The digital currency has become so famous nowadays that everyone wants to own one. Digital currency is just like any other money, cash or valuable asset stored, managed and exchanged digitally on the Internet.
Digital currencies are traded just like traditional currencies. But the difference is that they are not present in reality or physical form.
Digital currencies are virtual so that they can be transferred easily without any cost. It is owned privately and is not considered legal.
Types of digital currency are NFTs, cryptocurrency, virtual currency etc.
- NFTs are unique digital assets stored on a blockchain, while cryptocurrency is a digital currency stored on a blockchain.
- NFTs are primarily used to collect and trade unique digital assets, while cryptocurrency is a digital currency.
- NFTs have been controversial and criticized due to their environmental impact and perceived lack of real-world value.
NFT vs Cryptocurrency
NFTs are unique digital assets that cannot be exchanged for other assets of the same type. They represent digital artwork, collectables, and other special items. Cryptocurrencies are digital currencies designed to function as a medium of exchange. They can be used to buy and sell goods and services and traded on exchanges.
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NFT, or Non-fungible token, is a virtual token stored on the blockchain and used as a digital ledger. It is a non-interchangeable unit.
NFT can be owned by a person with a certificate of authenticity of the product or proof of its ownership. But it can be used to share and copy digital files.
It can be reproduced repeatedly in the form of audio, videos, photos etc. As they cannot be interchanged or exchanged, NFTs are very much different from cryptocurrency.
NFT can be considered an investment in art forms.
Cryptocurrencies are designed in such a way that they can be used as an exchange for something. Cryptos works on blockchain technology.
Cryptography stores the data of a digital ledger in a computerized database. Ownership of the individual coins is stored in secure transaction records and is also prevented from making additional coins.
Cryptocurrency doesn’t exist in reality. It is present in virtual form. Any legal authority does not issue it.
Cryptos are used in a decentralized manner,, using the blockchain as the public financial transaction database.
|Parameters of Comparison||NFT||Cryptocurrency|
|Trade||It cannot be traded for another.||It can be exchanged and traded.|
|Purpose||Creates a unique digital signature.||Quick, transparent and secured transactions.|
|Uses||Gaming, collaterals, investment, domain names, digital content etc.||Wealth management, money transfers, business practises etc.|
|Marketplaces||OpenSea, Rarible, Foundation||Coinbase, eToro, Kraken etc.|
What is NFT?
Quantum was the first NFT created by Anil Dash and Kevin McCoy in 2014. It was launched in New York.
They were called monetized graphics by the creators. NFT was just opposite to the counterparty.
A non-fungible token that cannot be interchanged but can be traded on blockchain explicitly as a work of art.NFT is data that is stored.
It can be related to a physical asset. NFTs are considered a status symbol.
There is always informal trading regarding the ownership of an asset.
NFTs function very much like cryptos. But they are fungible.
They do not hold the same value as Bitcoin or Ethereum. Every asset in NFT has a different matter.
NFTs are stored on the blockchain so that a record can be created regarding the previous owner of assets. So with each purchase or transaction, a unique digital authentication is provided to the owner to track it.
However, it is not always safe and can be rotted. NFTs also leave a carbon footprint that is not considered suitable for the environment.
NFT doesn’t transfer copyrights to the person who may purchase it. Copyright of work is provided to the original owner, and NFT sallows them to make more copies.
NFT can be used as digital art in high-profile auction sales. It can be used in games where digital assets can be owned by the years and not developers.
Music, films, memes, tickets, patents etc., can be used as a digital token in the form of NFT.
What is Cryptocurrency?
In 1983, for the first time, anonymous cryptocurrencies were received by David Chaum, who called it cash. In 2009, the first decentralized cryptocurrency was created by an anonymous Satoshi Nakamoto.
Any central authority or government does not maintain cryptocurrency. Different people control it, and the state monitors the units sold, exchanged or purchased and their ownership.
The system is responsible for determining whether new cryptos can be created. If created, who will get the ownership? All the information and transactions are done cryptographically.
Decentralized cryptocurrencies are known publicly. It is not controlled by the government or backed.
Mostly 1800 to 2000 cryptocurrencies can be found in the market. It is managed and controlled by the miners.
Because of its virtuality, it is tough to enforce laws on cryptocurrencies. Cryptos are maintained by the blockchain, which keeps them secure in computing systems with transaction data and a timestamp.
Nodes play an essential role in connecting the network of cryptocurrency.
Cryptocurrency wallets are also available to store public and private keys. Bitcoin is an anonymous cryptocurrency that has more than one key.
Owners of the bitcoin are not identifiable, but the transactions in the blockchain are public. The cryptocurrency transaction fee depends upon the network and the demand for the currency.
Main Differences Between NFT and Cryptocurrency
- The origin of NFT was in 2014. The source of cryptocurrency was by an anonymous person in 2009.
- NFT cannot be traded or interchanged for another asset. Cryptocurrencies can be exchanged and traded as all of them are equal.
- NFT aims to create a unique digital signature that gives an owner a unique identity. The purpose of cryptocurrency is quick, transparent and secure transactions.
- NFTs are less volatile and very complicated. Cryptocurrencies are unstable and highly risky.
- Uses of NFT include gaming, collaterals, investment, domain names, digital content etc. Uses of Cryptocurrency are wealth management, money transfers, business practices etc.
- The marketplace of NFT includes OpenSea, Rarible, Foundation etc. The marketplace of Cryptocurrency includes Coinbase, eToro, Kraken etc.
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.