Beyond Crypto: Investing in the Digital Assets Economy

The growing popularity of cryptocurrencies has paved the way for a digital transformation, and along with the rise of digital assets such as non-fungible tokens (NFTs), new opportunities for investors are emerging from the digital assets ecosystem. Over the past year alone, interest in digital assets has increased considerably, spurred by many of the changes resulting from COVID-19. As companies have shifted away from cash, digital assets have helped to bridge the gaps caused by the pandemic.

The Digital Asset Landscape

While many investors are familiar with some of the key terms surrounding cryptocurrencies, digital assets are not as well understood. Encompassing everything from decentralized applications to NFTs, digital assets fall under the blockchain umbrella and refer to currencies and technologies that exist in the digital space.

If that sounds like a broad definition, it’s because digital assets are continuously evolving along with the technologies and companies that support them.

Accessing Digital Transformation Through ETFs

For those interested in incorporating digital assets into their portfolios, having a big-picture view of the landscape is often a great first step. This includes knowing the types of companies operating within this ecosystem to bring digital assets into the mainstream.

Known as digital transformation companies, these organizations include asset management firms, payment gateways, and exchanges where digital assets are traded. They also include software and hardware development companies that facilitate digital transactions. The infographic below sheds some additional light on digital transformation companies.

By enabling digital assets to be used more widely, these companies play a big role in the digital transformation currently underway. They also present some unique investment opportunities.

Where Digital Assets Are Headed

Another component to investing in digital transformation companies is having a clear understanding of where they’re headed in the future. While their rapid growth makes it hard to pinpoint an exact trajectory, the market cap and revenue of digital companies tell a compelling story.

Over the past five years, the market cap has soared from less than $10 billion to nearly $100 billion and the revenue has tripled. This type of growth is likely to continue in the future, providing new opportunities for investors.

The past two years have led to some notable changes in how we think of digital assets and the companies making them accessible. While investing in these assets carries a certain level of risk, the broader themes they reflect are likely to lead to lasting change. Digital transformation companies offer exposure to those themes while helping to mitigate some of the aforementioned risks. As these types of companies move further into the mainstream, retail and institutional investors will increasingly take notice.

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