The introduction of blockchain technology led to the invasion of two most talked about elements in the digital ecosystem- Cryptocurrency and NFT. Aren’t both these blockchain products making the buzz in the market? Yet amidst their individual loud buzz there stands one common notion – NFT or Cryptocurrency? Are they the same? And if not, how are they different? Let’s address all these curiosities in this article itself and help understand the tits and bits of NFT and Cryptocurrency.
Basic Understanding of NFT and Cryptocurrency
The term NFT is an acronym for Non-Fungible Tokens which is considered to be unique when it cannot be substituted further with anything else. Each NFT is pegged with the identifiable information of its owner. It is created using blockchain technology for digital collectibles like such as art, music, games, etc. The blockchain-based digital certificates provide a distinct identity to the asset, work, or design.
On the other Cryptocurrency is the form of virtual money using cryptography to protect and verify the transactions. The ecosystem of cryptocurrency is decentralized in nature and hence remains unaffected by third-party interference. The transaction costs are highly negligible for the cryptocurrencies without any bar on the transaction limits too.
Comprehensive Comparison between NFT and Cryptocurrency
There are a few fundamental differences between NFT and Cryptocurrency which create their distinct identity in the Fintech world.
Each NFT acts as the authenticity certificate representing its unique identity and cannot be swapped further. Due to blockchain cryptographic principles, NFTs can never be amended or stolen. On the other hand, Cryptocurrency is the medium of trade in the digital format. It facilitates decentralized, secure, and quick transactions for the purchase and payment of goods and services.
NFTs can only be bought online and are managed in the digital ledger, they are not allowed to be traded. The unique identity certification of the NFT defines it’s worth making it the only one of its kind. Wherein cryptocurrencies are designed to be traded and exchanged. Their peer–to–peer format allows users to send and receive the payment just like any other form of digital money.
Cryptocurrencies can be traded or exchanged losing none of their value. Their peer-to-peer system, which works using blockchain technology, enables anyone to send and receive payments through any form of digital money or cryptocurrency.
The creative and artistic aspect of the NFTs becomes the point of attraction for the artists and traders making it extremely less volatile. But the complication and inconvenience involved in designing the NFTs might deter the designers at times. On the other side, most cryptocurrencies are highly volatile in nature. However, there are some more stable Cryptocurrencies like Tether that are pegged with one of the traditional currencies making them less risky and volatile.
Use Cases and Market places
NFT covers broader aspects than Cryptocurrency as it is used for multiple things like digital content, gaming, investment, collateral, domain names, etc. While Cryptocurrency is majorly used for wealth management, investment, low-cost money transfers, etc. limiting to the Finance at large. Presently, Rarible, Open Sea, and Foundation are the largest NFT marketplaces whereas Binance, Coinbase, eToro, and Kraken are contributing to the expansion of Cryptocurrency by acting as the prominent exchanges.
Choose NFT or Cryptocurrency?
Inarguably, both NFTs and Cryptocurrencies are creating the great buzz but also shaping the dilemma in the ecosystem. However, the choice to go with either NFT or Cryptocurrency is largely backed by the personal interests of the individuals. NFTs are seen as the most feasible choice for the artistically inclined individuals who desire to gain money from digital work. As a result, NFTs are becoming popular due to their artistic and creative component.
While Crypto ecosystem is flooded with several cryptocurrencies with different intentions and outlooks. Some of them are designed to be more stable like Tether and USD coin. Furthermore, Cryptocurrencies have revolutionized the complete Fintech ecosystem.
Thus, the decision between NFT and Cryptocurrencies is backed by the interest and risk-bearing capacity of the traders.
The NFTs and Cryptocurrencies are emerging as the highlight in the Fintech world by achieving monetary value for them. Their potential is still largely unchased making them the center of excitement and curiosity building. The traders and enthusiasts look forward to making the best chase out of these two buzzing Digital elements in the long run.