. 

For digital assets to exist, a clear legal framework for their issuance must be in place. Exactly this is what more and more governments worldwide have realized, drafting clear guidelines on digital asset issuance in their jurisdiction.  

Leading in this effort are Malta, Luxembourg, Estonia, but also Switzerland and Germany, more and more legislators follow. As both dividend payments and shareholder voting can be conducted via smart contracts, it is possible to foresee a future where digital securities are the norm, not the exception.  

2. PayPal, the world’s largest online payment provider, just adopted crypto-assets as a payment method.  

Wall Street and big corporations have long been skeptical of crypto-assets like Bitcoin. Not long ago, UBS and JPMorgan openly share their disdain for digital currencies (while highlighting the potential of blockchain technology). This is changing rapidly.  

PayPal announced on Oct. 21st that it would enable its users to buy, sell and deposit crypto-assets as the payment method in its global payment network of over 26mn merchants worldwide. 

3. Institutional interest in digital assets is growing.  

Institutional investment accounts for roughly 80 % of equity market capitalization. If these institutions were to invest in digital assets, the marketplace would grow massively. Due to conservative investment policies and their strict regulations, they have so far been unable to or shied away from investing in crypto-assets. 

Founded by the company behind the New York Stock Exchange and supported by Microsoft, Starbucks, and UBS, Bakkt envisions a digital asset ecosystem that attracts institutional and retail investors alike. Already in 2018, Bakkt succeeded in getting CF-approved Bitcoin futures that attracted interest from institutional investors.  

4. The number of STOs held is rising steadily. 

The issuing of digital assets and securities is growing. A recent study by the Oxford School of Law found that by July 2020, a total of 185 STOs had been completed worldwide.  

With each STO held, regulators’ experience and investor familiarity and acceptance of this form of raising capital grow further. It won’t be long before we see STOs become more popular than IPOs, given their time and cost benefits.  

5. User confidence and knowledge of digital assets are increasing.  

“How does the Covid pandemic influence the acceptance of and attitude towards crypto-assets?” That is the question leading crypto-magazine “Tokenist” asked a representative sample of over 4.500 online users in September 2020. The results showed three trends: 

  • User confidence and knowledge of crypto-assets grew among all age groups. 
  • User disapproval of traditional banks increased strongly. 
  • A majority of users would rather invest in BTC or gold than stocks. 

Conclusion 

Digital assets have gained momentum in recent months. Given increasing user confidence, institutional interest, and corporate adoption, their future looks bright and promising.