With the technological advancements in the global financial market, crypto assets and cryptocurrencies are increasingly helping businesses and economies enter the digital world. However, many people still confuse these two concepts, which, although related, have important differences.
“Both solutions are linked to the new era of decentralization of transactions and investments, but they are not necessarily the same, especially when we look at their application possibilities,” says the CEO of Pinbank, a one-stop-bank-provider with a complete ecosystem of financial solutions, Felipe Negri.
Key characteristics
Essentially, a crypto asset is a digital asset protected by encryption. Among the options in this category are cryptocurrencies, but there are also alternatives such as NFTs (Non-Fungible Tokens), stablecoins, and utility tokens.
“When we talk only about crypto assets, we are discussing a more abstract idea because they do not depend on fiat currencies to determine their value,” says Negri. “In other words, they are assets that follow the market in a way completely disconnected from a governmental model or specific strategy, depending much more on supply and demand,” he adds.
On the other hand, cryptocurrencies are backed by real-world currencies, which, in turn, are guaranteed by governments. One of the main examples is BTC (Bitcoin); according to CoinMarketCap, it surpassed $85,000 in mid-April and is increasingly becoming an option accepted by different investors and organizations.
“In the case of cryptocurrencies, which are backed by real currencies, the supply does not happen in a disconnected way,” explains Pinbank’s CEO. “For this reason, there is a movement in the market as a whole to embrace this crypto asset, as it is a solution to simplify and optimize payments and transfers worldwide,” he adds.
Evolution in Brazil
In Brazil, the crypto asset market is booming, as can be seen by the performance of cryptocurrencies. Data from the Federal Revenue Service reinforce this reality by revealing that these assets moved around R$ 248 billion between January and September 2024.
On the other hand, Negri points out that there is a major challenge in the country to make the use of these alternatives clearer. “New technologies always need to be applied to solve pain points, which, in this case, relate to preventing financial risks. This means that both governments need to educate the population on the topic and accelerate regulations, while companies should create services to reduce fees and improve user experiences,” he notes.
The executive also emphasizes that the development of the crypto sector can help Brazil address the ‘fiscal chaos.’ ‘Seeking to tackle exchange rate volatility through innovation is an efficient way to enhance commercial operations and even investment strategies, without being at the mercy of global economic uncertainties. In other words, the market has a much greater chance of achieving sustainable growth through the digitalization of processes,’ he concludes.
