We live in a digital world. You are either reading this article on your phone or computer. Every day, we interact with technology in innumerable ways and barely give it a second thought. In 2024, people’s digital and real lives will be completely intertwined. This means your digital assets, which are intangible, are just as valuable as tangible, physical assets.
Protecting your digital assets is a critical process that many people overlook. In this article, we define digital assets and how to protect them. We will also cover how to appoint a trusted agent to oversee your digital assets with a free printable power of attorney form.
What Are Digital Assets?
A digital asset is an item stored digitally, with proven value, and whose ownership can be transferred. The value of digital assets can be sentimental or financial. They are an important part of your holdings and need to be protected.
Digital assets that are private and not meant to be shared but still have personal value include the following:
- Media, like photos, videos, audio, and text
- Social media accounts
- Email accounts
- Gaming accounts
These privately held digital assets are owned by a single individual and have some financial value:
- Cryptocurrencies
- Non-fungible tokens (NFTs)
- Central bank digital currencies
These digital assets belong to businesses and organizations:
- Company logo
- Branded content
- Customer databases
In short, anything stored digitally that is valuable to its owner and potential buyers is a digital asset.
Why Do Digital Assets Need Protection?
Various risks can endanger your digital assets, causing them to lose value or for you to lose ownership or access. There are four main types of threats to digital assets:
- Operational risks, such as inadequate customer protection on a virtual trading platform
- Cybersecurity risks, like hacking and phishing attacks
- Market risks, which are to be expected when dealing with new and emerging investments
- Fraud risks, like online impersonation
Three Ideal Practices to Protect Your Digital Assets
The wise investor will know what potential risks threaten the viability of their digital assets before taking ownership. Once a digital asset is in your name, you need to follow certain best practices to ensure safety. Here are four ways to do so:
Implement User Authentication
It is essential to implement measures to authenticate users for any digital asset that is accessed by multiple parties, like a company database. Multi-factor authentication, such as logging in with both a password and security question, helps ensure that only people with clearance to use a digital asset can interact with it.
This protects assets against data loss or theft. If an asset is tampered with or stolen, you can identify where the leak could have occurred. Limiting user access to digital assets and implementing user authentication are critical requirements for digital security.
Consult with Cybersecurity Experts
Digital assets are at risk from hackers and scammers who know their way around online security systems. You must fight fire with fire if you have extremely valuable digital assets. This means contracting the services of a cybersecurity firm to help mitigate the threats of hackers and malware. It’s also advisable to regularly update your software and hardware so that your digital security protocols are always up to date.
Audit trails should be conducted at periodic intervals to identify weaknesses in the security framework and track user behavior
Always Back Up Important Digital Assets
Whether your digital assets are personal or professional, backing them up to a secondary virtual location is essential. If you fall victim to a cybersecurity attack or your hardware becomes unusable, having access to a fully backed-up version of your digital assets will be a major relief.
How to Transfer Ownership or Agency of Your Digital Assets
You will want someone you trust to look after your digital assets when you are unable to protect them yourself. If the digital assets have monetary value, you might even want to transfer their ownership to an inheritor after your passing. Many people don’t consider their digital assets when preparing their estate plans.
To ensure your digital assets are well looked after, even if you are incapacitated, you will need to appoint a digital fiduciary. This designated individual has the legal right to access and handle your digital assets with your permission.
To appoint a digital agent, you must meet with an attorney. Alternatively, you can download a power of attorney form template online, sign it with your agent, and get it notarized and made official. This way, your digital assets are safe even in your absence, and you ensure that they are used (or not used) according to your wishes.
