Have you heard of NFT and cryptocurrency? Nowadays, NFT and cryptocurrency had become the buzzwords in the digital trading world. While NFT and cryptocurrency share few similarities, do not get confused by thinking that they are the same thing. Thus, how is an NFT different from cryptocurrency ?
What are NFT and Cryptocurrency?
NFT stands for non-fungible token. An NFT is a unique as well as non-interchangeable unit of data which is stored on a digital ledger termed blockchain. For example, collectibles, digital arts and in-game item. Meanwhile cryptocurrency refers to digital currency which is also stored in blockchain that is secured by cryptography. The examples include bitcoin (one of the popular term nowadays) and other digital currencies like Ethereum, Binance Coin, Cordano, Polkadot and much more.
Differences between NFT and Cryptocurrency
Based on the definition of both NFT and cryptocurrency, we can see that the two are similar in term of having stored digital records on blockchain. So, again, how is an NFT different from cryptocurrency ?
Basically, NFT and cryptocurrency are set apart by fungibility. An NFT is built with digital signature which makes it authentic and valuable, hence it is non-fungible. For example, the price of the very first tweet by twitter’s CEO, Jack Dorsey NFT is not equivalent to the value of any random tweet NFTs from the platform.
On the other hand, cryptocurrency is fungible which allows it to be traded with one another. In addition, cryptocurrency is equal in value. For instance, one bitcoin can be traded with another bitcoin. Just like physical money, a one dollar bill can be exchanged with another dollar bill.
Over and above, the difference between NFT and cryptocurrency can be determined by value where the value of NFT depends on the assets value while the value of cryptocurrency fluctuates based on the market value.
To sum up, the difference between the two, however, does not diminish their unstable volatility. Therefore, trading should begin with the understanding of risk as well as one willingness to take the risk.
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