Understanding Digital Commodity
A digital commodity encompasses various digital assets, including computing power, storage, and primarily digital currencies.
While the term can be broadly applied to different digital goods, it is commonly associated with digital currencies, especially cryptocurrencies.
Leveraging Underlying Cryptocurrencies
As commodities, cryptocurrencies can also serve as the underlying basis for derivatives, which are financial instruments whose value is derived from the value of an underlying asset.
Derivatives contracts can provide traders with the right to buy or sell a specific amount of cryptocurrency at a predetermined date or value.
Many consider the growth of derivatives crucial for the widespread adoption of digital assets.
Real-World Asset Digitization
Interestingly, the term “digital commodity trading” can also refer to the electronic trading of real-world assets like oil and gas.
In this context, digital commodity trading pertains to the digitization of various aspects within the commodity trading chain.