With the evolution of digital wallets across the world, the use of traditional currency is taking a backseat. These digital wallets work perfectly with both, fiat currency as well as cryptocurrency. When it comes to digital currency, there are a lot of options to choose from and it is crucial to know about them all. Digital currency is nothing but an electronic form of coins and notes which are stored in a digital wallet. These can be easily withdrawn from an ATM or a financial institution. Cryptocurrency on the other hand is a bit different from digital currency. In simple words, an encrypted form of digital currency is called cryptocurrency. It runs, records, and stores all the data on blockchain technology, and all the transactions that are being made do not depend upon any financial institution for verification.
Another variation of blockchain that has been coming in headlines these days especially from the start of 2022, is Non-fungible tokens or NFTs or NFT stocks as they are called. Fungibility basically means that a part of your token can be exchanged with something of equal value. For example, if you exchange a one-dollar note with 4 dimes, it wouldn’t make any difference as both of them value the same, doesn’t matter how you take it. But, when it comes to NFTs it is different.
Non-fungible tokens cannot be exchanged for one another as no same NFT holds the same value. They are completely different from each other. NFTs are unique digital assets that represent different objects. These objects may be an art piece, video clip, an image, or music. You can read more about NFTs in our guide to NFTs.
What NFTs Can Do?
NFTs help by enabling the users to have ownership of a digital product. With this ownership, it is easy for the owners to unlock the value of that particular product. You may think, what if someone copies your “digital artwork” and share it on their own social media channel? They certainly can. but, it won’t give them ownership of the same. For example, anyone can copy some famous painting from social media and share it. But, it won’t have a value because the original one has.
NFTs are limited in number. That’s why their value increases with the increase in demand. These are created on the blockchain and they can represent something tangible as well as something intangible. Some examples of NFTs are mentioned below:
- Beeple’s purely NFT digital art was the first NFT that was sold at a major auction. It was auctioned at $69 million.
- Taco Bell sold a series of GIFs that were created based on the dishes in their menu as NFTs. These were sold within minutes after the launch.
- Music tracks
Non-fungible tokens are bought and sold online and all the transactions are managed by a digital ledger.
How Are NFTs Different From Crypto?
NFTs are known to remove the middleman from the digital exchange. In this way, they allow the buyers to directly link with the sellers. That is why NFTs make it possible for fans to directly support their favourite artists (in the case of digital artworks).
Another main difference as discussed above cannot be exchanged for something of the same value. Whereas in the case of crypto, these currencies can be exchanged as they are fungible.
The ownership right of NFTs is kept with the NFT owner itself, therefore, they also have the right to copy it as many times as they like. Creators of NFTs also have the right to create multiple copies of the original item. But, in case the buyer wants to create copies of NFTs, they will have to take permission from the creator. Though all these NFTs will also have unique values and they will be considered as unique NFTs.
Whereas for cryptocurrency, they too are created on blockchain technology. It is also possible for different companies to offer their own cryptocurrencies. These are called tokens. These tokens enable the users to perform trade specifically for a service or item that the company provides. Some of the popular cryptocurrencies are mentioned below:
If you plan on buying NFTs we would recommend you gather more information about NFTs in general and the NFT that you are planning to buy!