Cryptocurrencies and NFTs are digital assets that have gained popularity in recent years. They are often compared to other investment options as they possess the caliber of valuing high for how much crypto NFT were created. Before we go any further, it’s best to start with a glance at these two assets so that people unfamiliar with these terms get on the same page as us.
What are cryptocurrencies?
Cryptocurrencies are digital currencies that work on a decentralized blockchain system. In other words, there’s no banking or central institution that governs or influences the distribution of purchasing power on crypto-trading platforms. All transactions are recorded in a digital ledger available for everybody, and the information entered cannot be modified. It ensures that the cryptocurrency system is extremely safe. Those who want to buy cryptocurrencies can purchase an authorized crypto-trading app or website.
What are NFTs?
NFTs or non-fungible tokens are digital assets in the form of artwork, video, documents, or even music. It is a digital collectible. It is comparable to collecting rare paintings or assets in the real world and building a collection of them, as NFTs follow a similar logic but on a digital forefront. Similarly mint NFT also exist.
How are NFTs and cryptos similar?
- Both work on blockchain technology:
Cryptos and NFTs rely on blockchain to store transaction and ownership-related information. Each ‘block’ of information is static and cannot be modified once created. It is, however, possible to provide a successor to the ownership by initiating a new transaction that will be stored in a new ‘block.’
- Both are great assets for investment:
As discussed earlier, these digital assets have different values that can help a person strengthen their returns on investment. They can have a greater selling price than their production price.
- Both are stored in digital wallets:
Like a physical collectible or money that would’ve required a place to be stored, cryptocurrencies and NFTs have digital wallets that are utilized for the storage purpose of these assets.
What are the differences between NFTs and cryptos?
Unlike NFTs, cryptos can be broken down into smaller units that can be sold. NFTs, on the other hand, are indivisible. Thus, it’s not possible to purchase portions of NFTs.
- Sticker price:
On average, it’s costlier to buy NFTs than cryptos. One main reason for this is that NFTs can’t be sold in portions, but cryptos can. Additionally, NFTs are unique collectibles, so it’s obvious that they will be pricier. A creator can create NFT and sell the ownership to somebody else in exchange for money.
NFTs, as the name implies, are non-fungible. It means that one NFT, such as artwork, cannot be sold in exchange for another painting or NFT. The main reason is that all NFTs may have different values. Thus they’re not interchangeable. It’s similar to why the famous painting ‘Starry Night’ won’t cost the same as ‘Mona Lisa.’ On the other hand, cryptos can be exchanged like normal currencies are traded. One type of cryptocurrency can be exchanged for a different cryptocurrency of the same value.
The main goal of NFTs is to establish authenticity or ownership of a particular digital product. Each NFT is unique and doesn’t have another copy of itself. A NFT creator is therefore able to generate higher value for their NFT. Cryptos are mainly used to pay for other assets. Cryptos can have multiple identical units in the same way as regular currencies.
- Complexity of creation:
Unlike cryptos that require mining to generate new units, an artist can easily create NFT art and put it up for sale.
NFTs and cryptocurrencies are good investment options for those looking for assets that rely on certain trading regulations. The price of NFTs and cryptocurrencies are subject to changes depending on the economic climate.