If you haven’t heard by now, cryptocurrency is another form of virtual payment, like Bitcoin and Dogecoin, that is taking the world by storm. Each transaction is stored on a computer system that is impossible to hack, cheat, or erase, making it one of if not the most secure forms of transaction.
What is cryptocurrency?
Cryptocurrency was created in 2009 and is known by several different names, such as crypto, bitcoin, and crypto-currency. Crypto essentially removes the need for traditional ways of creating transactions, like using central banks or the Government, and uses an online network of computers like Blockchain to secure transactions around the world. As a digital currency, this means that the consumer does not have to pay any exchange rates that they would have to if they were converting from one currency to another. As crypto is accessible globally, the use of conversion rates is not needed and therefore, you don’t lose out on money through a transaction.
What is NFT?
When artists realized that they could link digital data to pieces of art, NFTs were created. NFT stands for a nonfungible token, which essentially means the piece of art you have purchased or created cannot be duplicated, replaced, and is, for all purposes, unique to you. Much like the Mona Lisa cannot be replicated without copyright coming into play. An NFT could be anything from a piece of art to a meme, a video, or a GIF. Once you purchase an NFT, the ownership is recorded on Blockchain; which is a digital ledger created by a network of computers and is stored virtually and not controlled by any central banks or governments. There are many NFTs for sale and they have proven popular around the world, even in the celebrity world.
Crypto vs NFT
The difference between crypto and NFT is simple; An NFT is a visual virtual token, like a piece of art, a video, a GIF, a meme, or even a page of words, whereas crypto is a digital token that is used as a form of payment. Although both are virtual tokens, they do have many differences. For instance, the value of cryptocurrency is purely economic. However, as the stock market rises and falls, the value of crypto will also mirror this and will also rise and fall. This is why a lot of people invest in crypto for the long haul so that they can ride out the ups and downs of the stock market.
Another difference is that a piece of crypto can be sold or traded for another piece without the value being lost. An example would be 1 bitcoin equals another bitcoin, which is how people create profit by trading one for the other or selling it for a price they choose. Whereas one NFT does not equal another NFT, as each NFT is unique and cannot be replaced. Essentially, you have one key that can unlock one padlock, and the key cannot be recorded or copied.
A lot of people invest in crypto to get more out of their money and create large pension funds that will allow them to retire a lot earlier than originally planned, as the profits and dividends created can be massively beneficial. Whereas those who purchase NFTs tend to keep them as part of their collection to store until later on in life. Much like high-end art shows, NFTs are virtual forms of this. The only way you could make money from an NFT would be if you were the artist who was selling the NFT, or if you were the owner and sold the NFT a few years down the line when the price of the NFT had gone up, making yourself a profit.
Also read: Why Should You Start Receiving Payments In Form Of Cryptocurrencies?
Conclusion
One of the only similarities that crypto and NFT share is that they are both part of the digital world and the new digital currency that is proving to be vastly popular, growing day by day. They are both based on the same software and technology, using a network of computers to store transactions, and are completely decentralized from traditional currencies and payment platforms. They both represent an alternative type of investment that is new and exciting for the younger generation. One is not better than the other, as they both have their own purpose and results. If you wanted to join long-term investing, you would use crypto, whereas if you wanted to create a collection of artwork that could be profitable in the future, you would choose NFT.