With the world’s continuous innovations, everything tends to change fast. We are seeing the rapid shift of things, thanks to technology by the way, right before our very eyes.
From traditional snail mail and pen pals to direct messaging (DM), indirect messaging (IM), and SMS. These days, we get to exchange messages real-time, real fast. Ordering food can now also be done through the convenience of a mobile app instead of via the phone.
Every traditional institution in the world has become subject to change and the financial sector has not been spared. On the contrary, it has even become more diverse.
In recent years, there has been a rise in the existence of financial technology (FinTech), digital money, cryptocurrency and non-fungible tokens (NFTs).
With the development of digital currencies, the world has seen a massive change in how we trade values and own things. The introduction of cryptocurrencies and NFTs have enticed millions of people all over the world for so many reasons.
Using blockchain, these rising financial technologies have given banks a run for their money.
Unlike traditional currency, cryptocurrency and NFTs are decentralized. This means they aren’t influenced and owned by financial institutions. They are publicly posted and can even give you a great deal of profit without interference from a third party.
But first, what are cryptocurrencies and NFTs? How are they different?
What is Cryptocurrency?
Before understanding how cryptocurrency works, you need to first understand what blockchain is.
Blockchain technology keeps track of all transactions and maintains them in a public ledger that anyone can access. Think of it as a community board where you can easily see updates and activities, that change on a daily basis.
Cryptocurrency is a form of digital currency that uses encryption. This makes it impossible to counterfeit and is almost foolproof.
All this is thanks to blockchain technology.
Cryptocurrency does not depend on financial institutions for verification, unlike traditional currency. It's what makes this type of currency special—because it is not issued by a single authority.
What are NFTs?
NFTs are considered the latest thrill to a rapidly evolving pop culture landscape. Many people have been loving the idea of exchanging or owning unique and quirky digital items for a hefty value.
Virtual items such as photos, digital art, music, and even original social media posts can become NFTs and can be sold for ridiculous prices.
NFTs can be quite special as well, with the term “non-fungible” being its biggest giveaway.
This means that these tokens cannot be exchanged for another because they are unique and are certifiable digital assets. Each item is very different from the other, implying its value.
A fungible token, however, can be exchanged with another of the same kind, just like cryptocurrency.
How Do They Differ?
Both cryptocurrency and NFTs use blockchain and are digital in nature. How they differ lies in how they can be exchanged or traded.
NFTs for one, because of their non-fungibility, can’t be bought or exchanged with another item because they are unique.
These tokens hold a certain value and can only be bought by huge sums of encrypted forms of payment, specifically cryptocurrency.
Think of NFTs as art pieces or collector’s items that are sold for large sums. These things can only be bought with a certain amount of money, in this case, cryptocurrency.
Cryptocurrencies, on the other hand, are exactly as their root word suggests: a currency. It is exchangeable and has the same value as its traditional monetary counterpart. Think of it as exchanging your currency for another country’s currency whenever you travel to purchase goods and services.
Wrapping It Up
NFTs and cryptocurrencies differ in their function and in how they are transacted. Yet, their apparent differences can always be overshadowed by their blatant similarities.
They are both highly evolved means of purchasing and ownership.
NFTs and cryptocurrencies, like FinTech and digital currencies, represent an ever-growing innovation landscape. It's a telltale sign of an even bigger thing at work here: the unstoppable digital evolution of our society.