FxBrokerReviews.org – The world is today shifting towards digital technology, with the introduction of online transactions and digital currencies, the world has seen a drastic change in the ways of trading. But to someone unfamiliar with terms like NFTs, cryptocurrencies, digital currencies, crypto wallets, and more it can look not very clear to differentiate between them.
Both crypto and NFTs are based on the same blockchain technology, both entered the market at around the same time, and both allow investments in a class of assets that are risky, exciting, and dominated by innovative and young creators. So where does the difference lie?
This guide on NFT vs Crypto will help you understand the difference between both forms of investments and will help you decide which is the ideal choice for you.
What is NFT vs Crypto?
Let us start by looking at the definitions of both investments to understand the difference between them.
What is an NFT?
NFTs stand for nonfungible tokens.
The term non-fungible refers to a digital token that can not be replaced or exchanged for another pass of the same value. Each NFT contains a uniquely identifiable code which makes it different from the rest of the tokens. NFTs are based on blockchain technology like Ethereum. Blockchain technology makes information such as who owns the digital asset and who sold it, available making them easily verifiable because such a certificate cannot be forged.
NFTs, provide ownership of an individual and unique asset, which can be both tangible and intangible such as paintings, virtual real estate, postcards, videos, music albums NFT art, and so on. The digital tokens allow the buyer to own the original item. Not only that, it contains built-in authentication, which serves as proof of ownership and earns “digital bragging rights” which is quite a status symbol these days for several people.
NFTs represent digital assets, like
- Video game data
- Virtual collectibles, and more
What are cryptocurrencies?
In simple terms, cryptocurrencies are digital currencies. These digital currencies have been given the name “crypto” as they are secured by a process called cryptography, meaning they are impossible to double-spend or manipulate. The cryptocurrency has a decentralized payment system. It is neither issued by the government nor regulated by any third-party authority. Cryptos are minted with the help of blockchain technology, which is based on complex calculations and algorithms.
There are thousands of cryptocurrencies available for investors to buy and sell, like Bitcoin, ETH, and more. Trading in the crypto market depends on the price fluctuations of various digital currencies like Bitcoin, Solana, ETH, and more.
One crucial factor to understand the working of cryptocurrencies is that they are fungible, unlike NFTs. We will look at more differences between Crypto vs NFT further in the article, but let us first understand the meaning of fungibility in cryptocurrencies.
Fungible currency is similar to traditional currency i.e if you exchange a $5 bill for another 5 dollar bill the value will be the same. Similarly in an exchange of cryptocurrencies, the value remains the same, which is not the case with NFTs.
What is the difference between Crypto and NFTs?
Let us look at some of the differences between NFTs and crypto- based on various factors like transaction costs, trading, volatility use, and more.
Crypto vs NTF difference
NFTs: NFTs are nonfungible which means that any two tokens can not be bought and traded for the same value. Also, when an investor buys an NFT they receive an original digital file o the artwork, instead of the tangible artwork.
Cryptocurrency: Cryptocurrencies are fungible, which means that they can be traded without losing any value i.e. one Bitcoin will always be equal to another Bitcoin. Moreover, the fungibility of crypto makes it easy to determine the price fluctuations and a cryptocurrency’s market value.
NFTs: NFT is used for a variety of things, including digital artworks, in-game assets, trading cards, investments and collateral, domain names, and a lot more. You can buy and sell these NFTs at some of the popular marketplaces like Rarible, OpenSea, and more.
Cryptocurrency: Cryptocurrency is used for the exchange of digital currencies like ETH, Bitcoins, and more. It is also used for investment, wealth management, ethical business practices, and more. Some of the popular crypto platforms include Binance, Coinbase, eToro, and more.
NFTs: NFTs are said to be less volatile in terms of cryptocurrency. However, there are slight price fluctuations in the NFT marketplace as they operate on a decentralized system without any regulatory body.
Cryptocurrency: Cryptocurrencies, are considered to be high-risk investments. Due to price fluctuations caused by geo-political situations, news, changes in legislation, and any technological advancements. However, certain cryptocurrencies are considered to be more stable than others like Tether.
NFTs: NFTs, have both economic as well as non-economic value. Artists can use NFTs to either distribute or monetize their artwork some investors might even just buy the digital tokens for a status symbol rather than trading them.
Cryptocurrency: the value of cryptocurrency is only determined in terms of economic value. The value of digital currency comes from its utility as a currency or as an investment.
What are the similarities between Cryptocurrencies and NFTs?
There aren’t many similarities between NFTs and crypto, except for the fact that both are digital assets; and, both of them are based on blockchain technology. Which also means that both the digital assets are secured in digital wallets, commonly referred to as crypto wallets.
Read here to find out the best crypto wallets to store your NFTs.
To further understand the similarities between NFTs and crypto it is crucial that we understand the meaning of blockchain technology and how it works.
What is blockchain?
Blockchain technology is, a data-sharing system that allows data to be stored and controlled by a network of users rather than intermediaries In simpler terms, you can define blockchain as a digital collection and record of transactions, registered in the public ledger.
How blockchain works?
All the records of the data transaction are stored in blocks that generate a link to form a chain of bookkeeping, hence the name “blockchain.” Once the nodes ( a chain of computer systems) verify the identity of the transactions, only then they are added to the public distributed ledger.
NFT vs Crypto: Which is better?
If you draw a comparison between NFTs and cryptocurrencies you will find that investing in both the digital assets, can turn out to be quite profitable of you have the correct skill set. In order to invest in NFTs you need to have crypto in your wallet, so it is not wrong to say that NFTs show a great dependance on cryptocurrency.
While we can not determine which is better as it depends on your use and type of investment we have drawn a comparison between both the assets, to help you make your decision.
|Usage||You can buy NFTs as an investment, to trade it further, or even just as a collatable or status symbol.||Crypto coins are looked upon as a source of investment, which can be exchanged further, based on price fluctuations to earn profits.|
|Types||Almost any artwork can be turned into digital tokens like paintings, music, videos, artifacts, virtual estates and more.||Crypto is only restricted to digital currencies like ETH, Bitcoin, ALT coins and more. Which you can use to buy NFTs.|
|Where to buy?||Several marketplaces like Opensea, Binance, Coinbase, SuperRare and more allow users to create,buy and sell NTFs||Crypto platforms like Binance, Coinbase and popular brokers like NAGA, e-toro and more allow the trade of digital currencies.|
|Where to store?||NFTs are stored in blockchain applications and crypto wallets like MetaMask.||Cryptocurrencies are stored in blockchain applications and crypto wallets like MetaMask.|
How to invest in NFTs?
Investing in NFTs for the first time requires a few steps like connecting to a crypto wallet, adding NFT crypto coins, registering with an NFT marketplace and more. In this section we will take a closer look at how to invest in NFTs for the first time.
1. Connect to a crypto wallet like MetaMask
Crypto wallets allow you to store your NFTs and even trade them further, therefore the first step before you start trading in NFTs is to connect to a crypto wallet like MetaMask. Once you enter all your details and verify your account make sure to add funds in your wallet, based on the blockchain you choose to invest in.
Example : if you buy and sell NFTs on Opensea you will need to have ETH in your crypto wallet as the marketplace is powered by Ethereum blockchain.
2. Choose a marketplace
There are several marketplaces where you can trade NFTs easily. Some of the popular marketplaces include, Binance, Opensea, SuperRare and more, where you will find more than thousands of NFTs to buy. Before choosing your marketplace, make sure you check details like the gas fees, transaction cost, time taken to complete the transaction and more.
3. Explore your marketplace
Start navigating the marketplace and select ‘Explore’ where you can find various Non-Fungible Tokens to invest in. Look for NFTs with value adding factors like invites to private events, in-game assets, discount vouchers and more. You can check for the same by clicking on the ‘Offers’ button.
When you find something of your choice, you have two options, either buy immediately or you can make an offer and participate in the auction of the token.
The ‘Buy Now’ button allows you to purchase immediately and the ‘Make an offer’ tab allows you to bid on the asset.
4. Invest in the token
To buy your preferred token click on the ‘Buy’ button and proceed to purchase the token You will get all the information related to your NFT tokens like the official name of the artwork, the collection it belongs to, the subtotal, and the total.
If you are satisfied with the details, click on confirm and your crypto wallet will be on the screen. It will display the estimated gas fees and the amount of time it will take to complete the transaction.
Which is the best marketplace to invest in NFTs?
While in the discussion of NFT vs cryptocurrency, if you have chosen to trade NFTs then you should know some of the best NFT marketplaces. As mentioned above there are several marketplaces to trade NFTs based on different blockchains like Solana, Ethereum and more.
According to our analysis by forex broker reviews, we find out that Opensea is a favourite amongst all kinds of traders, whether a beginner or experienced trader. It is the largest NFT marketplace with a wide range of NFT’s from all over the world. The platform based on Ethereum blockchain, allows users to trade NFTs with more than 150 crypto currencies. It is an easy to use platform and is also low on the transaction fee.
NFTs can be considered as a subject of the Crypto culture as it is based on blockchain technology and requires cryptocurrency to trade the tokens. However, this does not make both the assets similar. Crypto on one hand is used more in terms of economic value and currency exchange, NFTs play around the concept of investment in artworks and buying unique digital tokens.
In this NFT vs Crypto guide, we have laid out the basic differences between the two, which will help you make your investment decisions. You can visit forex broker reviews for detailed reviews on the best NFT marketplaces and learn how to invest in NFTs in detail.
Q1. Should I invest in NFTs?
Ans : To invest in NFTs you need to connect to a crypto wallet and add funds to it. You can buy or even mint unique digital artworks and earn profits.
Q2. Is NFT same as Crypto?
Ans : NFT stands for non-fungible token, based on blockchain networks. But cryptocurrencies, are fungible and interchangeable whereas NFTs are unique.
Q3. Which is riskier : Crypto vs NFT?
Ans : Cryptocurrencies, are considered to be high-risk investments. Due to constant price fluctuations caused by geo-political situations, and technological advancements.