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Home NFT

What sets cryptocurrencies apart from NFTs?

October 16, 2023
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What sets cryptocurrencies apart from NFTs?
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The rapid adoption of digital assets resonates with every industry with each passing day, and the trend will continue to go up incessantly. Today’s two most popular forms of digital assets include cryptocurrencies and NFTs (Non-Fungible Tokens), which are increasingly used by a maximum number of users. While these two digital assets share blockchain technology mutually, certain differences markedly set them apart.

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This article aims to bring those differences into light by expounding various reasons that markedly stand them apart. Simply put, we will discuss their unique features, technologies, and utilities to ensure how they have leveraged the world of digital assets. This will help you know best what makes cryptocurrencies and NFTs differ mutually.

NFTs Explained

NFTs or Non-Fungible Tokens refer to unique digital assets that do not allow replication or modification, whose authenticity is proven, and whose purchase and sale traceability is included in a smart contract.

It also has various unique features:

Uniqueness: Irrespective of a NFT type, its value is unique from its counterpart and other items, which make it unique on the whole.

Indivisibility: NFTs by nature are not divisible. This means you cannot divide them into smaller units. This unique property again stands them apart from cryptocurrencies.

Unalterable: Thanks to blockchain technology and smart contracts that collectively prevent information destruction, replication, or change.

NFTs are recognized as one of the most coveted and popular items in wide-ranging domains, for example:

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Digital Art: Artists can digitize their digital artwork as NFTs and validate the ownership of their creations and even sell them.

Collectibles: NFTs allow users to showcase the portfolio of their virtual collectibles in video games or digital card games.

Music and Entertainment: NFTs provide users, dealing in music and entertainment, with the opportunity to sell their exclusive music tracks and movie clips or offer access to their content.

Cryptocurrencies & its Utilities Explained

Cryptocurrencies refer to digital assets, such as Bitcoin, Dogecoin, Ethereum, etc., that rely solely on blockchain technology regarding functionality. The innovative technology offers seamless security to users while making transactions on a computer network.

Cryptocurrencies fundamentally rely on blockchain, a state-of-the-art technology that resonates with users due to its one-of-a-kind decentralization feature. Here are some of the popular utilities of cryptocurrencies:

Crypto Mining: Cryptocurrencies are extensively used in crypto mining, a crucial process that involves the creation of various crypto coins, for example, Bitcoin, Ethereum, etc.

Crypto Investments: Cryptocurrencies have grabbed the attention of investors to invest in them, as they offer the opportunity to get potentially enhanced ROI in due course.

Gambling & Betting: Cryptocurrencies have gained immense prominence in the online casino gambling and sports betting industry for their fast speed, seamless security, and heightened anonymity. Cryptocurrency sports betting, especially, has resonated with maximum users recently, as users get the opportunity to bet on their favorite betting events using notable cryptocurrencies like Bitcoin, Ethereum, etc.

How are Cryptos Different from NFTs?

Cryptocurrencies and Non-Fungible Tokens are classified as digital assets but they markedly vary in terms of purpose and functionalities. Simply put, cryptocurrencies are fungible assets, which imply that they are interchangeable and are fundamentally used for processing transactions and making investments. NFTs, on the other hand, are non-fungible in type and refer to varied tangible collectibles and artworks with unmatched uniqueness. While both digital assets are at the height of popularity and demand, the key factor ‘fungibility’ stands them apart. In the following table, we mention a few key differences between cryptocurrencies and NFTs.

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Conclusion

Cryptocurrencies and NFTs vary from each other regarding their functionalities and characteristics. Simply put, cryptocurrencies are fundamentally considered for making transactions and investments. In contrast, NFTs, being unique goods or content that remain in the digital environment, are used by users to represent their exclusive tangible assets and collectibles as well as their ownership.

In any case, both cryptocurrencies and NFTs ride high on success in the fast-thriving world of digital assets due to their unique features and functionalities that extensively resonate with users. Therefore, anyone who designs to enter the realm of digital assets must be familiar with the basic differences between the two in advance to streamline their journey effectively.

Tags: cryptocurrenciesNFTssets

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