Digital assets are disrupting industries today as this technology continues to evolve in financial ecosystems around the world. It has transformed the infrastructure of our financial markets, the way we buy and pay for things, and what we invest in. Digital assets include cryptocurrencies, NFTs, stablecoins, and security tokens, among others which have now become synonymous with technological growth and innovation.

A new type of economy based on trust and consensus is emerging before us in the virtual world. To better understand it and its future implications, it is essential to go back to the roots and understand how it all began.

The history and evolution of digital assets

1998: The ‘bit gold’ Idea

The emergence of digital assets dates back to 1998 when Nick Szabo proposed the idea of ‘bit gold’, a decentralised digital form of currency. He aimed to create a payment mechanism that was free from a central authority and would act as a long-term store of value. Its decentralised nature was brought about by its cryptographic and mining properties, whereas the proof-of-work mechanism allowed for the recording and verification of time-stamped blocks, similar to Bitcoin’s blockchain. However, Nick never put this proposal into action.

2008: The introduction of the first cryptocurrency; Bitcoin

A decade later, Satoshi Nakamoto wrote a paper on Bitcoin, which led to its introduction as the first cryptocurrency. It is a peer-to-peer digital currency created using blockchain technology, with no intermediary or central authority to govern it. The distributed ledger technology used in Bitcoin started gaining attention from upcoming new players and regulated financial institutions due to the security and efficiency provided by it when transferring currency or digital assets.

The realisation of the benefits of this technology brought about the evolution of digital assets as several new cryptocurrencies and tokenised assets were then introduced. Ethereum was the first public blockchain that introduced smart contracts and sparked the birth of decentralised finance and non-fungible tokens.

2011: The rise of altcoins

Following the success of Bitcoin, thousands of other digital currencies known as ‘altcoins’ or alternatives to Bitcoin (or sometimes Ethereum) were introduced. These either focused on making up for Bitcoin’s shortcomings or faults or focused on a different purpose altogether. In 2011 the first altcoin, Litecoin, was introduced, which used a different proof-of-work mechanism from Bitcoin called Scrypt. It used far less energy and was much quicker than Bitcoin’s consensus mechanism.

2014: The need for stablecoins

As the evolution of digital assets continued, the volatility of cryptocurrencies such as Bitcoin and others was questioned by society as it could harm a firm’s balance sheet health and investors. To address this issue, Stablecoins were introduced in 2014 as they eliminated the risk of volatility while still providing the benefits of crypto and its new capabilities. Stablecoins enable peer-to-peer transfers, digital wallet capabilities, and smooth cross-border transactions. Additionally, its volatility is reduced as its value is linked to traditional assets like fiat currencies or a commodity. Stablecoins have already exceeded $100 billion in market capitalization. This space continues to grow as digital assets like central bank digital currencies (CBDCs), tokenized securities, and more continue to be introduced.

2018-2020: ‘Crypto winter’ is here

Rapid proliferation was seen in the digital asset market from 2016 to 2018. However, following this period, the market witnessed a downward fall in 2018, known as “crypto winter” It was a difficult period as this bear market saw Bitcoin’s value drop by 83% from its highest to a low of $3,217. Similarly, Ethereum saw a drop of 94% in its value. The market began seeing improvements as it moved towards 2019, and by November 2021, Bitcoin had rebounded its value to nearly $69,000.9.

What is the future of digital assets?

Despite concerns regarding their volatility in value, digital assets are here to stay for a long time. As they continue to evolve rapidly, their adoption in both the institutional and retail industry has tremendously increased, given the expansion in use cases ranging from payments, money movement, art, entertainment, gaming, and more. Additionally, about 80% of central banks, including the federal reserve, are looking to launch their own digital currencies. The maturing of digital assets and their infrastructure is attracting a more mainstream audience. The shaping of their regulatory framework plays a significant part in this shift as it eliminates the uncertainty that initially held back these institutions and paves the way for the mass adoption of digital assets. To keep with this momentum, a deeper understanding of this asset class is needed so you and your organisation can become innovation leaders.

More contents to be discovered

If you are interested in discovering how blockchain is implemented in the industry, these are some of the best resources that can help you out!

Learn the skills of Fintech

Learn the skills of Fintech

More To Explore

Frequently Asked Questions

The Centre for Finance, Technology & Entrepreneurship (CFTE) is a global education platform that aims to equip financial professionals and organisations with the necessary skills to remain competitive in a rapidly changing industry. Our leading training programmes, curated by global industry experts, help talent build skills to join the digital revolution in finance. CFTE’s courses are globally recognised with accreditations from ACT, IBF, CPD, SkillsFuture and ABS.

At CFTE, our mission resonates with every learner’s goals to rapidly advance in their career, to thrive in their next project or even to lead the disruption in finance with their own venture. To help you do this, CFTE gives you the tools you need to master the right skills in digital finance. We bring exclusive insights from leaders that are steering the developments in the financial sphere from global CEOs to disruptive entrepreneurs. With CFTE you don’t just learn what’s in the books, you live the experience by grasping real-world applications.

If you are looking for rich insights into how the Financial Technology arena is transforming from within, we can help you get the latest knowledge that will stir things up in your career. CFTE offers leading online programmes in digital finance, covering an expanse of topics like – Payments, AI, Open Banking, Platforms, Fintech, Intrapreneurship and more, that will help you conquer the financial technology landscape. With this expertise at your disposal, you will be on track to turbocharge your career.

You will be learning from a curated line-up of industry leaders, experts, and entrepreneurs hailing from Fortune 500 companies and Tech Unicorns, among others. They will each be presenting their knowledge and experience in the field of digital finance. No matter if you are embarking on a new journey or fortifying your role, these lecturers and guest experts will guide you through the perspective of established institutions like – Starling Bank, Wells Fargo, tech giants like – Google, IBM, successful startups such as – Kabbage or Plaid, among many more!