Dealing With Intangible Assets

  • Darryn Pollock
    ⭐ Features

    When it comes to company assets, intangible ones are dynamic and fluid, and are becoming vitally important when considering blockchain tokens

Dealing With Intangible Assets
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Assets, commodities, and possessions in a business and financial setting have come a long way. From bartering crops and selling goods to stocks, bonds, and equities, the digitalizing of the globe has led to assets changing their face, and even their tangibility.

Now, companies and corporations are being valued on abstract concepts that fall under their intangible assets, and even determining that value through these intangible assets is starting to change. Company evaluations are shifting — they are no longer based just on pure equity but rather much more on their IPOs and publicly traded stock. This gives insight into a company that has a rich bank of intangible assets.

To this end, it is unsurprising that Blockchain assets for companies operating in this new space are starting to be viewed as a truer evaluation of the company. Cryptocurrencies can be viewed as an intangible asset, and as a new way of representing the value of a company. As these digital tokens grow in value and worth, they lend that growth and value to the overall stance of the business.

The way these intangible assets are shaping up and moving with the help of a new technological wave like Blockchain, it will eventually lead to a more distributed, transparent and thus truer and fairer reflection of a company's worth through these inclusive and attainable assets.

New intangible assets emerging

As a pure definition, an intangible asset is simply an asset which has no physical qualities to it. To be intangible means that one cannot touch, see, smell it, etc. But looking deeper into it, anything from goodwill, brand recognition and intellectual property — such as patents, trademarks, and copyrights — are all intangible assets.

However, even these assets are starting to be overtaken by another intangible asset that is emerging alongside a new technology. Blockchain companies are springing up, much like tech companies, with a solution to new problems, but these Blockchain companies come with their own assets.

Cryptocurrencies are the new intangible asset that is not only clearer and more transparent in terms of valuing their worth, but also generally better for the entire marketplace. The cryptocurrency worth of a Blockchain company can represent a much truer valuation than another company with traditional intangible assets.

In fact, the model of capitalism itself is in a state of flux. Tech companies have already tested its bounds in terms of equity and valuation, but as things move forward and more Blockchain companies spring up, the general idea of capital in a capital-free system will make valuations incredibly difficult and inaccurate. However, a cryptocurrency allows for market value to be attributed as a new form of intangible equity of a said company.

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A change in valuation

Companies are starting to be valued on much more than simple Assets - Liabilities basis. With this change comes the difficulty in valuing intangible assets. Putting a figure against brand identity is really an estimation and prone to purposeful inflation or deflation.

Tangible assets are easy to value, and thus easy to use to determine the equity of a company, but then there are some companies like Microsoft and other Tech giants that really own very little in the way of tangible assets. Their wealth is in intangible assets.

As Microsoft's founder Bill Gates puts it: “Products you can’t touch have a very different set of dynamics in terms of competition and risk and how you value the companies that make them.”

A lot of intangible assets are valued on the basis of public sentiment, and the metric for this is derived from things like IPOs and publicly traded stock. But the difficulties in determining the public sentiment from the excitement around stocks is equally difficult and often purposefully inaccurate.

Issues with the new standard in valuation

With IPOs and the resulting publicly traded stocks, the level of distribution and sentiment is often not a fair reflection. The system leaves the door open to big company investors like VCs and fund companies as well as big and wealthy individual investors that can use their money to move the markets.

These types of players always influence how the publicly traded companies work and how much their intangible assets are worth. Investment groups and companies can help prop up and lift companies, thereby influencing their true worth through their intangible assets in a way which can bring a swell of false public hype and frenzy.

In many ways, this is a form of market manipulation, as big money has all the power to pick and choose its own desirable companies to inflate. But, if stocks are being cherry-picked to inflate in order to grow the intangible assets of a company and thus give it a higher evaluation, the same cannot be said for cryptocurrencies.

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A Blockchain company’s desire is to distribute and include a vast and different arrangement for people to buy and invest in its cryptocurrency. Thus, if we take the same metric of a stock and use it against a cryptocurrency, the public sentiment is a far truer reflection because it is also on a market, but its price is heavily influenced by public sentiment.

And again, that public sentiment moves on an almost daily basis as this distributed group of ‘investors’ can easily buy and sell and trade their cryptocurrencies dependant on positive or negative news surrounding the blockchain company.

Inclusive, achievable intangible assets

Publicly traded stocks for traditional companies are technically open to all, but they are a lot harder to get one’s hands on as there is a level of exclusivity and exclusion that surrounds stock trading. Additionally, the model is not community oriented or decentralized, nor well distributed.

The more one looks at it, Blockchain assets are a much stronger and truer metric of company value. They are an intangible asset which is firstly easier to value as they operate on an open and transparent market, and secondly, they are a way to measure sentiment and growth in a company as they are far more distributed and liquid.

It allows these buyers of the token to be vested in the potential and possibility of the company; cryptocurrency assets often correlate strongly to the success of a company.

If a company is moving forward and hitting its targets on the way to its final goal, this is often predicated on the growing value of their token. It is also linked to an increase in interest and hype as more individuals buy the open and freely available token, which is then also well distributed.

So, if we consider these coins as intangible assets because they are not part of an asset which would determine equity, but they are a marker of success and sentiment in a company like a publicly traded stock, we can start to understand them a little more.

They do not have the difficulty of exclusivity, and thus are much more communal and therefore much truer as a metric by which to value a Blockchain company.

A decentralized community evaluation

People often call the cryptocurrency space a bubble since so many people are drawn to it and have bought into it, especially when it comes to ICOs and Blockchain companies. However, this is probably an unfair assessment of the space.

There is a creation of decentralized communities which are learning to accurately assess the intangible assets of companies. The shrewdness of a true distributed and decentralized collective is a determining metric that many mainstream tech companies cannot say they have as their basis for value.

Many tech companies may have had their value propped up by VCs and investment firms that helped kickstart them to success, but those in the Blockchain space have nowhere to hide. Their every move can be tracked and traced by the value of their tokens, which plays a part in their intangible asset worth and thus really in their total actual value as a business.

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Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?

  • Yuri Molchan
    ⭐ Features

    Stablecoins show hardly any volatility compared to Bitcoin and altcoins, many are hoping that they will be able to bridge new crypto economy and regular fiat money

Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?
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Bitcoin, the father cryptocurrency, emerged in hope that it will remove all intermediaries in electronic commerce that cut off their share of payments. BTC was perceived as a P2P way to replace fiat cash in an electronic format, which would enable one party to pay another without any financial institution or payment platform which would demand its share of a transaction as a reward for its services.

What is wrong with Bitcoin

For quite a while Bitcoin was performing the way the crypto community expected. But the situation changed later – BTC rate became weaker, thus bringing down its financial and economic reliability, when it gets to be used as a regular means of payment.

You cannot have a currency that would cost like a British castle today, a gram of gold – tomorrow and a pack of French fries the day after.

At that point practical fintech minds came up with an idea of creating something which would become a breakthrough in the universe of crypto – a so-called stablecoin.

Will stablecoins solve the volatility problem?

Technically, stablecoins are protected from the volatility roller-coaster that Bitcoin and other cryptos love to ride. They are programmed to keep their prices stable and investors now are largely attracted to this new type of digital assets.

Stablecoin does not show any volatility in its monetary value, since it has a fixed connection to an asset it is pegged to. The major goal of using stablecoins is taking the best from decentralized crypto coins and combining it with a constant value. Thanks to it, stablecoins can be used as a reliable means of trade.

Asset-pegged stablecoins

Asset-backed ones get their value from an asset as can be understood from the name. An asset provides the necessary value to a coin, as well as the necessary legitimacy.

A great example of an asset-pegged stablecoin is Tether (USDT). In spite of a series of scandals at the end of last year, it remains the most popular stablecoin in the crypto market.

Recently, it has partnered with the Tron Foundation to launch a Tron-based stablecoin.

Other examples are TrueUSD (TUSD), USD Coin (USDC), the Gemini Dollar (GUSD), and the Paxos Standard (PAX). They are all pegged to the USD.

Crypto-backed stablecoins

Some digital coins work in a similar way to fiat-backed ones, however, they are pegged to collateral crypto. That means that crypto assets that ensure the value of such stablecoins are stored in a wallet similar to escrow.

A good example of a crypto-pegged token is Maker, which is ranked 16 on CMC.

Algorithmic stablecoins

Even though, stablecoin can be interesting at first thought but the way they are built goes against the principle of decentralization that crypto coins have as a foundation. Thus, many crypto fans and evangelists are positive that stablecoins must be linked towards not a centralized asset but a computer algorithm which takes value from a balance between supply and demand.

Basis is now considered the most promising algorithmic stablecoin of all.

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Can stablecoin ensure smooth future for the crypto industry?

The primary goal of all crypto assets was and remains to come up with virtual asset that would be liquid enough and not vulnerable to market volatility. From this point of view, stablecoins are a dream of all crypto fans and evangelists of a decentralized economy.

Apart from the potential to conduct crypto transactions smoothly, experts believe it can bridge the two worlds – fiat and crypto, bringing them a mutually beneficial coexistence. However, that may take time.

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