Learning the friendly way

While you’ve likely come across the world of cryptocurrencies, you most probably have stumbled upon the term “blockchain”. But what is the blockchain solution? Blockchain is not only the revolutionary technology behind cryptocurrencies, it also has a large use case outside of the cryptocurrency and even the finance sector.

In the decade since blockchain technologies and digital ledger technology came to light, a host of blockchain networks have been created, most with their own digital currency. As the industry has grown and new blockchain networks have emerged, innovation in the space has increased significantly.

From the Ethereum blockchain providing a platform on which developers can create digital assets and smart contracts to corporate organizations implementing a private blockchain in order to streamline their services, the technology is propelling mankind forward in ways not witnessed in decades.

The blockchain solution provides much more than just digital assets, and industries far beyond just the payment processing ones are catching on. With traditional business networks incorporating the technology, the world of permissioned blockchain is igniting.

What is blockchain?

Blockchain is a decentralized, transparent, immutable technology that keeps a public record of all information entered. Designed to record and distribute information, not to be edited. Also referred to as a public ledger, a blockchain keeps a record of all information ever inputted and stores it chronologically in blocks.

These blocks are linked to each other through a hashing system, which ensures that no one can ever tamper with the previous records, or try to manipulate the information on them. The “chain” of blocks make up the blockchain database.

The decentralized technology is not typically run by one entity, but rather from a variety of computers (also known as nodes) that make up the network, and work together to validate transactions and all information added to the blocks. Blockchain can be used in two forms, as a public blockchain or as private blockchain networks.

The public version allows anyone to view all information on the network, while the private reserves the information for members granted access.

The advantages of blockchain technology

Powerful Technology

Invented in 2008 alongside Bitcoin by an anonymous entity Satoshi Nakamoto, blockchain is the technology that fueled the new way that money is transacted. Not only that, the technology offers incredible use cases far beyond the financial world. 

Fully Trusted, Fully Automated

One of the key features of blockchain is its ability to function without a central authority. The technology is designed to be maintained by various operating systems on the network, with full autonomy dispersed evenly. Information is stored on the blockchain in such a way that everyone can view it but no one can go back and tamper with it.

Powering Industries

While blockchain is the technology behind crypto, it also offers an incredible backbone to a diverse range of industries outside of this space. Companies like Nestle, Microsoft and Walmart are onboarding blockchain, proving to offer a strong and highly adaptable infrastructure to financial, property, and supply chain management entities. The number of blockchain companies is growing by the day.

The core benefits of a blockchain network

Decentralized

Blockchain networks are designed to be entirely decentralized meaning that there is no one central authority. The entire network is maintained by nodes (computers) around the world and no single entity has control. 

Immutable

Once the information has been added to a blockchain, no one can tamper, edit, or remove it. As information is verified and added to blocks, this solidifies its presence on the blockchain forever. 

Transparent

Blockchain offers a transparent view of all the activity that takes place on the network. This takes away the need for any checks or balances as all the information is available at any given time, in real-time.

What is the difference between a public blockchain and private blockchain?

When understanding what is blockchain, a common question is whether blockchain is secure. The answer is yes, blockchain is very secure.

Due to its decentralized nature, the technology requires a network of operators (computers) to verify and input all the information. As soon as one tries to input incorrect information or conduct illicit transactions, the network will recognize this and reject it immediately. 

The difference between a public and private blockchain is that public blockchain networks are open for anyone to see, while private blockchains are closed to an organization or a selected group of people.

Cryptocurrency networks are examples of public blockchain networks in that anyone can view all the transaction data. For a private blockchain, however, users will need special permission to access this information.

How is blockchain tamperproof?

Each block is made up of three things: the hash code of the previous block, the relevant information, and its own hash code.

When a new block is added, the new block will again have the hash of the previous block, the relevant information, and its own hash. This special sequence of hashes ensures that all blocks are stored chronologically, in a linear fashion, meaning that you cannot tamper with one block's information without tampering with every block after that.

Tampering with blocks would take an enormous amount of computing power and is largely considered impossible. Hence the security of using a digital asset or digital currency.

Blockchain explained: how does it work

At its core, blockchain records and distributes information to a wide network of users that participate in verifying the information and maintaining the network. Let’s take a deeper look at Bitcoin transactions to further explain how blockchain works. 

If one user wanted to send a portion of Bitcoin to another user, they would require the user’s wallet address. Each wallet is made up of two codes, a public and private key, which enable the user to receive BTC (through the public key), as well as access BTC and conduct transactions (through the private key). The sender will then input the receiver’s wallet code and send the amount of Bitcoin they desire. 

This transaction will then enter a pool of transactions waiting to be verified by a miner on the network. The miner will ensure that the sender owns the amount they are sending, and verify the transaction along with a number of other transactions.

On the Bitcoin network, the size of one block is 1MB, which equates to roughly 3,200 transactions able to be stored in one block. When building a blockchain network, the size of the blocks can be increased or decreased to suit the use case. 

Once the transaction has been verified, the miner will record transactions processed and ensure they are added to the chain. The transaction ledger will then be distributed to the rest of the operators on the network. This new version will then override the older versions, and so on as more blocks are added.

Once the block is added to the blockchain and distributed, the funds will reflect in the receiver’s wallet. No need for a bank account or legal contracts, Bitcoin (and other digital currencies) operate entirely separately from traditional banking institutions and allow for the fast, efficient and cost-effective transaction of value.

Fraudulent transactions cannot take place as this will be flagged long before the block is added to the chain. Blockchain work in such a way that network participants can immediately flag ill actors and dismiss fraudulent financial transactions.

Understanding the difference between blockchain and the Bitcoin blockchain

The burning question: how does blockchain compare to Bitcoin. The answer is that it doesn’t, there are two separate, co-dependent technologies. Bitcoin, the cryptocurrency, is built on blockchain technology and requires it to function. There is no Bitcoin without blockchain technology.

Consider it the backbone of all cryptocurrencies. Blockchain technology, however, is an adaptable technology that can be used outside of the cryptocurrency industry. The technology can be used in any industry, provided that they require a transparent, immutable public ledger. 

One thing the two do have in common is that they were both introduced to the world at the same time. While the concept of blockchain technology was initially invented by researchers W. Scott Stornetta and Stuart Haber in 1991, it was referred to as distributed ledger technology (DLT) and was created purely to store office documents.

The anonymous entity Satoshi Nakamoto built on this and ultimately solved the double spending problem it was plagued with. In 2008, Nakamoto released both blockchain technology and Bitcoin in a whitepaper titled Bitcoin: A Peer-to-Peer Electronic Cash System.

The Bitcoin blockchain refers to the network, while blockchain technology refers to the technology as a whole.

In conclusion

What is blockchain? Blockchain technology is the transparent, immutable storage of information. As mentioned earlier, this technology has use cases far outside of just the cryptocurrency and financial ecosystems.

Industries like renewable energy, supply chain management, and even farming sectors are now incorporating blockchain technology into their business systems, empowering them with a fully automated and safe means of storing records. 

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It's never too late to learn about the new-age financial payment system. Bitcoin has become infinitely more popular with each passing year, and as adoption rates continue to rise, now is the perfect time to become familiar with the world's first and biggest cryptocurrency. 

What Is Bitcoin?

Bitcoin is a peer-to-peer payment system that uses the internet to operate and not a centralised authority like all other currencies. This digital currency cuts out the middleman and instead allows users to send money directly to one another, eradicating high fees, lengthy application processes and time spent waiting for money to clear.

Instead of being operated by a bank, government or financial institution, Bitcoin is run by a network of computers around the world that all follow the same protocol to ensure the network operates smoothly. Blockchain technology forms the backbone of Bitcoin and ensures that all transactions are facilitated in a timely, transparent and immutable manner. 

Bitcoin is a secure, decentralised, borderless payment system and form of digital currency that operates 24 hours a day, 7 days a week. 

Bitcoin is often compared to gold as both assets price have rapidly increased over the recent years. While regulation regarding cryptocurrency is still being ironed out, it still remains a widely adopted and heavily used payment system.

What Are The Benefits Of Bitcoin?

Bitcoin brought about an entirely new way to manage one's funds. With the use of blockchain technology and the internet, Bitcoin has become a thriving financial ecosystem over the years. Below we outline several benefits of using Bitcoin.

• Decentralised. The network is entirely free from centralised control, including stopping transactions, freezing accounts and requiring complex paperwork.
• Accessible. Anyone anywhere can tap into the Bitcoin payment system as long as they have an internet connection. The platform is fully inclusive.
• Transparent. While the network is considered to be "pseudonymous", all transactions are still recorded on a public ledger in real time, providing an entirely transparent ecosystem.
• Liquidity. Bitcoin can be traded on hundreds of platforms around the world, ensuring that its liquidity is always in the green.

How Does Bitcoin Work?

Using blockchain technology, the network of computers is able to facilitate digital asset transactions from one peer to another bypassing any middleman. Let's break that down. 

Say Amal wants to send George 1 BTC. She will initiate this through her Bitcoin wallet by entering George's wallet address and the amount. Bitcoin is stored in digital wallets which have two important codes: one is the wallet address (known as the public key) and the other is the private key, a code only the owner of the wallet should know (similar to an ATM pin).

Once Amal has initiated the transaction, it will enter a pool of pending transactions on the network. From there, miners will "pick it up" and compete with one another to be the first to solve a complex cryptographic puzzle. The first one to do so will execute the transaction. 

The funds will then leave Amal's wallet and be deposited into George's wallet. This will be recorded on the blockchain, a transparent digital ledger shared across the entire network, citing the date, time, wallet addresses and amount in a block, which are stored in chronological order. Each Bitcoin wallet's balance will then be updated.

Wallets typically require 3 confirmations before the funds can be spent. This means that three new blocks need to be added to the blockchain, each block representing a confirmation. 

What Gives Bitcoin Its Value?

Bitcoin's value is determined by supply and demand, fluctuating in price when supply decreases and demand increases. When Bitcoin was created it was written into its code that only 21 million BTC will exist. By putting a cap on its total supply, the currency is naturally deflationary in value, the opposite of fiat currencies.

Due to Bitcoin's prominent increase in value over the years many investors have deemed it a strong store of value. This paired with its constant availability and high liquidity makes it an excellent long term investment, known in the industry as "hodling". 

What Is Bitcoin Used For?

With the seamless functionality of cash, its "always open" usability and the fact that it can be transferred anywhere in the world in a matter of minutes, Bitcoin is an excellent medium of exchange. 

Anyone can use Bitcoin as payment for goods and services - many merchants around the world accept the cryptocurrency - or as a store of value. As long as the person has an internet connection, they can send and receive Bitcoin. 

Where Did Bitcoin Come From?

First announced to the world on 31 October 2008, Bitcoin was officially launched in early January 2009. The creator, who remains anonymous to this day, goes by the name of Satoshi Nakamoto and is the pioneer behind the crypto revolution. 

They stated in the project's whitepaper that Bitcoin was created as a response to the global financial crisis. Instead, they wanted to create a currency that was free from government and banks' control, allowing people to take ownership of their funds and be solely responsible for them. 

Somewhere in 2010, Satoshi Nakamoto disappeared and no one has managed to track down their identity since. Many speculate that it was a group of people and not one acting alone.

Since the advent of Bitcoin, a number of new cryptocurrencies have been created. Any new currency that launched was referred to as an altcoin (alternative coin), and this term has stuck. There are over 12,000 cryptocurrencies today, each with its own unique use case. For example, Ethereum was created so that developers could build decentralized applications, while cryptocurrencies like Litecoin were created to improve on Bitcoin's payment system.

Where to buy Bitcoin (BTC)

If you're considering including BTC in your cryptocurrency portfolio, look no further than the Tap app. With the Tap app, you can conveniently manage and trade a diverse range of digital assets, including BTC. Whether you're a seasoned trader or new to the world of cryptocurrencies, our user-friendly interface and intuitive features make it seamless for anyone to navigate and engage in the crypto market

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If you know anything about the NFT craze in the cryptosphere, you’ve likely heard of the wildly successful Bored Ape Yacht Club (BAYC). Expanding on this concept is the ApeCoin ecosystem, a cryptocurrency positioning itself at the forefront of Web3. ApeCoin is controlled by the ApeCoin DAO, a decentralized autonomous organization of which all APE holders can become a part.

What is the ApeCoin ecosystem?

ApeCoin is an ERC-20 utility and governance token used within the APE ecosystem. The founding roots of ApeCoin lie in the NFT series Bored Ape Yacht Club (BAYC), a creation by Web3 company Yuga Labs. 

Enjoying viral success and arguably one of the most successful NFT collections to date, the 10,000 unique BAYC cartoon drawings earned cult status when their prices soared and big celebrities started buying them. To date, the most expensive BAYC NFT sold for a staggering $3.4 million.

ApeCoin, the fungible token, and a number of products and services make up the ApeCoin ecosystem. The coin is governed by the ApeCoin DAO, of which all token holders are eligible to become members. The ApeCoin DAO makes decisions on matters such as governance rules, partnerships, projects, Ecosystem Fund allocations, and more. The Ecosystem Fund supports community-driven initiatives and was allocated 62% of the ApeCoin supply when launched. 

In April 2022, Yuga Labs started minting virtual land in their Otherside metaverse, using ApeCoin for payment. ApeCoin is used to facilitate all transactions taking place in this virtual world.

Who created ApeCoin?

ApeCoin was created by Yuga Labs, inspired by the Bored Ape Yacht Club project. Supported by the Ape Foundation, ApeCoin is governed by the ApeCoin DAO which creates a framework for permissionless governance processes. These decentralized authoritative frameworks are designed to create a fair and inclusive ecosystem in which the coin can flourish. 

Within the Ape Foundation is an administrative council known as the "Board" which is responsible for implementing the decisions made by the ApeCoin DAO members. This Board is voted in by the ApeCoin DAO members on an annual basis and is not controlled by Yuga Labs. 

How does ApeCoin work?

ApeCoin grants holders access to exclusive games and services within the Ape Ecosystem and can be used for transaction purposes on the Otherside metaverse. It also acts as a tool in which third-party developers can tap into the Ape Ecosystem by incorporating APE into their own projects, games, and services. 

Animoca Brands, for instance, created a play-to-earn (P2E) game called Benji Bananas that utilizes ApeCoin, incentivizing and rewarding players with APE. 

From a governance perspective, holders of APE can become members of the ApeCoin DAO which vote on decisions impacting the ecosystem's functioning and growth. This might include anything from which partnerships the ecosystem should pursue to how funds are allocated. These decisions are then implemented by the ApeCoin Foundation, the 5-member Board acting as the DAO's legal representative. 

What are APE tokens?

ApeCoin (APE) is an ERC-20 token compatible with the Ethereum blockchain and any supported wallet. The coin was launched in March 2022, with all 1 billion tokens minted at once. When minted, 62% of the coins were allocated to the Ecosystem Fund which are then allocated to community-based projects based on Ape DAO decisions. 30.25% were released into circulation for the community to engage with. 

How can I buy the APE token?

If you're considering including APE in your cryptocurrency portfolio, look no further than the Tap app. With the Tap app, you can conveniently manage and trade a diverse range of digital assets, including APE. Whether you're a seasoned trader or new to the world of cryptocurrencies, our user-friendly interface and intuitive features make it seamless for anyone to navigate and engage in the crypto market

You've likely come across the term "ERC-20" in your crypto endeavours, with plenty of these token standards currently ranked in the top 10 (even top 100) cryptocurrencies. But what does ERC-20 actually mean, and what is a token standard? In this piece, we're uncovering everything you need to know about these popular crypto terms.

To start things off, ERC stands for Ethereum request for comment.

What Is A Token Standard?

Let's start at the beginning. When Ethereum was created to provide developers with a platform on which to build decentralized apps (Dapps), the team incorporated several token standards. 

These token standards allow new projects to create, issue and deploy various functioning tokens on the blockchain. Each token standard is a smart contract that holds a set of particular "rules" that must be followed in order to be created.

In recent years a number of blockchain platforms that provide Dapp creation functionality have created their own token standards, however, for the sake of this article we are only looking at Ethereum.

The most popular token standards on Ethereum are the ERC-20, ERC-721, ERC-777, and ERC-1155 tokens. Each holds its own functionality and would be utilized depending on what the Dapp intends to use it for, i.e. will it be a transferable asset or be used to hold ownership rights. 

What Is An ERC-20 Token?

By far the most popular token standard utilized on the Ethereum network, the ERC-20 token is a fungible token that can be bought, sold and traded in the blockchain ecosystem. To date over 350,000 ERC-20 tokens have been created. 

Similar to the functioning of other cryptocurrencies like Bitcoin and Litecoin, ERC-20 tokens also hold value and are able to be bought and sold, however, they operate solely on the Ethereum blockchain. This means that all ERC-20 transactions conducted are executed on the Ethereum blockchain network.

The rules associated with this particular token ensure that it can function optimally on the Ethereum blockchain, and must be submitted to the community leadership for approval prior to its launch. While some rules are mandatory and others optional, the required ERC-20 rules are as follows:

• total supply: defines the total supply of the token
• balance of: indicates how many tokens are in a wallet address
• transfer To, Transfer From: must be able to be transferred from one user to another
• allowance: ensures that wallets have a sufficient amount before making a transaction
• approve: checks total supply against transactions 

The optional elements are centred around the token's name, its ticker symbol and how many decimal places it would have %u200B For instance, Ethereum's token name is Ether, its ticker symbol is ETH and it is divisible by up to 18 decimal places.

Examples of ERC-20 tokens are Augur (REP), Basic Attention Token (BAT), Maker (MKR), USD Coin (USDC) and OmiseGO (OMG).

Can you mine ERC-20 token?

ERC-20 tokens, unlike Ethereum and its native coins (ether), cannot be mined. That is, new tokens are 'minted' when a planned initial token offering (ICO) or security token offering (STO) event takes place. Usually, these events involve users sending ether to a smart contract address and in return receiving the newly minted ERC-20 token.

An ERC-20 token is technically a smart contract so it's possible for the developer team behind an ERC-20 token to issue new tokens at will. However, this isn't recommended because users would be less likely to trust these tokens if they could be minted at will. There must be a measure of scarcity in order for tokens to be valuable. 

The pros & cons of ERC-20 tokens :

Some of the main benefits of ERC-20 tokens include:

Fungible

Fungible ERC20 tokens are interchangeable, just like cash. Although the coins are technically distinct, they function in exactly the same way. You can trade one for another and they will be functionally equivalent, just like cash or gold.

Fungible tokens are fantastic, and there's a lot of value in the technical aspect. On a technical level, it's worth noting that fungible tokens don't add extra value to goods. They're typically beneficial in a variety of commercial scenarios.

Broad adoption

The popularity of ERC-20 tokens is quite apparent in the cryptocurrency industry. The number of exchanges, wallets, and smart contracts that already support newly-launched tokens has made it easy for new projects to integrate with them. There is plenty of developer support and documentation to go around.

Flexibility

The first thing to note about ERC-20 tokens is that they are highly flexible and may be used in a variety of circumstances and applications. This is due to the fact that these tokens are very customizable. They can be used in a lot of different scenarios such as Loyalty points programs, in-game currencies, or digital collectibles such as NFT's.

Some of the main cons of ERC-20 tokens include:

Mainstream

The popularity of ERC-20 tokens is also their greatest weakness. There are so many projects using the same standard that it's difficult to stand out from the crowd without differentiating your token in some way. Moreover, since they're essentially all the same on a technical level.

Fraud and Scams

It takes minimal effort to create a simple ERC-20 token, meaning that anyone could do it for good or bad purposes. As such you want to be careful with what you're getting in when considering blockchains projects because there are some Pyramid schemes masquerading as legitimate projects out there and trying to get unsuspecting investors involved in their scams. As a result, when looking at blockchain projects, you need to be cautious with what you are interested in purchasing.

Other ERC Token Standards

While there is a large range of ERC tokens available, below we've outlined the most popular ones (excluding the ERC-20 one as it is listed above). 

ERC-721 

This token standard is for a non-fungible token (NFT) which gained huge popularity in the last year across the gaming and digital art worlds. These tokens represent ownership of something, and cannot be used interchangeably. 

ERC-777 

An evolution of the ERC-20 token, the ERC-777 provides more usability, particularly pertaining to its ability to mint or burn tokens. It also holds improved transaction privacy and an emergency recovery function.  

ERC-1155

This token standard allows for the creation of both utility tokens and non-fungible tokens. Making trading more efficient, the token standard allows for bundling of transactions which in turn saves costs. 

Learn More about cryptocurrencies and blockchain.

You can learn more about crypto basics from our specially created Learn centre, which covers everything a trader ought to know about cryptocurrencies and the blockchain industry. 

Building wealth doesn’t require a finance degree, a huge bank account, or advanced knowledge of the stock market. What you need most is clarity. Understanding the basics of investment can help you reach major goals like buying property, funding your education, or planning for retirement. When you learn how to put your money to work, you create opportunities for long-term growth, greater financial security, and even future revenue streams.

This guide breaks down what an investment is, how it works, the different types available, and how you can start today.

What Is an Investment?

An investment is something you purchase with the expectation that it will increase in value or generate income over time. You trade resources (usually money, but sometimes time or effort) for a future benefit. In simple terms, investing is like planting a seed today that grows into a tree tomorrow.

In finance, investments can include assets such as stocks, bonds, real estate, commodities, cryptocurrencies, mutual funds, and other financial instruments. These assets may generate profit through interest payments, dividends, rent, or increases in market value.

Outside of money, people also “invest” in education, skills, or personal development. The idea remains the same: you commit resources now for long-term reward. Whether you’re an individual saving for the future or a corporation expanding operations, investment is a powerful tool for building wealth and increasing economic value.

How Do Investments Work?

Investments typically generate returns in two main ways: income and appreciation.

1. Income

Some investments pay you regularly even if you never sell them. Examples include:

• Dividends from stocks, which come from a company’s profits
• Interest from bonds, which compensates you for lending money
• Rent from real estate properties
• Coupon payments from fixed-income securities

Income-focused assets can help you create predictable cash flow, support long-term goals, and diversify your portfolio.

2. Capital Appreciation

Appreciation occurs when an asset increases in market value.
Example:
You buy a share for $100, and later the share price rises to $150. If you sell it, your profit is the $50 gain minus any cost or tax.

Most investors rely on a mix of income and appreciation depending on their financial strategy.

Risk and Return

All investments involve risk, such as:

• Market volatility
• Credit risk (for bondholders)
• Depreciation of property or goods
• Currency fluctuations
• Liquidity constraints

In general, higher potential return usually comes with higher risk. Understanding your risk tolerance is essential for proper portfolio planning and long-term success.

Compounding

Compounding occurs when your earnings begin to generate additional earnings. For example, interest added to a bank account earns more interest later. Compounding accelerates wealth-building and is one reason long-term investing is effective.

Types of Investments

There are many investment vehicles available in the marketplace, each with distinct features, costs, and risk levels.

A. Stocks (Equities)

Stocks represent ownership in a company. When you buy a stock on an exchange, you become a shareholder. Your potential returns come from:

• Share price growth
• Dividend payments

Stocks are often more volatile but historically deliver higher long-term returns. They’re typically best for investors seeking growth and willing to handle market fluctuations.

B. Bonds (Fixed-Income Securities)

Bonds are loans you provide to a corporation or government. In exchange, you receive:

• Regular interest payments
• Return of your principal at maturity

Government bonds, corporate bonds, and foreign bonds vary in credit risk and coupon rates. Bonds help balance a portfolio and provide steady income.

C. Mutual Funds

Mutual funds pool money from multiple investors and invest in professionally managed portfolios of:

• Stocks
• Bonds
• Commodities
• Other securities

They offer diversification and professional management but may include management fees. Investors purchase shares of the fund at the end-of-day price.

D. Exchange-Traded Funds (ETFs)

ETFs are similar to mutual funds but trade on stock exchanges like individual shares. They often track stock market indexes, commodity markets, or sectors. ETFs typically have lower fees and offer flexibility, diversification, and transparency.

E. Real Estate

Real estate investments include:

• Rental properties
• Residential or commercial buildings
• Real Estate Investment Trusts (REITs)
  

Real estate offers potential income through rent, capital appreciation, and tax benefits. It also serves as a physical asset with market value tied to local economies.

F. Alternative Investments

These include:

• Commodities (gold, silver, oil, agriculture)
• Cryptocurrencies
• Private equity
• Venture capital
• Collectibles (art, coins, metals)

Alternative products often have higher volatility or lower liquidity but can strengthen diversification strategies.

How Much Money Do You Need to Start Investing?

Today, you can begin investing with $1 to $100 thanks to:

• Fractional share purchasing
• Micro-investment apps
• Zero-minimum brokerage accounts

The amount matters less than consistency. For example, investing $100 every month over 10 years can yield more than investing $1,000 just once, because compounding rewards regular contributions.

Before you begin, ensure you:

• Have a bank account in good standing
• Maintain an emergency fund
• Understand basic investment terms
• Are aware of costs, fees, and taxes

The barrier to entry is lower than ever, making investing accessible for almost anyone.

Advantages of Investing

1. Wealth Growth Through Compounding

Your money earns returns, and those returns earn more over time. Compounding is one of the most powerful financial tools available.

2. Passive Income Potential

Dividends, interest payments, rental income, and other streams can supplement your salary and eventually support financial independence.

3. Protection Against Inflation

Cash loses purchasing power over time. Investments in assets like equities, commodities, or real estate historically outpace inflation rates and help preserve long-term value.

4. Tax Benefits

Many investment accounts offer tax incentives:

• 401(k) and IRA contributions may reduce taxable income
• Roth accounts allow tax-free withdrawals
• Long-term capital gains are often taxed at lower rates

Always consult a tax professional for personalized advice.

Risks and Considerations

1. Risk of Loss

All investments carry the possibility of losing principal. No product offers guaranteed returns.

2. Market Volatility

Prices fluctuate based on supply, demand, economic policy, regulation, behavioral economics, and global events.

3. Liquidity Challenges

Some assets (like real estate, certificates of deposit, or certain bonds) are not easily converted to cash.

4. Knowledge Requirements

Successful investing requires ongoing learning, research, and understanding of financial statements, corporate law considerations, and market dynamics. Professional advice can be useful in complex situations.

How to Start Investing

1. Set Your Financial Goals

Define your purpose: retirement, education, purchasing property, or building long-term wealth. Timeline matters because it influences your strategy.

2. Check Your Financial Foundation

Ensure:

• A stable monthly budget
• An emergency fund
• High-interest debt under control
  

3. Understand Your Risk Tolerance

Consider your age, life stage, income stability, and comfort with market swings.

4. Choose Your Investment Account

Options include:

• Employer 401(k) plans
• IRAs (Traditional or Roth)
• Taxable brokerage accounts
  

5. Select a Brokerage or Platform

Look for:

• Low fees
• Educational tools
• Customer support
• Privacy and security features
  

Robo-advisors can offer automated, passive management based on your profile.

6. Start Small and Stay Consistent

Use strategies such as dollar-cost averaging, automatic transfers, and regular rebalancing.

7. Seek Guidance When Needed

Financial advisors, online courses, and platform research tools can help you navigate complex decisions.

Calculating Return on Investment (ROI)

Use this simple formula:

ROI = (Current Value – Original Cost) ÷ Original Cost × 100

For example:
You invest $1,000. It grows to $1,250.
ROI = (1250 – 1000) ÷ 1000 × 100 = 25%

ROI helps you compare different investments, though it does not account for time, risk, or market conditions. If you wish to learn more, you can check out our blog article on ROI.

Conclusion

Investing is the practice of putting your money to work so it can grow over time. You don’t need a large starting amount, just a plan, patience, and consistency. By understanding how investments function and choosing the right strategy for your needs, you can build wealth, protect your purchasing power, and work toward long-term financial goals. With knowledge, discipline, and the right tools, you can confidently take your first step into the world of investing.

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You hear the word "asset" thrown around constantly, in finance podcasts, investment apps, crypto spaces, business news, etc. You name it. But if someone asked you right now to define what an asset actually is, could you give a clear answer? Most people can't, and that's a problem, because assets are literally the building blocks of wealth. They're what you own that has value. They're what grows your net worth. They're what separates financial stress from financial freedom.

Whether you're trying to build a safety net, figure out what Bitcoin is about, or simply understand why your financially savvy friend keeps talking about "diversifying assets," getting clear on this concept changes everything.

This guide breaks it down simply: what an asset actually is, how different types work, why they matter to your money, and where digital assets like cryptocurrencies fit into the bigger picture.

Asset definition

Simple definition

An asset is anything of value that you own that can provide future economic benefits. That benefit can take many forms: income, appreciation, utility, security, or the ability to complete a task. Think of it as something that puts money in your pocket, either now or down the road.

For example:

• Your home is an asset that provides housing and may appreciate in value
• Your car helps you get to work (though it typically depreciates over time)
• Cash in your bank account can be used immediately or invested
• Stocks or bonds potentially grow your wealth through dividends and appreciation

In everyday terms, an asset is simply something valuable you own that can be converted to cash or provides some economic benefit over time.

Financial definition

In more technical terms, accountants define an asset as "a resource controlled by an entity as a result of past events, from which future economic benefits are expected to flow."

This definition, based on International Financial Reporting Standards (IFRS), highlights three key components:

1. Control or ownership of a resource
2. Result of a past transaction or event
3. Expected future economic benefit

The accounting definition focuses more on the precise financial impact and reporting requirements, while the everyday definition captures the intuitive understanding that assets are valuable possessions.

Why assets matter

Whether you're an individual building wealth or a business scaling operations, understanding your assets is fundamental to managing your financial life. At the personal level, assets define your net worth by representing everything you own minus what you owe. They're your financial safety net during emergencies, your potential source of passive income, and often the deciding factor when applying for loans. Beyond the present, assets form the backbone of retirement planning and what you'll eventually pass on through estate planning.

For businesses, assets play an equally critical role. They form the foundation of a company's balance sheet and serve as a key indicator of financial stability and growth potential. Strong assets can be leveraged to secure financing, generate ongoing revenue, and support day-to-day operations. When investors evaluate a company or potential buyers assess acquisition opportunities, asset strength is one of the first things they examine.

The common thread? Assets represent economic potential. Whether they're sitting in your investment portfolio or listed on a corporate balance sheet, they're resources that can be deployed to create value, either immediately or down the line. Understanding what you own, how it grows, and how to leverage it isn't just smart financial planning. It's the foundation of long-term security and opportunity.

Types of assets

Assets can be grouped in several ways depending on their function, liquidity, or how they generate value. Here are the most important categories you’ll encounter in finance and digital markets:

1. Financial Assets

These are instruments whose value comes from a contractual claim.

Examples include:

• Cash and bank account balances
• Stocks, bonds, exchange-traded funds
• Money market instruments

Financial assets are easy to trade and track, making them essential tools for individuals, investors, institutions, and professional traders.

2. Physical or Tangible Assets

These are physical items with measurable market value.

Examples:

• Real estate
• Machinery
• Vehicles
• Gold, commodities
• Inventory held by businesses

When people talk about “asset-backed holdings,” tangible assets are often the base layer.

3. Digital Assets

Digital assets exist only in electronic form but still hold economic value.

Examples:

• Cryptocurrencies like Bitcoin, Ethereum, Solana, and utility tokens
• Tokenized assets (real-world assets represented on a blockchain)
• Domain names
• Software licenses
• NFT-based items
  
  

As blockchain technology evolves, digital assets are becoming an important category in finance, regulated differently across Europe, the United States, Switzerland, Liechtenstein, and other regions.

4. Intangible Assets

These are non-physical assets that hold long-term value.

Examples:

• Patents, trademarks, copyrights
• Brand reputation
• Customer data
• Subscription business models
• Proprietary technology

Even without a physical form, these assets help determine a company’s market value.

Current vs fixed (or liquid vs. illiquid) assets

Current assets (also called liquid assets) can be converted to cash within a short period, typically one year.  Think of these as your financial quick-change items: cash and cash equivalents, short-term investments, accounts receivable, inventory, marketable securities, and prepaid expenses. They're the resources you can tap into relatively quickly when needed.

On the flip side, fixed assets (also called non-current or illiquid assets) are your long-term financial items that provide value over extended periods but aren't as easily converted to cash. 

These include your more substantial investments like land and buildings, equipment and machinery, long-term investments, vehicles and furniture, and leasehold improvements - typically items that form the backbone of long-term financial stability but would take time to liquidate.

Liquidity - the ease and speed with which an asset can be converted to cash without significant loss of value - is a critical consideration when evaluating your asset portfolio. Many financial whizzes choose to have a mix of liquid and illiquid assets, which helps balance immediate cash needs with long-term growth objectives.

Operating vs. non-Operating assets

Operating assets directly drive a company's core revenue generation - like production equipment, factory buildings, raw materials, operational technology systems, and product patents. These are the essential tools that keep the business running and producing income day after day.

Non-operating assets, while valuable, don't participate in daily operations, think investment properties, surplus marketable securities, unused land for future expansion, and corporate art collections. This distinction helps businesses separate their essential revenue-generating resources from their supplementary value holders.

Personal vs business assets

Personal assets belong to individuals and typically include:

• Primary residence
• Personal vehicles
• Household items and furnishings
• Jewelry and collectibles
• Personal investment accounts
• Retirement funds

Business assets belong to a company and may include:

• Commercial property
• Business equipment
• Inventory
• Accounts receivable
• Company vehicles
• Intellectual property

This distinction is especially important for small business owners and self-employed individuals who need to separate personal from business assets for tax and liability purposes.

Common examples of assets

To reinforce your understanding of different asset types, here's a list of common assets:

Personal tangible assets:

• Primary residence
• Vehicles (cars, motorcycles, boats)
• Jewelry and watches
• Furniture and appliances
• Collectibles (art, coins, stamps)
• Electronic devices

Personal intangible assets:

• Investment accounts
• Retirement plans 
• Insurance policies with cash value
• Patents or copyrights
• Professional licenses
• Social media accounts with monetary value

Business tangible assets:

• Office buildings and facilities
• Manufacturing equipment
• Inventory
• Company vehicles
• Office furniture and equipment
• Raw materials

Business intangible assets:

• Brand name and recognition
• Patents and trademarks
• Customer lists and relationships
• Proprietary software
• Goodwill from acquisitions
• Franchise agreements

Often-overlooked assets:

• Domain names
• Social media accounts
• Promissory notes (when you're the lender)
• Life insurance cash values
• Royalties from creative works
• Timeshare ownership
• Cryptocurrency holdings

How to determine asset value

Different methods of valuation

Determining what your assets are important, especially when it comes to financial planning, tax purposes, and business decisions. Here are some of the most common valuation ways:

1. Cost method

The original purchase price is used as the asset's value. For example, if you bought a computer for $1,500, that's its cost value. This method is straightforward but doesn't account for depreciation or market changes.

2. Depreciation method

This recognises that many assets lose value over time. For example, a $30,000 car might depreciate by $3,000 each year, so after three years, its depreciated value would be $21,000.

3. Market value method

This determines what an asset would sell for on the open market today. For example, your home's market value is what a willing buyer would pay for it now, regardless of what you originally paid.

4. Income method

This values an asset based on the income it generates. For example, a rental property might be valued at 10 times its annual net rental income.

5. Replacement value

This estimates what it would cost to replace the asset today. For insurance purposes, the replacement value of your home furnishings might be higher than their current market value.

Why valuation matters

Accurate asset valuation is important for several reasons:

• Tax planning: Proper valuation ensures you're not overpaying on taxes and helps with capital gains calculations
• Insurance coverage: Knowing asset values helps ensure adequate insurance protection
• Estate planning: Accurate valuations are crucial for fair distribution of assets among heirs
• Business decisions: For companies, understanding asset values informs decisions about selling, leveraging, or replacing assets
• Financial planning: Knowing your true net worth helps with retirement planning and financial goal-setting

How digital assets fit into the bigger picture

Digital assets, especially cryptocurrencies, blur the line between traditional finance and modern technology in ways that fundamentally reshape how we think about ownership and value.

Unlike physical or contractual assets, digital assets operate on distributed blockchain networks that bring unprecedented transparency to financial transactions. They enable entirely new forms of ownership: fractional stakes, tokenized rights, and programmable transfers that were impossible in the analog world. Perhaps most remarkably, they can move across borders in minutes rather than days, expanding access to financial services for individuals and businesses who were previously locked out of traditional systems.

The practical implications are already visible. A cryptocurrency wallet puts you in direct control of your assets without needing a bank as an intermediary. Blockchain-based tracking systems are revolutionizing supply chain transparency, letting companies and consumers verify authenticity and origin in real time. Tokenization is unlocking liquidity in traditionally illiquid markets (real estate, fine art, commodities) by allowing these assets to be represented, divided, and traded digitally. As adoption accelerates across the globe, digital assets are no longer experimental. They're becoming a standard part of the global financial infrastructure.

The role of regulation  in asset management

Assets, especially digital ones, don't exist in a vacuum. They operate within legal frameworks designed to protect users, institutions, and the integrity of financial markets themselves. Regulation seeks establishing trust, preventing fraud, and ensuring that security is built into the system from the ground up.

Key regulatory elements include:

• Anti-money laundering (AML) requirements
• Know-your-customer (KYC) verification for traders
• Licensing for financial services
• Consumer protection laws
• Transparency standards

Countries like Liechtenstein, Switzerland, and the European Union have emerged as early leaders in crafting digital-asset frameworks that strike a careful balance, encouraging innovation while maintaining professional oversight and accountability. The result is a regulatory environment where both builders and users can operate with confidence.

Strong regulation delivers tangible benefits that strengthen the entire ecosystem. It increases market stability by reducing volatility driven by fraud or manipulation. It protects individual investors from bad actors and predatory schemes. It encourages institutional adoption by giving major players the legal clarity they need to participate. It improves asset security through mandatory safeguards and best practices. And perhaps most importantly, it builds credibility.

Bottom Line

Assets are the building blocks of the financial world, covering everything from cash accounts and real estate to emerging forms of digital currency. Whether you're exploring conservative instruments or researching digital assets, a clear understanding of what makes something an asset is the first step toward smarter financial planning.

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