A new kid on the block has spearheaded the UK’s economy. Blockchain is a word you have probably heard that’s causing all sorts of frenzy online -both good and bad.
Digital assets are the brainchild of blockchain technology. The United Kingdom’s forward-thinking nature has emerged as a global hub for digital asset investing.
Last year alone, United Kingdom Blockchain companies recorded over $500 million worth of investments, according to a report by Deep Knowledge. Increased innovation and receptive laws are the chief accelerants for growth.
Below, we analyze whether it’s prudent to invest in digital assets in the UK. We also take a deep dive into why the UK is emerging as a digital asset investing investment leader. Finally, we give you the best entry points into the cryptocurrency and larger blockchain market.
What Are Digital Assets?
First up are NFTs. Non-fungible tokens are the latest trend in the London blockchain community. NFTs are part of the broader digital assets investment vehicle.
Digital assets are web-based blockchain derivatives that possess value backed by online ledgers rather than physical assets. The derivatives have a unique identifier or “code’ that gains or depreciates, and users can transfer between each other.
Think of the assets as cash but with no physical asset backing, such as government bonds and treasury bills.
The main types of digital assets are cryptocurrency and NFTs. Common digital assets include Bitcoin, Ethereum, Cyberpunk, Bored Apes, and Cardano. As of March 2022, 6.1% of Britons owned cryptocurrency.
Digital Asset: The New Investment Class
The UK is a global Fintech leader. It follows that the country would be more aggressive in pursuing newer internet-based financial developments. However, this is not the case- at least it wasn’t five years ago.
With countries like Gibraltar bucking from the trend of banning cryptocurrency mining and use, the UK had to reevaluate its position on the blockchain spectrum. The revaluation prompted UK legislators to enact laws that develop a meritorious standard for investing in the volatile asset class.
One of the laws was VAT tax exemption from Bitcoin. The main challenges in regulating digital assets are their supposed anonymity and difference from traditional investment options. It is not the Wild West here in the UK. More regulations have enabled the UK to incorporate the assets into mainstream investing.
Select banks offer over-the-counter and online cryptocurrency investment options. The most crypto-friendly banks offer more aggressive options, including futures and margin trading.
Digital assets’ unique selling point is high ROI in a short time. Shiba Inu (SHIB) has generated approximately 46,000,000% returns.
Case in point: If you had invested £75.87 in SHIB, you would be sitting on £34349805.49. Ridiculous returns. Here’s where to buy Shiba coin in the UK for ridiculous returns and in the cheapest way possible.
The new investment class is part of the larger crypto economy, which seems to be the industry standard for Gen Y and Z investing. It is no surprise that 30% of cryptocurrency owners in the UK are aged 18 to 29.
Many crypto proponents see the high returns as a better store of value and a hedge against inflation. However, the returns are only as good as your due diligence on the millions of tokens and coins available.
Why the UK is the Frontier for Digital Assets
The United Kingdom is beating other countries to the punch in all digital assets aspects. London-based blockchains offer the best online ledger services, UK developers create high utility tokens, and London-based exchanges provide global crypto services. Interestingly all the innovations are not the main drivers of the UK as a global leader in digital asset investment. The government is.
As earlier mentioned UK is home to many DAOs. The most acclaimed is Blockchain, providing services to over 3 million users. Nicolas Gary, the cofounder of Blockchain, recently made positive remarks on UK’s role in the blockchain economy. “It would be a historical mistake not to make this the home of digital currencies. There’s an incredible amount of talent and experience here.”
Close collaborations between the government and crypto economy stakeholders forge new user-centric legislation. Initially, the Financial Conduct Authority (FCA) had developed a strong stance against crypto but slowly warmed up to the inevitable currency.
Currently, there’s a task force between the Bank of England and other stakeholders to create ‘Britcoin,’ a Central Bank Digital Currency.
Innovations will still play a crucial role, but the regulations provide the supporting framework to lead the UK into the go-to place for your digital asset investing. Like other countries, precise regulations are a work in progress. But the European enclave is the trendsetter.
Should You Invest in Digital Assets?
Digital Asset investing has numerous offerings and multiple entry points. Whittling down to a particular coin or NFT is unwise. Instead, diversify your portfolio as a beginner. Narrow it down to a smaller portfolio as you increase your knowledge.
Ultimately it boils down to your risk appetite and understanding of the market. Black Swan events can cause you to gain or lose a lot of money in the erratic market. Invest only in what you understand.
Being a global financial hub, the UK has laid the foundation for dominating the digital asset market. Receptive laws and innovation bridge the gap between traditional finance and the new asset class. The UK is at the forefront of it, and other countries will have to use the UK as a reference for success in digital asset investing.
If you’d like to know more about cryptocurrencies and digital assets you can read our latest article on Cryptocurrency investments.