We personally can’t count how many times we have heard somebody ask or say, “is NFT not cryptocurrency “ or “NFT, crypto no be the same thing?” or even “wetin come be the difference?” well we are here to tell you the difference, so you can teach people that don’t know.
What are NFTs?
Firstly, and most importantly, NFT is not a cryptocurrency, although they are both cryptographic assets, they are not the same or different versions of each other.
NFTs simply mean non-fungible tokens, they are digital assets that represent online collectibles like art, music, and games, they are bought and sold on a digital purpose-built marketplace and not a cryptocurrency exchange, they are usually bought with other cryptographic assets like Bitcoin(BTC), Ethereum(ETH), etc, so cryptocurrency is one of the means by which people buy NFTs, although NFTs have been around since 2015, they only become popular in 2021 when a digital artist popularly known as Beeple (Mike Winklemann) sold one of his works for over 60 million dollars.
What is Cryptocurrency?
Cryptocurrencies are cryptographic digital assets. They are similar to traditional money in the sense that they are both used in buying and selling, and they are traded on exchanges(join our newsletter for information on the best cryptocurrency trading platform, the key differences are that crypto has no physical embodiment, and it operates independently in a decentralized manner without a bank or a central authority, this is why crypto makes global transactions easier.
Putting them together.
Now that we know them separately, let us put them beside each other to know how different they are from one another. Here are some of the reasons people may get confused about them:
- Blockchain: Both Crypto and NFTs are cryptographic assets and they use both use blockchain technology to function.
- Method of payment: To own an NFT you would first have to own a cryptographic asset like cryptocurrency to make a purchase, but to own a crypto Asset all you need is to register with a secure and trusted crypto exchange and deposit cash.
- Fungibility: Fungibility simply means that an asset can be exchanged for another asset of the same nature, in other words, you can swap bitcoin for Ethereum on crypto exchanges, but you can not swap one NFT for another NFT.
- Value: crypto assets get their value from their prices on the market, which varies from time to time as cryptocurrencies are very volatile, while NFTs can either get their value from the amount stated by the owner or by considering other factors (community, rarity, social proof, etc)
- Ownership: in the case of crypto, a single asset can have multiple owners (over a million people in the world today have bitcoins in their wallet) but in NFT more than one person can not own a single asset.
If you know any other major difference that could help us understand NFTs and cryptos better, you can join the conversation by using the hashtags #NFTsvscrypto and #Breetapp.