Understanding Virtual Assets
Virtual assets refer to digitally represented value assets that can take various forms such as:
Digital Tokens
- Cryptocurrencies: Decentralized digital currencies like Bitcoin and Ethereum
- Utility Tokens: Grant rights to perform specific actions within blockchain ecosystems
- Stablecoins: Pegged to stable assets like fiat currencies
- NFTs: Unique digital collectibles representing ownership
Unlike central bank digital currencies (CBDCs), these assets operate independently of traditional financial systems.
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Bitcoin Explained
Key Features
- First widely adopted cryptocurrency (created in 2009)
- Peer-to-peer transactions without intermediaries
- Public ledger (blockchain) for transparency
How Bitcoin Is Created
Through mining—a process where miners verify transactions and receive BTC rewards. Each transaction is recorded on the blockchain.
Virtual Asset Futures ETFs
These exchange-traded funds track virtual asset performance through futures contracts (e.g., CME Bitcoin Futures).
Key Risks
- Tracking error vs. spot prices
- Liquidity and operational risks
- Single-asset volatility
Example: Investing in Bitcoin futures doesn’t grant actual BTC ownership.
Spot vs. Futures Virtual Asset Trading
| Feature | Spot Trading | Futures Trading |
|------------------|----------------------------|------------------------------|
| Ownership | Direct asset ownership | Contractual agreement |
| Capital | Full asset value | Margin-based |
| Platforms | Binance, Coinbase | CME, regulated exchanges |
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Investment Risks
- Innovation Uncertainty: BTC’s nascent stage leads to price volatility.
- Regulatory Shifts: Evolving policies may impact adoption.
- Cybersecurity Threats: Hacks and fraud are prevalent in unregulated platforms.
FAQ Section
Q: Are virtual assets legal?
A: Legality varies by jurisdiction; always check local regulations.
Q: How do I store Bitcoin securely?
A: Use cold wallets (offline storage) for enhanced security.
Q: Can futures ETFs replicate spot prices accurately?
A: No—futures often deviate due to contango/backwardation effects.
Sources: Samsung Asset Management, CME Group, Investor Education Centre (2022).
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