NFTs – Non-Fungible tokens
NFT refers to non-fungible tokens. They are unique and deploy the proof of owner concept to verify each transaction. The biggest advantage of NFTs is that these tokens cannot be replicated or interchanged. An asset is assigned a value in the virtual world. Investors interested in this asset buy these tokens. Every NFT purchased in the virtual market is stored in a unique ledger. The ledger is then stored in a public network. This allows ownership visibility of your asset to everyone. If you are interested in bitcoin trading, visit the crypto trading bot
NFTs can take any shape and form. The most commonly used NFTs are gaming, digital art, real estate, and in certain cases domains as well. Many celebrities are endorsing NFTs. Certain NFTs also enable you to buy tickets for an expensive show, upcoming movies, etc. Most NFTs make use of the Ethereum platform to execute transactions.
Cryptocurrency, on the other hand, is a digital currency that uses cryptography to verify every user transaction. Bitcoin was the first cryptocurrency to enter the global market. Following the legacy, today there are more than 14000 cryptos. The total market capitalization of crypto investments today stands at $2 trillion. The number of investors has grown exponentially from 2017 to 2021.
NFT vs Crypto – what’s the difference
Principally both NFTs and cryptos use the same working principle. Cryptocurrency and NFT make use of blockchain philosophy and work on similar technology. Hence, it is obvious to attract similar types of investors. In other words, NFTs entered the market as a subset of cryptocurrency. Your digital wallet should have cryptocurrency to enable buying and selling of NFTs.
The key difference between crypto and NFTs lies in their functionality. Like fiat currencies, cryptos also have a value. These types of currencies are used to buy and sell products and services. In short, these currencies take a value and can be used as a legal medium of exchange. NFTs on the other hand are not exchangeable. You cannot use NFTs to buy and sell goods and services.
An example will help to understand this concept better. Assume you are a painter and would want to launch your paint in the global market. As a tribute to the art form you could create an NFT token – a memento may be. Creators or artists continue to earn their rewards every time the painting is sold. An example of this is the recent announcement by Bollywood actor Amitabh Bachchan’s NFT. In November 2021, the legendary actor came out with some of his unique collections. This NFT included vintage posters, paintings by the actor himself, and a few poems penned by his father. While the auction started at $75K, it was picked for $95K.
What can NFTs do to an investor?
NFTs help in removing any middle man while selling your product. An NFT token can be easily created and investors gain their share of profit every time the token is purchased. No two NFTs are the same. There is a unique value assigned to every NFT. This makes it difficult to exchange one NFT for another. The unique value of the token is decided by the creator himself. Every time the token is purchased by a user, the creator gains royalty benefits.
Similar to cryptocurrency, NFTs also make use of blockchain technology to undertake a transaction. Every transaction is stored in multiple layers of chains backed with Ethereum technology and platform. The creator can create copyright benefits to his/her token. The developer can also create a copy of the same as much time as he/she wishes. The advantage here is that every copy of the token is still considered unique in its terms.
Are NFTs here to stay?
This is an interesting question being discussed globally. While many find the idea of NFTs fascinating. There is still a group of investors who believe that the hype may not last long. But it is important to understand that like cryptocurrency, NFTs are also here to stay. The craze and market capitalization of NFTs will increase in the coming years. All transactions about NFTs are carried out online and managed on a digital ledger. Cryptocurrency is decentralized and non-regulated. But in the case of NFTs, the transactions are decentralized but completely regulated. The community that creates these coins completely monitors and regulates each transaction.