A digital asset that is divisible into units that are interchangeable on a like-for-like basis. An example is ether, which is fungible with other ether tokens. Digital assets are any sources of value or wealth that exist only in digital form and comes with a distinct right to use or distinct permission for use. Digitally stored data that do not have those rights are not considered assets. More specifically, a digital asset is an asset that can be stored and traded on a blockchain or other distributed ledger technology.

Through fungible asset tokenization, digital assets can obtain the fungibility feature if two main characteristics are secured: 1) interchangeability, where each unit of the tokenized asset has the same issue value/ market value and validity — for example, all units of bitcoin have exactly the same value and 2) being divisible, that is, a fungible digital asset can be divided into as many decimal places as were defined during the tokenization process. Each unit will have carry the same value and validity.

A digital asset is created, or minted, when new information is added, through an entry, to a particular blockchain. Blockchain entries allow users to exchange existing digital assets and/ or create or mint new ones according to the established process of mining or minting. Digital assets represent a broad category that encompasses anything minted and exchanged on a blockchain. Examples of digital assets include NFTs, utility tokens, and similar types of assets that are created and can be tracked on the blockchain. Broadly classified, digital assets come in five categories: crypto assets, stablecoins, non-fungible tokens, central bank digital currencies (CBDCs), and security tokens.

As a term, “digital asset” is often used interchangeably with “virtual asset” to denote the same thing, but in certain contexts they are overlapping. There are certain key conceptual and practical differences between the two terms. All virtual assets are digital assets, but not all digital assets are virtual assets. In order to be a virtual asset, a digital asset must possess its own value and shall be able to be exchanged for other forms of assets.