Crypto might not be a new word with a lot of individuals, or something too new around the world today.
This is because, the word Crypto has brought a lot of results to many people and organizations, that has brought job opportunities to many and created a lot of advantages to economic and national development. While NFT on the other hand has been around the world system, it’s rarely known to many what it is…
Crypto advancement is a key sustainable approach to money, and in the financial market today, a lot of companies now use crypto in the purchase of stocks, and market commodities and promoting an e-money system called wallets, which enables saving and transactions of money between individuals and companies around the world. A lot of people have called crypto a way of life and a game changer, especially in this contemporary age and time.
We might want to look at some similarities between crypto and NFT, while crypto is a digital currency with a lot of programming systems, NFT is a non-fungible token which is cryptographic in nature, with lots of metadata, which distinguishes them from one another. The non-fungible token is so fungible because it can be traded or exchangeable with one another, unlike cryptocurrency, which cannot be traded or exchangeable with one another.
More insight has been researched into the non-fungible token and crypto over the last five decades to know, what there are? Questions like, is crypto also NFT, what are their differences, what benefits do there bring together, how are there used and other similar questions. However, we will get to know some of such answers going down this article. But, it’s also better to understand the differences between these two types of e-system transactions. Cryptocurrency differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can serve as a medium for commercial transactions.
Firstly, let’s look at Cryptocurrencies more closely and also at non-fungible tokens too:
Cryptocurrency has been defined by Investopedia as A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.
Wikipedia also defines Crypto in a more interesting way as A digital currency designed or built to work as a medium of exchange through a computer network system that is not reliant or dependent on any central authority, by either government or any other national body.
In 1983, the American cryptographer David Chaum conceived an anonymous cryptographic electronic money called e-cash. Later, in 1995, he implemented it through Digi-cash, an early form of cryptographic electronic payments. Digi-cash required user software to withdraw notes from a bank and designate specific encrypted keys before they can be sent to a recipient. This allowed the digital currency to be untraceable by the issuing bank, the government, or any third party.
More so, cryptocurrency doesn’t exist in any physical form, like paper money, or physical mental coin as used in the past decades or still in use in different regions of the world, Cryptocurrencies typically use decentralized control as opposed to a central bank digital currency (CBDC). When a cryptocurrency is minted or created before issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically through blockchain technology, that serves as a public financial transaction database. Traditional asset classes like currencies, commodities, and stocks, as well as macroeconomic factors, have modest exposures to cryptocurrency returns.
As it is well known from research, the first decentralized cryptocurrency was Bitcoin, which was first released as open-source software from 2009 to 2010. As of March 2022, there were more than 9,000 other cryptocurrencies in the marketplace, of which more than 70 had a market capitalization exceeding $1 billion. This was a huge plus to the currency market or financial institution at the time.
Secondly, let’s look at NFT: the Non-fungible token: In the past five years, a lot of contribution and research work has brought more light to the importance of NFT, and how advantageous this system is as compared to crypto. Looking at the definition from Investopedia and Wikipedia respectively:
Investopedia has over the years defined the NFT as thus; Non-fungible tokens (NFTs) are cryptographic assets on blockchain technology with unique identification codes and metadata that distinguish them from each other.
Wikipedia on the other hand has a lot of interesting things to say about the NFT system; A non-fungible token (NFT) is financial security consisting of digital data stored in blockchain technology, a form of a distributed ledger.
All these definitions are to give insights into what these two systems are, and how there is used in advancing technology in the world today, through blockchain technology. These two digital blockchain technology promoted in no way the ease of doing business across the world.
The ownership of an NFT is recorded in blockchain technology and can be transferred by the owner to another individual, making or allowing NFTs to be sold and traded. NFTs can be created by anybody, and require few or no coding skills to create. NFTs typically contain references to digital files such as photos, videos, and audio. Because NFTs are uniquely identifiable, they differ from cryptocurrencies, which are fungible. The market value of an NFT is associated with the digital file it references and more.
Proponents of NFTs claim that NFTs provide a public certificate of authenticity or proof of ownership, but the legal rights conveyed by an NFT can be uncertain. Meaning its legality is still unknown, the ownership of an NFT as defined by the blockchain has no inherent legal meaning, and does not necessarily grant copyright, intellectual property rights, or other legal rights over its associated digital file. A Non-fungible token does not restrict the sharing or copying of its associated digital file and does not prevent the creation of NFTs that reference identical files.
However, the NFT market grew dramatically from 2020–2021: the trading of NFTs in 2021 increased to more than $17 billion, up by 21,000% over 2020’s total of $82 million. NFTs have been used as speculative investments, and they have drawn increasing criticism for the energy cost and carbon footprint associated with validating blockchain transactions as well as their frequent use in art scams. The NFT market has also been compared to an economic bubble or a Ponzi scheme. By May 2022, the NFT market was seen as beginning to collapse. A lot of monies were lost, investments went wrong and other economic meltdowns happen to the NFT market in the last months of 2022.