An Introduction
to Digital Assets

How blockchain technology is transforming our economy

and society in the 21st century.


Did you know …?

Companies globally
are expected to spend approx.


on blockchain technical
services by 2024*

* Mitic 2021

A quest for decentralisation

On the 31st October 2008, less than two months after Lehman Brothers had filed for bankruptcy, a paper was sent out to a small mailing list of computer science enthusiasts that would change the course of economic history.

Written by an unknown author under the pseudonym of Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System” outlined a concept that disrupted the world of banking and gave birth to a new capital market.

At a time when trust in the financial system was at the lowest it had been in decades, the document outlined a fully decentralised digital payment system — one that would no longer rely on financial institutions at all.

At the core of the system proposed by Nakamoto was a technology called blockchain.

When it comes to economic interactions like banking, the entire system relies on scarcity. A value sum of money – represented in the form of data – can’t simply be replicated and keep the same value. In digital economies this is known as the double-spending problem.

To avoid double-spending, banks maintain central databases, acting as an intermediary to ensure online transactions are legitimate. Crises such as the financial crash of 2008 highlighted the vulnerabilities of this centralised banking system, including single points of failure, corruption, data inconsistencies and settlement delays.

A blockchain is a decentralised database that records transactions transparently, anonymously and securely. This structure fundamentally replaces trust in authority with security through encryption, allowing for the direct exchange of assets in the same way that information is shared on the internet – without any intermediaries.

The real implications of this concept could be massive.

Did you know …?

There are now more than


cryptocurrencies other than Bitcoin*

* CoinMarketCap 2022

A taxonomy of tokens

Bitcoin was proposed as an alternative world currency, but the underlying blockchain technology is what could potentially shape the future of money, government and business.

Two types of virtual objects that have emerged are standalone digital “coins” and “tokens” that are built on top of existing blockchain platforms like Ethereum. They can be used in fundamentally different ways.


Payment tokens are the purest form of cryptocurrencies, enabling the decentral transfer of digital money e.g. to purchase goods and services.
Bitcoin dominates this space but has inspired many alternative “Altcoins” over time.


Security tokens are very similar to utility tokens, but they represent an investment in an asset that already has value, e.g. company shares, bonds, or certificates.
Their key advantage is that issuers don’t have to securitise these tokens through traditional clearing houses, registries etc.


Utility tokens provide access to specific services or goods (e.g. as an event ticket or for car sharing access), similar to vouchers.
They are bound to a single use case – for instance, Uber tokens may be redeemed for a ride but nothing else.

Did you know …?

$100 invested in Bitcoin in 2011
are now worth


* Own calculations, as of 03/21/2022  CoinMarketCap

Measuring up the digital asset market

Since 2018, the value of one Bitcoin has increased 17 fold. In part because of the media attention and hype around cryptocurrencies and blockchain, this technology has become a major topic in financial markets and the public.

However, this picture should not distract from the reality that Bitcoin and other cryptocurrencies currently make up only a tiny fraction of global markets.

The key questions for investors, regulators and users remain:

“Are crypto assets a separate new asset class?”

“Can they reasonably be considered for diversified portfolios?”

Bitcoin is signifcantly more volatile than other traditional assets

Based on rolling weekly returns, % calculated over the last 5 years

Putting the market in perspective

Market capitalisation of major global asset classes

Crypto market






Money (M1)


Global GDP


Global Equities


Global Debt


Digital assets in a global multi-asset portfolio

Analysis of the risk-return profile and potential for diversification.

Digital assets, like Bitcoin or Ethereum, are often compared to a gold-like “store of value“, due to their decentralized nature, independence as well as their partial scarcity.

When comparing and combining asset classes in portfolios, it is essential to take a risk-equivalent or risk-adjusted perspective, e.g. by normalizing relative to volatility or drawdown, less than 2% of Bitcoin is risk-equivalent to 10% of Gold.

Hence, digital assets can seriously be considered as a separate new asset class, and can add value in a long-term wealth allocation context.

Global diversified portfolios

Past performance is not a reliable indicator for future performance.
Source: Bloomberg; own calculations, data as of April 2022

Do you want to learn more?

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Christian Hille

CIO, Head of Portfolio Management & Product
Fürstlich Castell‘sche Bank

Nils Mallock

Portfolio Management & Product
Fürstlich Castell‘sche Bank

Lukas Kreß

Product Management
Fürstlich Castell‘sche Bank

We would like to thank everyone involved, internally and externally, for bringing this comprehensive publication together. Special acknowledgement goes to Katharina Gehra and Walther Doernte for their valuable insights and very constructive, critical discussions around blockchain and its applications, as well as professional writer Tarn Rodgers Johns.