Although NFTs and cryptocurrencies have some relationship to each other, there are very marked characteristics that distinguish both universes. Keep reading because here we will explain the difference between these two assets that are marking a real digital revolution.
As everything is being virtualized, the planet is moving towards the metaverse. And given this acceleration, it is not far-fetched to think that in the very near future, all our transactions could be done using a single and global digital currency.
On that path, NFTs and cryptocurrencies have emerged. Let’s look in detail at the difference between each of them.
Index
What is an NFT and how does it work?
An NFT is a unique digital asset and works just like any other asset that can be traded. The secret behind a non-fungible token (NFT) is blockchain technology.
Any digital file, image, video, even a sound or a song, can be minted, and thereby become a unique token, thanks to the blockchain, where all the information about the creator, the chain of buyers and its value is also registered.
With the sale of the first tweet in history for $2.9 million, a great revolution began in the NFT world. Today, tokens are sold and auctioned off as digital art pieces, and their use is being extended to other sectors.
As companies and investors discover the potential of this technology, new applications are starting to be seen.
For example, they provide access to exclusive materials or content, prizes or other rewards that recognize the owner of an NFT. In a way, it becomes the creditor of a membership with certain privileges and benefits.
Some owners of a non-fungible token receive air tickets, passes for events, passive income and exclusive access to an exclusive community.
As with a Picasso painting, photographs, videos and other reproductions can be made, but the value always stays with the original. The same is true with a token: its value lies precisely in its unique and irreplaceable character.
Just like any cryptocurrency, it is the blockchain technology that makes the NFT a digital asset possible, but they should not be confused, as there are several differences between NFTs and cryptocurrencies.
We explain what the attributes of both universes are. Join us and discover them!
What are the differences between tokens and cryptocurrencies?
The exchange condition. This is the main difference between tokens and cryptocurrencies. The “N” and “F” are the key initials of NFTs: they mean non-fungible, which means that there is no token that is equal to another and, therefore, they cannot be exchanged.
On the other hand, if a person has a cryptocurrency, for example, 1 ETH, they can exchange it for another ETH and there is no relationship of gain or loss; they are exchanging two equal elements. This happens with cryptocurrencies, but it is impossible with NFTs.
Its uses. A crypto, like any other currency, serves to buy, save and invest. But an NFT has other uses: in most cases it is to collect them or buy and sell as a form of investment, as would happen with any other asset.
The type of blockchain. As a general rule, a cryptocurrency has its own blockchain (for example, Ethereum for Ether), which also makes it fungible. On the contrary, an NFT does not have a dedicated blockchain; instead, it is stored on the Ethereum blockchain, among others.
Meanwhile, NFTs are created within an existing blockchain. For example, any file is minted or coined within Ethereum and is traded, that is, it is bought and sold for Ether.
In this way, a cryptocurrency has a value only in terms of economics, while an NFT transcends commerce and can have symbolic values and even status and belonging.
In short, these are the differences between NFT and cryptocurrencies:
→ Cryptos are an interchangeable currency; an NFT is a unique and non-fungible token.
→ A cryptocurrency is a currency; the token is usually a collectible digital asset.
→ Cryptos are minted on their own blockchain; the token, on an existing one.
→ A crypto has a set value; the NFT is worth what someone is willing to pay.
→ Cryptocurrencies only have economic value; the token adds other symbolic values.
What are NFT Cryptocurrencies?
NFT Cryptocurrencies are like any other cryptocurrency and should not be confused with a non-fungible token. They are assigned the NFT attribute to cryptocurrencies that are created to back up a certain token ecosystem.
The best example of this happens with NFT video games, like the pioneering “Axie Infinity”, or any other from the play-to-earn (P2E) sector. The native currency of this game is AXS and sustains the entire digital economy inside the game.
The same happens with MANA, ENJ or SAND, just to mention some of the NFT cryptos that are coming through with strength. These are currencies that the person accumulates and that allow them to buy NFTs.
Afterwards, these tokens can be sold within the same video game, or displayed in some markets like OpenSea, Mintable and Rarible.
What are NFT Games?
NFT Games are developments created under the logic of blockchain and play to earn. Gamers complete different tasks, according to the game’s mythology, and receive rewards, such as a token, some ability or also in cryptocurrencies.
The NFT universe is experiencing a revolution thanks to the development of games that allow gamers to make some money while having fun, some of them even for free.
Blockchain technology, once again, is the key behind the authenticity, for example, of the NFTs created for games, as well as for the certification of ownership of each digital asset. It is also the one that establishes the basis for its commercialization.
Well, we reached the end of this journey that allowed us to understand what is the difference between NFT and cryptocurrencies. Although both universes are based on the blockchain, their own nature, uses and even technological aspects distinguish them.