What Are Cryptocurrency Smart Assets?
Smart assets are unique virtual currency tokens that may represent a tangible real-world asset or non-tangible ownership that can be purchased, sold, or exchanged as defined by the rules of smart contracts on the blockchain network.
- Smart assets are the underlying assets of smart contracts.
- NEM, which stands for New Economy Movement, is a peer-to-peer cryptocurrency and blockchain that uses smart assets.
- Physical assets are intended to be the basis for smart assets.
Understanding Smart Assets
The smart asset may be a virtual representation of a physical asset, like a property or a car, or it may represent virtual goods, like a Bitcoin, an equity share, or a patent on a novel product. Each smart asset is associated with a smart contract that governs its usage.
Smart assets offer a great degree of autonomy, anonymity, and low-cost of transactions in the peer-to-peer (P2P) blockchain network compared to those in the real world.
Smart assets have various use cases, such as taxation or debt. With taxation, the issuer can get a share following each transaction, while smart assets can also serve as debt, which can only be transferred back with permission from the issuer.
Smart assets can also be used to freeze assets for a period of time, or for blacklisting certain addresses. This can also cover whitelisting, which allows for the transfer to a set number of addresses. Smart assets can be limited to asset pairs as well, where they are only interchangeable with certain currencies.
Smart assets are popularly used concepts in many emerging blockchain networks, like the NEM (XEM), or New Economy Movement.
Example of Smart Assets
Say you have a royalty-linked patent on an e-book that you co-authored with a friend and published on an Amazon Kindle-like platform. In this case, you can have all the royalty payments automatically calculated and credited to the respective accounts based on the defined smart contract, including the price paid to the Kindle-like platform.
The smart contract may also have defined terms regarding if and how the authors can sell their royalty smart asset tokens to only a select group of partners and on what conditions.
NEM and Smart Assets
NEM is said to be the first cryptocurrency to adopt the smart asset platform. The NEM blockchain allows smart asset transactions that are logged on the blockchain ledger. The NEM allows users to launch their own tokens or cryptocurrency that acts as a smart asset.
The four key parts of NEM smart assets are addresses, mosaic, personalized namespaces, and transactions. Addresses are also known as container assets, which can be where digital coins or stored or represent things like deeds or documents.
Mosaics are fixed smart assets that do not change. This could be a token or a set of assets, such as stock. Namespaces are unique places for assets or businesses. Transactions are the actual transfer of assets, such as Mosaics between addresses, or the transfer of ownership between addresses.