What Is an Asset

An asset is anything that allows one to transfer economic values across time and space. A good asset is anything that transfers economic values across time and space at a minimum cost or uncertainty.

Different assets achieve it in different ways. But it’s this core utility that makes something an asset.

An asset doesn’t necessarily need to generate economic value itself. It just needs to be really good at transferring value.

For example, gold is an asset because it allows you to transfer value across time (you can keep it in storage today and similar amount of value is available to you tomorrow), and across space (you can sell it for a similar amount of value as what you bought it for). The fact that gold can be used in industrial processes to generate economic value is a separate feature from what makes gold an asset.

Same thing goes for bonds, stocks, seashells, real estates, bitcoins, email lists, digital content, social media audience… All of these may, or may not be a good asset, depending on how well they fulfill the utility of allowing you to transfer value across time and space.

If you’re clear about what an asset is, and judge any asset-wannabes by how they fulfill the core utility of an asset, you’d be less confused than most people.

© 2021. Natasha Che. All rights reserved.