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Digital assets: an emerging paradigm for financial services?

With the development of digital assets, we are experiencing the emergence of a new and nascent asset class for the first time. Even more interestingly, built on the blockchain, this new asset class is underpinned by a technology that has the potential to revolutionise the global financial system.




In this episode of our Think Tank podcast, we talk about digital assets. Over the past few years, digital assets have gone from being dismissed by many as a niche technological hobby project in the early days of blockchain development to an asset class that is becoming more and more mainstream. Our moderator and former BBC World News presenter, Nisha Pillai, talks to Sipho Arntzen, Next Generation Research Analyst at Julius Baer, and Esteban Polidura, Head of Advisory and Products for the Americas at Julius Baer, about digital assets and its potential impacts.

We heard a lot about crypto coins, altcoins, tokens; what is the difference between them? Which drivers will influence the market environment for digital assets in the future? We have seen in recent weeks a focus by regulators on digital assets; but how will it evolve? Our Think Tank Podcast explains.

Listen to the podcast
Click on the player below to listen to the conversation:

Podcast snippets

Crypto coins, altcoins, tokens

When delving into the world of digital assets, investors are often confronted with terms such as coins, tokens, and altcoins. While often used interchangeably, there is a difference between these terms. “Coins are defined as crypto assets that are minted or created on their own native network and operate on their own independent blockchain”, says Sipho Arntzen, Next Generation Research Analyst at Julius Baer, during this conversation.

The most common examples are Bitcoin (BTC), which operates on the Bitcoin blockchain, and Ether (ETH), which operates on the Ethereum blockchain. “Coins have the characteristics of fungibility, portability, and durability, while the main use case for the majority of coins is to facilitate the transfer of value between network participants”, adds Arntzen.

Opportunities for investors on digital assets

From a portfolio perspective, digital assets provide some diversification benefits, but not to the extent that many may believe. They often suffer more strongly than equities in times of risk aversion. “For example, the total market capitalisation of digital assets is down materially from the highs achieved in November 2021 while gold has gained during the period”, says Esteban Polidura, Julius Baer’s Head of Advisory & Products for the Americas.

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