How NFT is different from Cryptocurrency?
NFT or Non-Fungible Token is made up of two parts, non-fungible and token. The first part implies that the thing or an item is irreplaceable by another identical item. The second part implies the unique cryptographic identification of ownership of an item. To sum up, NFTs are the digital assets that are unique and cannot be replaced with similar objects. This digital asset could be any form of artwork like music, video, images, etc.
Beeple is one of the most popular artists who sold his artwork “Everydays: The First 5000 Days” for 69.3 million dollars. Jack Dorsey, Co-founder of Twitter sold his first tweet for 2.9 million dollars. Nyan Cat became popular on the internet in 2010’s that the video creator tuned it into NFT and sold it for 300 ETH. There are many other such examples of NFTs artists around the world.
People often get confused NFT with Cryptocurrency. They are similar in a way that they use Blockchain technology to verify ownership. The value of Cryptocurrency is fungible, that is, it is interchangeable. It does not matter what crypto token a person holds, 1 bitcoin = 1 bitcoin has the same value. On the other hand, NFT is unique and irreplaceable. The person that purchases or create the digital file holds the unique claim on that asset. Cryptocurrency is used for economic purposes. It is a digital currency used to buy or sell things online.
Traditional artwork is unique on its own. While digital files can be copied endlessly. NFTs tokenize the artwork and creates digital certificates of ownership. These records are maintained by blockchain technology and cannot be altered. But investing in NFTs could be risky, especially for beginners. The uncertainty of NFTs makes it risky. It depends on the popularity of that digital asset and the buyers interested. NFT that is more popular today may not have that popularity in the future. Just like Cryptocurrency, we do not have the history of NFT, to judge its performance. Government could impact NFT by applying rules and regulations.
NFT has revolutionized the digital market since 2014. Many celebrities are attracted to NFT and selling their art digitally. The digital certificate of ownership makes it unique. It can be considered as a subset of Cryptocurrency. Though, Cryptocurrency is a digital currency which in turn used to buy NFT. We cannot predict NFTs as it has no history. It could be risky for beginners to invest or buy NFTs without proper knowledge.
