Many crypto users are making money by investing in it, and there are many ways to earn money via popular crypto coins such as Bitcoin, Ethereum, Litecoin, Dogecoin, etc. Different people purchase crypto coins for various purposes, such as making money, doing decentralized transactions, online shopping, starting a global business, etc. You can make money using crypto by investing, trading coins, mining, consulting, etc. The new term called NFTs is also known as the best investment than cryptocurrency. Many people get confused with these terms, so we will try to shout out the confusion. If you are interested to use NFTs, there are reliable platforms that you may use like NFT Investor
What is a cryptocurrency, and how does it work?
Cryptocurrency is a new way of seeing the future of the payment system because there is no control of the intermediaries, which may be government institutions or financial institutions. There are over thousands of crypto coins on the network, and most of the coins work on the blockchain system, which makes it powerful.
When it was ancient times, people usually used cash for exchanging goods and services. However, with the technological changes, people moved to digital transactions via online banking applications and other third-party applications that charge enormous amounts for international transactions. But the first crypto coin’s (Bitcoin) founder (Satoshi Nakamoto) was also experiencing the same issue other people were facing. Afterward, he invented the concept of a blockchain system that is non-hackable and unmanageable to third parties.
The blockchain is the public book for everyone that shows all the recent and previous transactions in crypto coins because no third parties control it. For instance, when you do marketing using a bank account, the bank system validates the transaction and stores it in its design, which means no one can see the transactions under the bank. But in the case of cryptocurrency, when we do transactions on it, the crypto coin goes under the process of validation on the blockchain, where multiple nodes validate by contributing their computational power and skills because no third-party staff is validating or storing it.
What is NFT, and why do people invest?
NFTs stands for Non-Fungible Tokens, which means digital assets with ownership rights that you cannot replace with other things. For instance, suppose you bought a white plain t-shirt directly from a vendor in your area, and your friend also purchased the same t-shirt you recently purchased because there is no difference or unique thing. You both can exchange your t-shirts because the value is the same. However, suppose you get a celebrity’s signature on your white t-shirt, which means now it has become the unique one among all the t-shirts globally. You cannot exchange your signed t-shirt with your friend because you know it is unique, and you can sell it at a significantly higher price.
So Non-Fungible Tokens are like the unique t-shirt that we took the example above but in a digital form with the ownership rights, and it will store on the NFT markets that will trade through the cryptocurrency (Ethereum).
Difference between NFTs and Crypto Coins
1. Meaning:- NFT stands for Non-fungible Token, which means digital assets on the NFT online market space for buying unique digital assets with the ownership rights to profit. On the other hand, cryptocurrency is digital coins backed by a blockchain platform to remove the institutions known as third parties so the users can take advantage of the payment gateway without paying additional charges.
2. Blockchain: Non-Fungible Tokens and cryptocurrencies are backed by the blockchain platform. Both have the same object to cut off the intermediaries from the system and make all transactions or data on the internet space transparent. The only difference between the NFTs and Crypto coins is that NFTs are online assets backed by blockchain, and crypto coins is a payment system like domestic cash without intermediate.
3. Fungible and Non-fungible:- First of all, you must have a clear concept of fungible and non-fungible. Fungible things are interchangeable; we took the illustration of t-shirts above, which means the vendor has the same t-shirt, and people can exchange it, but it will become non-fungible (non-exchangeable) when someone signs on it. So cryptocurrency is fungible coins because the currency’s value is the same every time you send, i.e., the receiver will receive the same weight you sent. But NFTs are non-fungible, which means digital assets are unique.
4. Existence without each other:- NFTs are nothing without cryptocurrency because they came after the cryptocurrency. Mainly the NFTs are backed by the Ethereum blockchain, and you can only use the Ethereum crypto coins for buying and selling.
5. Market attraction:- NFTs assets attract the crypto market since only the cryptocurrency users understand them. So NFTs attract the cryptocurrency market.