NFT is not a crypto coin, it is also a digital asset, but it is different from a cryptocurrency.
There is always confusion among crypto individual newbies on what NFT is, some of the newbies believed that it (NFT) is a cryptocurrency, this article is to help you to know what the two concepts are and their use in the crypto world.
What is an NFT? A Cryptocurrency Or Not
NFT is an abbreviation for non-fungible tokens, it is used in the crypto community to represent real-world assets like pictures, videos real states, etc.
NFT is a digital asset just like they are other digital assets in the world of Blockchain technology that people invest in, the reason it is called a non-fungible token is that it can not be substituted with the real-world asset. What this means is that all NFTs are different.
It is the development of blockchain and the digital activities that bring about NFT.
NFT (non-fungible token) exists on the blockchain, as a result, it has certain features with some other assets that use blockchain technology, one of these features is “decentralized”.
What is NFT Collection
This is a combination of digital assets compiled by an artist or group of artists, that is to say, each artist will assemble a list of NFTs of a certain quantity, and these will make up the collection of NFTs.
Some of the Crypto collections are Crypto Punk, and Bored Ape Yacht Club (BAYC), these collections, however, live on certain blockchain projects; some of the blockchains that is home to NTF collections are; Ethereum blockchain, Solana, polygon, etc.
NFT vs. CRYPTOCURRENCY
One of the differences between NFT and Cryptocurrency is fungibility, that is, Cryptocurrency (digital currency) is fungible, while NFT is non-fungible,
What then is a fungible asset? These are exchangeable assets, for instance, two people with two different wallets, ” wallet A and Wallet B”, wallet A has 20BNB in it, and he transferred the BNB to wallet B, wallet B now has 20BNB transferred to it by wallet A. This is what happens in cryptocurrency, you can exchange your digital assets and it will remain the same.
What is a non-fungible asset; it has to do with digital assets and real-world assets, to demonstrate this, imagine yourself with two fruits, an Orange and an Apple, the two fruits can not be exchanged because they are not the same.
- The second difference between NFT and Cryptocurrency is the imbalance in price; when you want to buy a crypto coin, the market price of the coin at the time you want to buy it, but in NFT, the price that you buy an NFT asset is dependent on the value, scarcity and how the demand of the asset is. Value and scarcity can make the price higher.
- Another difference between Cryptocurrency (digital currency) is its usability, although the two are digital assets, cryptocurrencies have become a currency that can be used to buy and sell more often in the digital world, unlike NFT assets which can take a longer period to trade. Also, Cryptocurrencies are always used by NFTs.
Similarities Between Crypto Coin and NFTs
- They are both built on Blockchain Technology.
- They are both tradable digital assets.
To sum it all up, you should know now that NFT assets and Cryptocurrency are different, this is because, even though the two of them are built on Blockchain technology, they have their differences and similarities.