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The Future of Digital Assets with Blockchain

 

In the digital reality, change is the only constant. With the emergence of digital assets, which range from physical assets and property to rights and identities, the way we trade money and trust has changed. The era of banks’ hegemony may be about to end - digital assets are designed to democratize the financial realm and give anybody equipped with enough technical knowledge a chance to create their own digital asset in the so-called process of “tokenisation”.  Commonly divided into currency tokens, security tokens, and utility tokens, they redefine transactions systems and act on a basis of total transparency.  In the report prepared by The European Union Blockchain Observatory & Forum, experts closely examine Blockchain and the digital assets, analyzing their strengths, weakness and their implications for the future. Blockchain, designed to boost reliability of transactions and offer absolute transparency of information, is often seen as the bridge to the equal-opportunity business world. According to some estimates, Blockchain could reduce costs of cross border payments for up to 80%. As an instrument of innovation, it has gathered a lot of attention in the last years, especially after the rise of digital assets. 

Although Blockchain-based digital assets were first introduced before 2015, they attracted public attention in 2015 when they were proposed by Ethereum. Consequently, most of today’s digital assets are based on Ethereum’s standard “ERC-20 token”. They can be used in numerous ways: for example, to represent shares, commodities, or a driving license.

Despite the fact that Blockchain and Digital assets promise an equal, transparent, and secure worldwide market, their potential is muffled by legal incertitude, banks’ skepticism of digital assets, technical limitations, and financial considerations. The European Union Blockchain Observatory & Forum lists legal difficulties as the major cause of digital assets’ struggle to gain worldwide popularity. Innovative as they are, digital assets are not included in the scope of the current EU financial laws, which significantly decreases their credibility. Without a regulated legal status, they are deprived of certain juridical benefits, such as customer protection, which includes deposit guarantees and possible court appeals. Such a lack of legal protection and certainty does not encourage trust for digital assets. Banks’ refusal to support digital assets doesn’t help their case: numerous banks have refused to participate in digital asset projects. Moreover, many digital asset projects were denied banking services, such as opening bank accounts. The lack of legally authorized payment method is also one of the reasons why Blockchain’s potential is held back. Consequently, the development of “tokenised legal tender currency” and settlement of legal issues could clear all the Blockchain-related doubts and effortlessly win over potential customers’ approval. Once legal uncertainty is gone, the future of digital assets will be brighter than ever. After all, in the digital reality, security and trust are the hottest currencies.

This article based on the: BLOCKCHAIN AND THE FUTURE OF DIGITAL ASSETS - a thematic report prepared by THE EUROPEAN UNION BLOCKCHAIN OBSERVATORY & FORUM, please find attached full version.

 

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