Digital assets, crypto-assets and digitаl currencies: Economic content and potential of convergence

Abstract

The article is devoted to researching the nature of new economic categories (digital assets, cryptoassets and digital currencies) and identifying their essential features and functional relationships between them. The study developed an original interpretation and classification of cryptoassets and digital currencies, proposed a decision tree for attributing a digital asset to a particular type, identified the features of issuance and circulation of various cryptoassets and digital currencies. The study showed that not all digital assets are cryptoassets or digital currencies. Cryptoassets should be considered as the most important and most numerous type of digital assets. According to the author’s classification, cryptoassets can be categorized into two main types: virtual currencies and digital tokens. The former perform mainly a payment and/or savings function, while the latter perform an investment and/or utilitarian function. The two main subspecies of virtual currencies are cryptocurrencies and stablecoins. Cryptocurrencies have neither an identifiable issuer nor collateral, but are characterized by intrinsic value (bitcoin) or imputed value (altcoins). Stablecoins typically have an identifiable issuer and use various reserve assets to maintain a stable market value. In terms of functionality, virtual currencies, like new digital forms of fiat money issued by central banks (central bank digital currencies) or commercial banks (tokenised deposits), can perform all or some monetary functions. The latter becomes possible due to the public consensus reached by users even in the absence of regulation of virtual currency circulation. According to the authors, modern digital currencies exist in four main forms: central bank digital currencies, tokenised deposits, stablecoins and cryptocurrencies. The potential of convergence between crypto assets and digital currencies is revealed at the instrumental, infrastructural, consumer, institutional and regulatory levels.