Conventional investment practices have provided a remarkable foundation for the present-day wealth status. However, as lucrative as conventional investments sound, they provide limited options for investing, they require a substantial amount of capital, and they raise transparency concerns. As a result, as technology keeps advancing, so does the demand for better efficiency, more automation, greater transparency, ease of operational traceability, and easier investment opportunities.

The Big Picture

The continued global competition for dominance in wealth has created an opportunity for tech giants and tech enthusiasts to quest for alternatives using the technological intervention. Ultimately, by utilizing the ever-advancing blockchain technology, digital investment alternatives are intended to bring about the utmost customer satisfaction, employee engagement, time-to-market, and operational efficiency.

Most digital investment services available currently appear to have a model which is identical to the conventional non-digital investment. However, digital investments are executed by means of digital platforms that provide the ground for investing money in stocks, shares, and funds while profiting from it. Such platforms, just like the traditional investment mediums, are expected to offer assurance of exchanges, verifiability of transactions, and secured access to statements.

Furthermore, digital investment can be great news for financial firms as they can invest their money to produce value. As predicted by experts, one way of achieving that is by creating a digital debt system. Just as the conventional form of debt is considered a critical element that serves as a lubricant for the growth of the economy, so are digital debts. They have the potential to create wealth by obligating a pledger to make payments of an agreed value. Of course, with the help of regulatory stakeholders’ involvement.

Involvement of Artificial Intelligence

Artificial intelligence (AI) has made huge transformations in several industries. It’s no different in the investment sector either. AI applications with functionalities can enable the digital execution of all traditional investments such as digital stocks, digital bonds, digital investment funds, digital assets, digital gold, cryptocurrency, and the list goes on.

Since conventional investments have been criticized for lack of transparency and unreported expenses, the involvement of AI in digital investment can considerably simplify and make investment less complicated for the general public. Moreover, AI can address the concerns of transparency by providing accurate and timely information about financial status, degree of risk, and applicability to investors.

According to the EY-Parthenon 2020 research, speed and success are critical components of investment, with 72 percent of business CEOs stating that they must fundamentally restructure their operations over the next two years in order to compete successfully in their sector. The research also indicated that companies across all industries will need to focus on scaling technological solutions and achieving advantages as they increase investments in high-priority initiatives.

The Current and Future Status of Digital Investment

People have the tendency to invest digitally now more than ever. Even though the most notable rationale is transparency, people are also interested in the duration of return on investment (ROI). The lower the duration, the more motivated investors are. Even though digital investment is still in its earliest stages, it has a generally satisfactory ROI. According to a recent Forbes report, companies that tracked their return on digital investment anticipate a 7.6 percent average ROI in 2022, which would exceed last year’s 4.4 percent average ROI.

With the growth of several attempts to scale up digital investment practices, particularly with the help of blockchain technology and cryptocurrencies, firms have discovered a better alternative for raising money through digital bonds. According to Zebpay, digital bonds are poised to disrupt the $120 trillion in the financial industry. Based on the report, currently, in the world, there are around 14 bonds issued digitally whose values range from $20 million to $2.6 billion, with maturity spanning from zero to ten years. The European Investment Bank (EIB) issued all these digital bonds for the purpose of experimenting. The results showed that the digitalization of investments enhanced speed, efficiency, cost savings, transparency, and public access.

Sooner or later, more and more digital investment alternatives will emerge as advancements in blockchain technology keep on growing. The present attempts of digitalization of investments will scale up, leading firms to provide training for their workforce with digital technologies and to advance their digital business models. Eventually, financial institutions will fully replace their conventional operations with blockchain, as the demand for enhanced efficiency and transparency keeps rising.

Photo: Ground Picture/Shutterstock

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