What is a digital asset and how is it valued?

Main characteristics of digital assets

Digital assets have three main characteristics. First, these assets exist in digital form, and for this reason, their ownership is known as the right of use. These assets can have intrinsic or tangible value.

Digital assets are created, stored, and transferred through electronic means distinct from physical objects. They exist in bits and bytes of information that are stored on servers, cloud storage platforms, or blockchain networks.

The rights to use these assets are also distinct. Digital assets often come with proprietary rights, licenses, or intellectual property (IP) protections. These rights govern the access, distribution, modification and use of the property.

Digital assets can have intrinsic and tangible value. Intrinsic value refers to the intrinsic value of an asset, such as its potential to generate revenue or increase brand recognition. Tangible value appears in the form of actual monetary benefits, such as direct sales or licensing fees.

How are digital assets valued?

Valuing digital assets can be complicated due to their intangible nature and dynamic market conditions. For this reason, different methods are used to value digital assets.

The finished price approach

This method takes into account the cost of the asset including development costs and acquisition costs.The cost approach is a method of valuing digital assets that focuses on the original cost of acquiring or developing the asset. This approach is based on the principle that the value of an asset is determined by the amount of money invested in its creation or acquisition.

Market approach

This method assesses value based on comparable assets traded in the market. The market approach is a method of valuing digital assets that involves analyzing the prices of comparable assets that have recently been sold. It is based on the principle that the value of an asset is determined by the prices paid for similar assets in the market.

Income approach

This method estimates the value of the asset based on the future cash flows it is expected to generate. The income approach is a method of valuing digital assets that focuses on future earnings or cash flows generated by the asset. It is based on the principle that the value of an asset is determined by its ability to generate future economic benefits.

Expert assessment

In cases where the assets are unique or non-monetary, expert appraisals are often used. Expert judgment is a valuation method that relies on the insight and expertise of experienced professionals to assess the value of digital assets. This approach is often used when other valuation methods, such as cost, market, and income approaches, are not fully applicable or provide inconclusive results.

Diverse categories of digital assets

Digital assets can be defined in these categories.

 Intellectual property

This property includes ideas, including copyrights, trademarks, patents, and digital trade secrets. These assets represent unique and valuable ideas or inventions. The following are examples of assets that have intellectual property.

Copyright: Protects original works of digital content, including literary, dramatic, musical, and artistic works.

Trademarks: Consists of trade names, logos, and other symbols that identify and distinguish goods or services.

Inventions: Consists of innovations and inventions, including digital processes, products and methods.

Trade secrets: Confidential information that gives companies a competitive advantage.

Data

These assets include organized and structured information such as customer data, market research and financial records. This data has strategic value and can inform decision-making, management and business direction.

Customer Data: Customer data includes information about customers such as their name, address, email address, purchase history, and interests. This data can be used to personalize marketing campaigns, improve customer service and make better business decisions.

Market Research Data: Market research data includes information about industry trends, customer behavior, and competitor activity. It can be used to identify new market opportunities and develop new products or services.

Financial records: Financial records include information about a company’s financial performance, such as sales, costs, and profitability. They can be used to track progress toward financial goals, make informed investment decisions, and attract investors.

Customer Relationship Management (CRM) data: CRM data includes information about customer interactions and relationships. It can be used to identify and nurture high-value customers, cross-sell and upsell products or services, and solve customer problems.

Digital currencies

These assets include decentralized and unregulated digital or virtual currencies that are used for transactions or investments. For example, we can mention Bitcoin, Ethereum and Litecoin. Investing in digital currencies that have long-term value or act as a payment method is therefore a form of digital asset.

Cryptocurrencies: Digital or virtual tokens that use cryptography to secure transactions and control the creation of new units. Examples of digital currencies include Bitcoin, Ethereum, and Litecoin.

Central Bank Digital Currencies (CBDC): Digital or virtual tokens issued by central banks. CBDCs are still in development, but have the potential to revolutionize the way we interact with money.

Stablecoins: Digital or virtual tokens that are pegged to a fiat currency such as the US dollar or Euro. Stablecoins are designed to be less volatile than cryptocurrencies.

Utility Tokens: Digital or virtual tokens that give holders access to a specific service or product. Utility tokens are often used in blockchain-based applications.

Digital collections

These are unique, non-fungible tokens (NFTs) that represent ownership of digital items such as artwork, music, or in-game assets. They convey exclusivity and potential appreciation.

Art and collectibles: NFTs are increasingly used to represent ownership of digital art such as paintings, photographs, and music. They can also be used to show digital ownership of physical collectibles like trading cards and toys.

Virtual Real Estate: NFTs are used to represent ownership of virtual land in video games, the metaverse, and the online world. They can be used to build structures, develop businesses, and even rent space to others.

In-game items: NFTs are used to represent ownership of in-game items such as weapons, armor, and pets. These items can be traded or sold to other players or used to gain an advantage in the game.

Tickets and Passes: NFTs are used to represent ownership of tickets to events, such as concerts and sporting events. They can also be used to indicate access to exclusive clubs or situations.

Digital infrastructure

This asset includes software, applications and platforms that enable digital services and transactions. For example, we can mention cloud computing services and e-commerce platforms. Digital assets refer to any intangible or digital asset that has value and contributes to the overall value of the company.

Cloud computing services: Cloud computing services are managed computing services provided over the Internet, such as data storage, computing power, and networking. They provide flexibility and scalability to businesses, allowing them to quickly scale up or scale down their IT resources as needed.

Data Centers: Data centers are physical facilities that house and manage computer systems and storage devices. They are the backbone of cloud computing and other digital infrastructure services.

Network infrastructure: hardware and software that connect devices and networks and enable data transmission and communication. This is essential to enable businesses to quickly and securely access and share data.

Cyber ​​Security Solutions: Cyber ​​security solutions protect digital assets from unauthorized access, use or disclosure. These solutions are critical to protecting sensitive data and ensuring the confidentiality, integrity, and availability of critical systems.

Web-based assets

Websites, web applications and other online platforms that generate revenue through advertising, e-commerce or subscription services. Examples of web-based assets include:

Websites: Websites are online platforms that act as a company’s digital storefront or information center. They can be used to showcase products or services, provide customer support, and drive traffic to other channels.

Web Applications: Web applications are software programs that run on the Internet and provide specific services or functions. They can be used for tasks such as e-commerce, customer support and project management.

E-commerce platforms: E-commerce platforms enable businesses to sell products or services directly to customers online. They offer features like shopping cart, payment processing and order tracking.

Subscription Services: Subscription Services provide access to content or features for a monthly or annual fee. They can include access to music, movies, streaming services, software as a service (SaaS) and e-books.

Software assets

Proprietary software applications, algorithms and intellectual property related to software development.

Proprietary software: Proprietary software is software developed and owned by a company that is used in its own operations or sold to others. It can create a competitive advantage and generate revenue through licensing or sales.

Software Licenses: Software licenses allow the use of software developed by others. They can be open source licenses, which are freely available for use, modification and distribution, or closed source licenses, which are proprietary and require a fee to use.

Intellectual property rights in software: Copyrights, royalties and trade secrets related to software development protect the company’s investment in its software assets.

Open Source Software: Open source software is software that is freely available for use, modification, and distribution. This can be a valuable resource for companies that want to develop or use software without incurring the cost of developing it themselves.

NFT Holdings

Own unique digital assets, such as artwork, collectibles or in-game items, represented by non-fungible tokens.

NFT artwork: NFT artwork is a digital artwork stored on the blockchain, often with unique properties and ownership records. It can be a valuable asset for collectors and investors.

NFT Collectibles: Digital collectibles such as trading cards, virtual avatars, or in-game items represented by NFTs. They can be traded or held for their potential value.

NFT Music: Digital music files stored on the blockchain, with associated property rights and royalty streams. They can provide new income opportunities for musicians.

Video NFT: Digital videos stored on the blockchain, with limited editions or exclusive ownership rights. They can be collectibles or as proof of ownership of the original content.

Digital Rights Management (DRM) assets

Licenses and technologies that control access and use of digital content such as music, video or software. The following are examples of digital rights.

DRM licenses: Agreements that allow the use of digital content such as music, movies, or software while restricting unauthorized access or distribution. They protect copyright holders and prevent piracy.

DRM technologies: Technologies that control access to and use of digital content, such as encryption, watermarking, and digital signatures. They help prevent copyright infringement and protect intellectual property.

DRM Solutions: Software and services that implement DRM technologies to protect digital content from theft and unauthorized use. They are essential for businesses that sell digital content.

DRM Management Systems: Platforms for managing DRM licenses, technologies and usage rights for digital content. They provide a centralized way to control and enforce DRM policies.

Digital subscriptions

Revenue-generating subscriptions to digital services, such as online streaming platforms, online learning platforms or software-as-a-service (SaaS) offerings, are considered assets.

Streaming service: A subscription service that provides access to streaming content such as music, movies or TV shows. They offer convenience and value to consumers and can generate significant revenue for businesses.

Online Learning Platforms: Subscription services that offer online courses, training, and certifications. They provide access to education and training and can serve as a valuable business model for educators and content creators.

Software as a Service (SaaS) platforms: Subscription services that provide access to cloud-based software applications. They offer flexibility and scalability and can help businesses save money on IT infrastructure.

E-book platforms: subscription services that provide access to digital books. They offer convenience and a wider selection of titles than traditional bookstores.

Digital Monetization Assets

Strategies and technologies that generate revenue from digital assets, such as advertising, in-app purchases or affiliate marketing, are types of digital assets that are intangible in nature.

Advertising: Earn money from displaying ads on websites, apps or other digital platforms. This is a common monetization strategy for businesses with large online audiences.

In-App Purchases: The sale of digital goods or services within apps, such as virtual currency, in-game items, or subscriptions. This is a popular monetization model for mobile app developers.

Affiliate Marketing: Earning commissions by promoting the products or services of other businesses. This is a passive income stream for businesses with a large online presence.

Product placement: Integrating products or brands into digital content, such as movies, TV shows, or videos. This can be an effective way to reach a wider audience and promote products to the target market.

Sponsorship: Partnering with brands or individuals to promote their products or services in exchange for payment. This is a common monetization strategy for sports teams, celebrities, and influencers.

E-commerce selling: generating income by selling products or services directly to customers online. It is a popular business model for companies in various industries.

Data Monetization: Selling or licensing data to third parties for marketing, research or other purposes. This is a valuable asset for businesses with large amounts of customer data.

Digital currency trading: making profit from buying and selling digital currencies. This is a risky but potentially profitable investment strategy.

Tokenomics: Designing and implementing token-based economic models to incentivize user behavior and generate revenue. This is a new and evolving area of ​​digital monetization.

Blockchain-based applications: development and deployment of applications that use blockchain technology to provide new or enhanced services. Blockchain can be used to create secure and transparent transactions and build new types of applications.

Digital identity assets

Digital Identity Assets are unique digital identifiers that represent the identity and credibility of an individual or organization online, such as social media profiles, email addresses, and website domains. These assets include unique identifiers that identify an individual or organization online. They are essential for connecting with others, accessing services and building relationships in the digital world. These assets can be divided into two main categories: personal and organizational.

Social media profile: Unique identifiers that identify an individual or organization online, often associated with personal or professional information. They are valuable assets for businesses that want to connect with customers and build relationships.

Email addresses: Unique identifiers that facilitate digital communication and are often linked to social media profiles and other online accounts. They are essential for business and personal communication.

Website Domains: Unique identifiers for websites that serve as digital addresses and branding elements. They are valuable assets for businesses that want to have a strong online presence.

Digital Loyalty Assets

Points, rewards, and other forms of digital currency earned through interactions with a company’s products or services are also considered digital assets. In this way, the assets resulting from things like customer clubs can be identified as Digital Loyalty Assets. These assets encourage the customer to buy more or interact with the brand.

Loyalty Points: Value earned through interaction with a company’s products or services that can be spent or redeemed for rewards or discounts. These points encourage customer loyalty and repeat purchases.

Rewards programs: Programs that offer incentives to customers for repeat purchases or engagement with the company’s brand. These programs foster customer loyalty and encourage repeat engagement.

VIP Programs: Exclusive programs that provide additional benefits and experiences to loyal customers. These programs recognize and reward valuable customers and encourage them to stay engaged.

Types of digital credit

Online reviews, testimonials, and other forms of feedback that influence consumer perception and brand credibility. This asset is known as Digital Reputation Assets.

Digital reputation assets are intangible assets that represent the online reputation of a company or individual. These assets can include comments and reviews that are associated with a brand or person in the digital world.

Online review: Feedback from customers or users that indicates the company’s reputation and influence on the purchase decision. These assets are very important for building trust and credibility.

Comments: Positive feedback from customers or users that can increase brand credibility and customer trust. They provide social proof and encourage potential customers to consider a company’s offerings.

Branding: An online mention of a company’s brand name or products, which indicates brand awareness and consumer interest. They help businesses monitor their brand reputation and identify areas for improvement.

Digital brand

The visual identity, messaging, and other intangible elements that represent a company’s brand are known as digital brand assets. Digital brand assets are intangible elements that define and represent a company’s or individual’s brand in the digital world. They are the set of visual identity, messaging, and other things that shape the resulting brand experience and guide how customers perceive a brand online.

Visual Identity: The overall look and feel of a company’s brand, including logos, colors, typography, and images. It communicates with the brand personality and helps customers to know the brand.

Brand messaging: The consistent communication of a company’s values, mission, and brand positioning. This ensures that all communications are consistent with the brand identity and resonate with the target audience.

Brand Experience: The overall customer experience associated with a company’s brand, including interactions with products, services, and customer support. It affects customer perception and loyalty.

Digital ecosystem assets

Digital ecosystem assets are intangible assets that represent the network of relationships and communications of a company or individual in the digital world. They include relationships with partners, investors, influencers, and other stakeholders that contribute to a company’s success.

Partnerships: Strategic collaborations with other businesses or organizations that expand a company’s reach and influence. They provide new opportunities for growth and open innovation.

Ecosystem participation: active participation in industry networks, communities or associations that promote collaboration and innovation. Foster relationships with key players and keep the company up-to-date on industry trends.

Customer Relationships: Strong relationships with customers, based on mutual trust and value, that foster customer loyalty and patronage. They turn customers into brand champions and encourage positive word of mouth.

Product of digital innovations

Intellectual assets or technologies that position the company to disrupt or innovate in its industry.

Disruptive Technologies: Advanced technologies that have the potential to change an industry or a company’s business model. They provide opportunities to gain competitive advantage and disrupt the status quo.

Intellectual Property in Disruptive Technologies: Patents, Trademarks and Trade Secrets Related to Disruptive Technologies. They protect the company’s investment in these technologies and prevent competitors from copying or replicating them.

Expertise in Disruptive Technologies: Ability to research, develop and implement disruptive technologies in company offerings. This enables the company to stay ahead of the curve and adapt to changing market dynamics.

Digital assets are a valuable asset class for businesses of all sizes. By understanding the different ways to value digital assets, businesses can make informed decisions about how to use these assets for growth and success.