What are the different types of NFTs?
What is the difference between cryptocurrencies and NFTs?
There are two basic categories of virtual assets: cryptocurrencies and non-fungible tokens (NFTs). Cryptocurrencies and NFTs represent a very important part of the industry. Both have distinctive characteristics. Let’s dive deeper to learn what makes them different from each other.
Digital or virtual currencies that use encryption for secure financial transactions are called cryptocurrencies. They run on a distributed ledger technology known as a blockchain and are decentralized. On cryptocurrency exchanges you can buy, sell and trade cryptocurrencies, which are primarily used as a method of exchange. Cryptocurrencies such as Bitcoin, Ethereum and Litecoin are some examples.
Non-fungible tokens (NFTs), on the other hand, are a class of cryptocurrency that signify ownership of a particular digital asset. NFTs are constructed using blockchain technology and use smart contracts to authenticate ownership. They are often used to symbolize digital artwork, memorabilia and other types of distinctive digital goods. NFTs are unique and cannot be traded for other NFTs or cryptocurrencies on the same terms. Cryptocurrencies, on the other hand, can be traded for other cryptocurrencies or fiat money.
Unlike NFTs, which are unique and cannot be traded for other NFTs or cryptocurrencies of a similar nature, cryptocurrencies are usually transferable and can be traded for other cryptocurrencies or fiat currencies.
Crypto is “fungible”. For example, if you exchange a Rs. 10 note for another, their value remains the same as they are interchangeable or similar.
NFTs are non-fungible in nature. Trading one NFT art for another is not the same because an authentic art has value.
Crypto tokens can be split into many smaller pieces.
NFTs, on the other hand, are not divisible
Payments, money transfers and anonymous spending are all possible with crypto tokens.
NFTs are used in the trade of digital goods, cosmetics and even virtual real estate. You can use NFTs to protect anything that can be turned into a digital copy.
4. Investment cost
Crypto tokens are easy to buy. Tokens can be traded on a number of crypto exchanges, both centralized and decentralized.
Buying NFTs can be prohibitively expensive. Because each piece is unique, it cannot be traded freely.