These are things you will no doubt have seen all over the news in recent years, people becoming rich, people losing lots of money, people being scammed and celebrities investing in it left, right and centre. So, what exactly is the difference between cryptocurrency and NFT’s?
What is cryptocurrency?
Cryptocurrency is a new form of currency, specifically a digital currency that utilises blockchain technology. In simple terms it is very similar to an existing currency but the price of it is far more volatile. You could buy 1 Bitcoin and then a week later it is worth half the value, therefore there is a lot of potential to make and lose money with it which is appealing to many people. There isn’t just one form of cryptocurrency, Bitcoin is without doubt the most famous and the most expensive but there are many others like Ethereum. Due to the online nature of cryptocurrency, there are many crypto scams around but perhaps more worryingly there is now also an increasing amount of physical assaults associated with it. In recent months there have been a series of kidnappings associated with trying to force access to a cryptocurrency wallet. The major flaw of this type of currency is that whoever holds the wallet owns it, nobody else is entitled to it once it is in your possession, there is no way of blocking payments or anything like that.
What are NFT’s?
NFT stands for Non-Fungible Token, and you will most frequently see this associated with digital artwork at the moment although it can be used for anything. It is a way of selling online and proving ownership/authenticity of what has been sold so lets say you want to buy an original Banksy, he may be selling them on an NFT marketplace so you can purchase it and then prove that you have the original, when you sell it this then gets transferred to the new person. The most frequent NFT scams revolve around phishing or fake products. The one major drawback with NFT’s is that (using the previous Banksy example) someone could just do a screenshot of the Banksy artwork that is already in exist and then list it claiming it is the original. The way to ensure all of your artwork is real is to follow the artist themselves and links that they provide when they announce that one is for sale.
So, what is the difference between NFT’s and Cryprocurrency?
They are both totally separate entities. You would use cryptocurrency to buy and sell an NFT but the NFT itself is effectively just a product that you would buy. Think of it like going in to a shop and buying artwork in pounds sterling. The cryptocurrency is the pound sterling and the artwork is the NFT. If you’re looking in to buying or selling NFT’s make sure you do your research first and find a legitimate marketplace to make your purchases. There are a lot of fake sites around that will only be too happy to take your money.