How Blockchain Technology Is Transforming Digital Asset Marketplaces

Digital assets are unique items. They are purchased and created on digital marketplaces. We discuss how blockchain technology is transforming them in the article below.

A digital asset is any item created and stored digitally that has a perceived value. This can be monetary, or it could be something else important, such as information or intellectual property. They are also recoverable and identifiable. As digital assets become more commonly used, how is blockchain technology managing to transform the places they are bought and sold?

What defines a digital asset?

Digital assets are nothing new. They have been around since people began to create files on computers and could scan documents. However, in the modern age, they have gained prominence due to the introduction of cryptocurrencies and blockchain technologies. The most well-known digital asset today is cryptocurrencies, the most well-known of which is Bitcoin. Used as a digital currency, it is now favoured as a store of wealth. Its value rises and falls in line with other investments like stocks and shares. This means it is impacted by global events or supply and demand like any other asset or commodity.

At the time of writing, the Bitcoin price USD is around the $99,000 mark. However, it has not always been this way. Over the past week, it has dropped as low as $93,000 and risen to $103,000. This has been due to news about the United States economy, inflation, and even the accumulation of the currency by large investors known as whales.

However, cryptocurrencies are by no means the only digital asset. Non-fungible tokens are also rising in popularity. They allow someone to have digital ownership of a product assigned to them. Many people have used these for artworks, like images and music. However, tokens can also be used in other ways. They can be backed by real-life assets, such as gold or oil. Even real estate can be tokenized to show ownership.

The relationship between digital assets and the blockchain

The blockchain is the underlying system that allows digital assets to be created, registered, and traded. The purpose of a blockchain is to share and store information. In this way, they act like a traditional ledger, holding information in a list. When a new entry is created, a block is added to the chain.

They are also decentralized, meaning no individual or company has ownership of a blockchain. All information stored is available for everyone else to see. This provides a level of transparency not usually found in other methods of storing information. This can provide a heightened level of trust, particularly when trading. Information can be verified using the blockchain. As these transactions are immutable, meaning they can’t be altered or deleted, there is security in the transparency they offer.

For added privacy and control over blockchain transactions, businesses and individuals can utilize German Proxies. These proxies provide secure, location-specific connections, ensuring seamless access to decentralized marketplaces while maintaining anonymity.

What is a digital asset marketplace? 

A digital asset marketplace is a website where digital assets can be bought, sold, and traded. For example – FilterGrade is a digital asset marketplace where creators can buy and sell digital editing tools such as Lightroom Presets, Video LUTs, and Motion Graphics Templates. Generally, these are broken down into two types. The first are exchanges, much like traditional currency exchanges. Users can log on, and then buy a range of cryptocurrencies or sell them. They operate in a very similar way to a trading platform, offering insights into rising and falling crypto prices.

The second type of digital asset marketplace is one that deals in NFTs. You will find these very much like a more retail-oriented setting, almost like eBay. You can browse the artworks on offer, then make a bid or buy them outright in cryptocurrency. They are then transferred to your wallet. 

The future of digital asset marketplaces

The future of digital asset marketplaces will be regulated by how much they are adopted into the mainstream. If not, digital asset marketplaces really don’t have any need to evolve. They currently serve the function they need for the niche audience who deal in crypto and NFTs. However, this could change as digital assets become more used in traditional financial institutions and systems.

In fact, this scalability is the one major flaw in blockchain technology. As it is decentralized, each section must validate a transaction. The more this increases, the more the system slows down and clogs up. This increases transaction costs and lowers efficiency. Added to this are the huge energy costs required to run a blockchain, which continue to rise. If digital asset marketplaces are to evolve, then these issues need addressing.

The major blockchains, such as Ethereum, have been working on this. There are also rival blockchains, such as Solana, that have arrived to compete with it. Generally, this will need to be funded by institutional investment once they see the applications that digital assets can bring to their business and operations.

Secondly, digital asset marketplaces will need support from governments. This has already begun in some places like Nigeria, where the government is using blockchain technology and digital assets to rehaul the real estate industry. However, clear regulatory guidelines about the use of these marketplaces would help. 

Blockchain technology is not so much transforming digital marketplaces as it is that they need it to function. For them to evolve, the scalability of blockchain technology needs to be solved along with the level of energy consumption. Once this is done, combined with mainstream adoption, blockchain could transform the way we live with digital marketplaces at the forefront.

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