Quick Summary
- There are several similarities and differences between NFT and cryptocurrency. They are both very volatile and unstable, function on blockchain and they are solely digital and unregulated at the moment.
- They are different in some ways too. NFT is more viewed as a digital asset and cryptocurrency as a virtual currency. While cryptocurrencies can be traded for other crypto, NFTs can’t as they are all unique looking and have different values.
Traditional wallets with banknotes are slowly taken over by digital wallets filled with digital euros, bitcoins or NFTs. With the recent popularity surge of non-fungible tokens (NFTs), it’s important to know how they differ from cryptocurrencies. Both of these assets are completely digital and correlated. This correlation is not 100 percent, but it’s very present. With the cryptocurrency boom, there comes a surge in NFT prices too. But what are the parts that distinguish them from each other? Let’s dive in and identify both of them.
Non-fungible token (NFT)
NFTs are unique digital assets that can be created with the help of artificial intelligence (AI) or by artists and then minted on some marketplaces. Then they can be bought or sold by anyone on an open and decentralized market through cryptocurrencies. All the transactions are completely digital and transparent.
NFTs represent anything that can be captured as a photo, thing, or video – art, music, gaming. For example, if a person doesn’t want to buy a real painting, he/she can just buy an NFT and receive a digital file. All the data connected to owning and transactions are stored on the blockchain. Even tweets can be sold as NFTs (Jack Dorsey sold his first tweet for more than $2 million).
NFTs are special in the fact that every one of them is different, so the value of one doesn’t equal the other like it can be done in cryptocurrencies. This makes the NFT market less liquid than the crypto market. Most NFTs exist on the blockchain of the Ethereum cryptocurrency, and like Bitcoin, the Ethereum blockchain creates permanent digital records of every transaction using that cryptocurrency. It also creates an indisputable ledger of all the NFT transactions.
Where to trade NFTs
If you want to buy or sell an NFT, you need someone to trade it with. That’s why marketplaces were created. In order to do that, you have to go to a marketplace. If you want to buy, just visit any marketplace to do so. However, if you want to sell, you need a big audience and that’s possible with big marketplaces.
Currently, the biggest NFT marketplaces are:
- OpenSea
- Axie Marketplace
- Rarible
- Larva Labs
- NBA Top Shot
- SuperRare
- Foundation
…and more
Cryptocurrencies
Cryptocurrencies are an encrypted form of digital currency, but with much higher volatility. Bitcoin can increase or decrease in value by 10% in one day, but US Dollar won’t. The benefit of cryptocurrencies is they do not rely on financial institutions to verify transactions. Blockchain does that automatically and leaves out intermediates.
This peer-to-peer (P2P) system working on blockchain technology enables one to send and receive payments from anyone around the world. When an individual transfers cryptocurrency, the transactions are recorded in a public ledger. The most known cryptocurrencies are Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Solana (SOL), Binance Coin (BNB), etc.
Where to trade cryptocurrencies – the biggest crypto exchanges
- Coinbase
- Binance
- Huobi
- Kucoin
- Kraken
…and more
Similarities
- cryptocurrency and NFT are both digital and unregulated. The essence of these assets make it hard to for authorities to actually regulate them. It may happen in the future, but for now, you can enjoy benefits of the free market
- the price of NFT and cryptocurrency is unstable, making it very volatile
- they both function on blockchain.
Differences
- NFT is viewed more as a digital asset and cryptocurrency is a virtual currency
- cryptocurrencies can be exchanged and traded among each other (e.g. 1 Litecoin for 0.003 Bitcoin), but NFTs cannot. They are all unique, have a different value and parameters
- while it’s hard to create cryptocurrency, it is significantly easier to create an NFT.
Conclusion
Cryptocurrencies and NFTs have many similarities and basically correlate with each other, but they both have different attributes connected to their functioning and trading. They are both very similar in some, but different in other aspects. With an extreme demand after NFTs, we think they are here to stay and will help build the online world even more. Furthermore, NFTs will support the growth of cryptocurrencies.
more to read
What You Need to Know Before Buying an NFT
sources: whatis, asiaone, techtimes
Rene Remsik
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
