As two of the hottest topics in the world of fintech and cryptocurrency, non-fungible tokens (NFTs) and crypto currencies like Bitcoin, Ethereum, Ripple, and Litecoin are hot on the radar of investors and speculators alike.
However, it can be hard to tell where one ends and the other begins—if they aren’t interchangeable at all, that is! Let’s take a closer look at what makes these two financial instruments different from each other, as well as why they may be destined to coexist moving forward into 2019 and beyond.
What are non-fungible tokens (NFT)?
Non-fungible tokens (NFTs) are a specific type of crypto token that represents one unique asset in digital form. In NFTs, each token (or asset) is unique in some way, making it stand out from other assets on a blockchain’s registry of transactions and balances.
NFTs are an extension of ERC-721 tokens on Ethereum, which were developed by startup 0x for decentralized exchange marketplaces like OpenSea and Rarebits. NFTs allow users to make purchases and transfers over these platforms without relying on a third party to process payments or facilitate ownership transfers between buyers and sellers.
What are Cryptocurrencies?
Most cryptocurrencies are built on blockchain technology, and work using smart contracts which exist as decentralized digital code.
The word cryptocurrency derives from an encrypted information sequence called a blockchain. Each unit of cryptocurrency contains data about when it was created, who created it, and what transactions were made by its owners (if any).
Cryptocurrencies rely on cryptography to provide anonymity to those that use them.
How can you buy, sell, or trade an NFT?
While it’s not necessary to trade in-game assets for real world money, there are plenty of reasons why you might want to cash out and turn your assets into cash or other cryptocurrencies (assuming a blockchain game supports that). You might want to sell off some items to raise money for rent or bills.
Or you may want to invest in new games or buy something on another platform like Steam or Xbox Live . For whatever reason, there are now a number of ways you can cash out your crypto-assets for USD/EUR and spend them anywhere traditional currency is accepted.
There are a number of ways to get your hands on NFTs, including dedicated secondary markets like OpenSea and RareBits , but perhaps the easiest way is to buy them directly from their issuer using their own in-game wallet .
You’ll need to be registered with that game’s blockchain platform if you want to make purchases with your own balance—otherwise, you’ll have to buy or trade for tokens from someone else already playing.
Do you need an exchange to trade cryptocurrencies?
Buying and selling cryptocurrencies on exchanges like Coinbase or Binance can feel overwhelming—especially when you’re just getting started.
The simple act of purchasing a cryptocurrency can seem daunting if you don’t know how to go about it—and exchanging one type of crypto for another isn’t always intuitive, either.
And let’s be honest, there are countless new exchanges popping up that make it hard to keep track of them all. If you do decide to buy or sell cryptos through an exchange, though, here are a few tips that may save you from losing your money before you ever have a chance to invest it in blockchain-based assets.
To trade cryptocurrencies on an exchange, you’ll first need to create an account on that exchange by providing basic personal information such as your name and email address.
Once you have registered, you will be able to transfer your fiat currency into your trading account through one of several methods, including a bank wire transfer or a credit card transaction.
Why do some people prefer one over the other?
No one knows for sure why some people prefer one over the other, but there are a few theories.
The No-Fee Theory – Some people think cryptos do not have any fees and therefore they like investing in them because they can make money without paying anything to use the platform, while with non-fungible tokens you do have to pay to buy/sell on the marketplaces like OpenSea or RareBits.
There are many difference between NFT and cryptocurrency that people can use to decide which one they like better. NFTs have a history and proof of ownership attached to them, while there is no such thing with cryptocurrencies as of now (most, but not all).
What do professional investors have to say about these two types of digital assets?
We are not seeing a ton of growth in non-fungible tokens, [Jerry] Brito said. So if you want to invest in crypto, you have more options than just these.
The marketplace has been pretty well saturated already for non-fungible tokens and it’s getting harder and harder to differentiate yourself from others in that space because of that saturation and competition among those [assets].– CoinDesk
Tokenization allows these industries to lower operating costs, increase consumer access, and boost sales by streamlining their interactions with buyers and sellers .–TechCrunch
Why are these two digital assets doing so well?: The last month has been a very good one for both types of cryptocurrencies. Both projects have enjoyed serious gains over that time frame, with Tron (TRX) having climbed more than 60 percent from $0.0192 to $0.0377 on December 6th and NFTs having risen from $1 billion in market cap all the way up to $2 billion as of December 13th. – CoinTelegraph
Are there any differences in ownership rights between an NFT and a cryptocurrency?
In a cryptocurrency, such as Bitcoin, you own a coin and it can be transferred from one user to another. When you transfer it, there’s no way for you to retrieve that coin again—in fact, all users of that network will be able to see your transaction and its details.
When you sell or trade your NFT token on an exchange platform, you can still buy it back if you want to. It’s up to you whether or not you want to do so; after all, why would someone buy a token they have already sold?
There are other differences between NFT and cryptocurrency, too. One of these is that they’re traded in different ways on crypto exchange platforms.
For example, someone who wants to buy or sell a particular cryptocurrency needs to acquire or cash out its whole supply—that’s all of those coins (or tokens) currently in circulation. By contrast, if you want to trade your NFT token, it doesn’t matter if you only have one; you can still find a buyer or seller willing to buy it from you or give it to you respectively.
Does one type have more value than the other type of digital asset?
A crypto token is a digital asset built on top of the blockchain that typically has value in an open market, whereas an NFT does not have value on its own but represents the ownership of or rights to something else that does have value, like a physical object.
There are pros and cons to both types of digital assets—for example, crypto tokens can be easily used in different ways because their functionality isn’t linked to one particular asset, while non-fungible tokens offer increased security as there’s no shared history associated with them.
In all likelihood, both NFTs and crypto will be here to stay, meaning your investment in either could pay off in a big way. But since there are no financial metrics that can perfectly compare them (yet), it’s tough to say which will ultimately have more value.
One thing we do know for sure is that crypto has exploded onto the scene over just a few short years and has quickly become one of most disruptive technologies of our time; so if you want to invest in something new and innovative, investing in crypto is a good way to go.
But as with any kind of investing, there are risks. Even if you’re a seasoned veteran of Wall Street, crypto-based investments can be confusing and complicated because of their unregulated nature; their highly volatile prices (which would probably make even seasoned economists queasy); and their complex technology that’s still being perfected.