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Cryptocurrency and NFTs: What’s the Difference?

Cryptocurrency and NFTs: What’s the Difference?


NFTs, Cryptocurrencies, Bitcoin,. Ethereum, Web3. It can be confusing, opaque, or overtly bizarre for someone who has not interacted directly with the crypto world before.

All of this is easily understood. The internet's advent and the technology it supports represents a sea-change. As people react to the internet's early days with excitement, fear, and skepticism today, blockchain-based technology is causing the same reaction.


The NFTs and cryptocurrency are two of the biggest mysteries in technology. So we created this simple explanation to explain what each is, how they work together, and the differences between them. You must first understand the infrastructure both require to be possible. It is also known as the Blockchain.


More NFT News: Latest NFT News


What is the Blockchain?

Blockchain technology is fundamentally a new way to share and manage data. It allows data to be stored and operated by a democratic network rather than a few giant companies (think Google and Facebook). This makes it possible to accomplish what Web2's traditional models of internet access cannot. The blockchain-based tech was used to usher in the dawn of the new internet and is commonly referred to as Web3.


The Blockchain is an electronic record and collection that shares data transactions. It's not dissimilar to a public ledger. Individual data transaction records are stored as blocks that link together to form the bookkeeping chain. That is why the term "blockchain" was coined.


All parties involved must confirm that the ledger's contents are correct. The more checking nodes within the system, the safer it will be. Hacking into Google and Apple is not enough to compromise the system. You would have to be able to access a large number of computers to hack it.

 

This dramatically increases its security.


We have the new technology to support decentralized data transactions of any type.


The NFTs (cryptocurrencies) and the cryptocurrencies are two of blockchain tech's most well-known types. These two types of data transactions share key similarities and interactions but are also distinct in many important ways.


Let's start by talking about cryptocurrencies.


What are cryptocurrencies exactly?

Cryptocurrencies are digital currencies. The term "crypto" is derived from the fact these currencies (often called virtual tokens) are encrypted via cryptography. It means that they are highly secure and virtually impossible to double-spend.


This security is achieved using a variety (including encryption algorithms and public-private key pairs. However, they have their controversies. For this explanation, it is enough to know that cryptocurrencies can be described as a digital version of money. This is why digital tokens are often called "X-coin."


Bitcoin (BTC) and Ethereum (ETH) are the most well-known cryptocurrencies, each functioning within its separate blockchain system, but there is OpenSea. (a platform that allows you also to buy NFTs) or Binance. You must set up a crypto wallet to store the digital money you need. Crypto can be used to buy NFTs, which we'll discuss next, but many view them as a trading or investment tool due to their volatility and sometimes high prices.


The main thing you need to know about cryptocurrencies is their fungibility. You would not mind if someone asked for your five-dollar bill and you refused. Your money can be fungible. A five-dollar note is just as good as another as long as it accomplishes the task. This is precisely how cryptocurrency works. Five ETH from my digital wallet can be used interchangeably with five ETH from another digital wallet.


A quick note on safety regulations. Transactions can be streamlined and optimized because digital currencies are distributed on the Blockchain. There are no international transfer fees, and there is no interference from the government. This currency is therefore free from the control of dictatorial regimes. This does not guarantee that any third party will reimburse you if your transaction goes wrong.


This, together with other legitimate concerns regarding the state of crypto, exist. But it's worth noting that Web3 is unlikely ever to cease. The technology is both too helpful and valuable. There are compelling pros and cons to blockchain technology. As with all revolutionary technologies in their infancy, there are always new issues. These are the guides on how to buy or sell cryptocurrency.


Be sure to do your homework and remain calm. The media loves to exacerbate reports of doom. Also, don't take any article that suggests crypto is the answer to all your problems or without risk with a massive grain of salt. Both are extremes, but the reality is far more nuanced and interesting than either of these perspectives.


You now have a basic understanding of cryptocurrency and how they work. One of the best ways to further your knowledge is to compare them with their closely-related digital counterpart, NFTs.


What is an NFT, and how can it help you?

NFT stands for non-fungible token. These tokens can be used as digital assets or digital tokens. While cryptocurrencies are interchangeable and fungible, NFTs, on the other hand, is singular and distinct. They can be found on the Blockchain as cryptographic resources, similar to cryptocurrencies.


Here, we will compare the differences between physical currencies and the unique items people buy just for their uniqueness. We've already talked about how cryptocurrencies can be interchanged. A digital wallet that holds ETH is identical in function and value to one another.


Think about a physical object that is very special to you. Of course, there is only one. This could be a painting you purchased, a collector's piece like a card or stamp, or an original print of a book you treasure, signed by its author.


These items cannot be resold. We hope you would decline if you were asked to exchange your autographed first-edition books for a fifth-edition reprint. The words in the books are identical, but they are not interchangeable. They are not interchangeable.


In this thought experiment, you will apply the principle to an ebook with a unique digital signature. The author certifies that it is authentic. There are only 25 copies on the Blockchain. NFTs, give digital assets the ability to be unique and have monetary worth. Even if you have a JPEG NFT, the NFT is yours. No one can screenshot it or "steal" it. The public blockchain record confirms that.


Blockchain's ability to facilitate this transformation is the key to its beauty. This technology has huge implications, including the ability to directly and correctly compensate artists for their work. It doesn't matter if the item can be digitized. Songs, GIFs (JPEGs), photographs, digital drawings, etc., can be made into NFTs.


You will need to adjust your psychological perspective to understand what is NFTs. How can a JPEG make it unique and valuable if I can either take a screenshot or download it to my computer? That's a legitimate question and something that everyone must ask at one point or another on their journey from Web2 into Web3.


What is the difference between cryptocurrencies, NFTs, and other cryptocurrencies?

NFTs are unique digital assets. These digital currencies are the digital money you use to purchase these assets. A real-world example is the best way to visualize this.


Cath Simard was a wilderness photographer who shared an image of a single Hawaiian road she took on Instagram. The photo went viral quickly and was shared thousands of times across social media platforms, almost without Simard receiving any credit or monetary compensation.


This inequity perfectly reflects many of the problems associated with Web2. Web2's success is almost entirely dependent on clicks and visits. It's easy for Simard to imagine that some people made a profit from his work by sharing it on social media platforms, but none went to him.


Simard used Blockchain to authenticate. It means that she uploaded it to blockchain infrastructure and "certified it" as the authentic, original photo she had taken on that Hawaiian road. This gives it a unique digital signature that any other version will never use.


Simard's photo had a digital fingerprint. This was similar to how a painter marks their work by inscribing its edition number. The image was created into an immutable public document that proved its authenticity.


Simard made the unique photograph NFT available for purchase. A cryptocurrency is required to purchase an NFT. Different blockchains use different cryptocurrencies. Simard's photo was minted (created, authenticated) on Ethereum and sold for 100 Ethereum. This Blockchain's fungible cryptocurrency at the time was $303,481. A good turnaround for an artist who had his work freely available online.


This perfectly summarizes just one of NFTs' merits. Artists who had to deal with intermediary institutions, such as galleries, to make a portion of their profits can now receive a direct, easy, and fair way to be compensated for what they do. 


NFTs are also customizable and allow artists to code in the royalties from secondary sales. This means that when the artwork is sold, a percentage of the proceeds goes to the original artists, creating a more sustainable creative economic system.


Also, musicians are using NFTs. It's no secret that streaming services like Spotify or Apple Music treat musicians like trash. Unless you are a hugely popular artist, it is unlikely that you will make any money selling your artwork. Spotify, for example, offers artists $0.003-0.005 per streaming


You'd need about 250 streams to make a dollar. Black Dave, a producer and rapper is a prime example of someone who has successfully used NFTs to his advantage. He sold entire albums and songs for thousands of dollars as NFTs.


NFTs are only as valuable as those willing and able to pay for them. Many artists who are already well-known will make their work NFTs and sell it for thousands, if not millions because they have a following. Many young artists are turning to tech to help them to make it big. Many NFT projects funded by creative communities have burst onto the scene, making absurd profits.


In any case, cryptocurrencies have made society so much more diverse. This includes how we view and value art and how that art is produced and distributed. Web3 can be dynamic, and it is risky. It can't be argued that Web3 isn't exciting and inspiring.


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