What is a Digital Asset?

What is a Digital Asset?

What is a Digital Asset?

1 A digital asset is anything existing in digital format (with no physical presence) that comes with the right to use, has value and can be owned. A bitcoin, an online shop and a monetized youtube channel are some examples of a digital asset.

2 Although the term Digital Asset includes text, graphics, audio, websites, animations, videos, cryptocurrency, etc. and is constantly changing as new digital formats emerge, it is important to keep in mind that file format is only part of the definition. The other important portion in the definition is the word asset, which focuses more on the expected value the asset can bring to the owner of the digital asset. 

3 In his book “Rich Dad Poor Dad”, Robert Kiyosaki makes it easy for even individuals without a financial background to understand the difference between an asset and a liability. Kiyosaki defines an asset as anything that puts money in your pocket. A liability is anything that takes money out of your pocket. See how I’ve used the diagrammatic illustration below:

4 The following 3 key characteristics make any single file a digital asset.
A digital asset must:

  • Be a digital file owned by an individual/organisation
  • Provide value to the individual/organisation
  • Be discoverable (usually using metadata) 

5 Why are digital assets important? 

The evolution of digital technologies has lead to a rapid increase in the creation of new digital assets, such as e-commerce websites, bitcoin, social media & video sharing platforms, etc. 

These new digital assets represent a fundamental change in the way value is transferred globally. 

  • Digital assets are the visual and/or interactive representation of the value you have to offer to your customers. This includes products, services, culture and, ultimately, the value that you promise. 
  • Digital Assets drive online engagement, represent the connection between your brand/organisation and your customers and give you the ability to interact with customers in a way they like, when they like, where they like. All without having to leave move from where you are, physically. 

Digital Assets are important because there is a digital world that exists, and just like it is with the physical world, there are things of value that we must buy into and/or build so that we can enjoy returns on our investments later. 

6 What are some of the benefits of having or investing in a digital asset?

In a nutshell, digital assets have these benefits:

  • Creating a digital asset requires a little upfront cost
  • Digital assets can be managed from anywhere
  • With digital assets, the internet becomes your market.

7 What is the value of a digital asset? 

It depends.

To understand the value of digital assets, you need to factor in more than just the cost of developing or buying the asset. It’s also important to consider the time invested in developing it, and the ability to reproduce it.

Some of the ways to contributing factors to the value of digital assets are:

  • Site Age
  • Technology platform used
  • Net Profit
  • Unique Visits
  • Pages per session
  • Bounce Rates
  • Average session duration
  • Traffic source
  • Country
  • SEO Presence
  • Social Media Following
  • Intellectual Property (e.g. Domain Name Trademark), etc.

8 Summary notes from Maloom on this topic:

  • Digital Assets are a relatively new form of investment
  • To view anything digital as an asset, one must be prepared to accept a minor paradigm shift in how we think about the coming together of the physical and digital worlds. For some, it may be difficult but for others, it will be easy to conclude that we are calling non-tangible things assets.
  • Almost anything digital with current or future value for the owner can be a digital asset. You simply need to think “Does it help me to make money or can I sell it for money”. It can range from the unique email address you get from GMail, or the social media handle you have created, to the TLD your domain is registered as, all the way to building/buying a website to serve a specific business purpose like e-commerce. 

One thing is certain, Digital Assets, like other forms of investments, have the potential to make you and your investors money. It’s all about how you treat the asset. 

Notes:

Digital describes electronic technology that generates, stores, and processes data in terms of two states: positive and non-positive. Positive is expressed or represented by the number 1 and non-positive by the number 0. Thus, data transmitted or stored with digital technology is expressed as a string of 0’s and 1’s. Each of these state digits is referred to as a bit (and a string of bits that a computer can address individually as a group is a byte). 

 

Asset describes a resource that can generate economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.

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