Crypto-assets are digital assets that can be used as a means of exchange or for investments. Unlike traditional banking, there is no need for a central register - they are based on distributed ledger technology that enables transactions to be recorded securely by a network of computers. They are private; not issued or guaranteed by a central bank or public authority. "Crypto" in their name hints at security - they are secured with cryptography.
The first crypto-assets were bitcoins, introduced in 2008 as a cryptocurrency - a payment method alternative to central bank-issued currencies. By 2020, there were 5,600 different cryptocurrencies with an estimated global value of €250 billion (still a relatively small share of the value of all money). This generation of crypto-assets is generally not backed with assets that hold intrinsic value and their value is often quite volatile, which limits their practical use, turning them into a form of risky investment rather than a useful currency.
Tokens are newer crypto-assets; they are a digital representation of interests or rights to certain assets. They are typically issued to raise capital for new entrepreneurial projects or start-ups.
The introduction of new products such as stable coins that could be a more stable payment method as their value is backed by real assets brings new possibilities for innovation and use on a larger scale.
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