(NFTChronicle.com) – Most people diving head-first into the world of collectible NFTs typically have the same first question: what’s the difference between an NFT and cryptocurrency? Bitcoin, Ethereum, Dogecoin, and other names people hear about can sound confusing. Now, there’s also this thing called an NFT? Luckily, understanding the differences between the two is simple.
It helps to have a foundation to understand most things, and blockchains are the foundation of both cryptocurrencies and NFTs. Blockchains are what make the entire crypto world spin. The chain is nothing but a transparent, decentralized, immutable record of transactions. When people create, sell, trade, destroy, or combine cryptocurrencies or NFTs in the form of digital tokens, an unchangeable record goes into a block of data visible to anyone with internet access. When the block is full, it adds to the chain.
The tokens themselves differentiate cryptocurrency from NFTs. A cryptocurrency token, like a single Bitcoin, is a fungible asset. Like tangible currency, you can trade one Bitcoin for another, and it will be worth the same amount. Much like a dollar bill, it makes no difference how or where you got it, it’s worth what a dollar is worth and nothing more.
An NFT is a non-fungible token, meaning each is unique. NFTs store files, not currency, along with smart contracts denoting who made it, who owns it, how the owner can use it, and any other parameter the token’s creator sets.
While NFTs and cryptocurrencies are different, they’re also inherently connected. Blockchains compatible with NFTs use their own cryptocurrencies to pay for transaction fees. So those who wish to start collecting NFTs will likely learn about cryptocurrency to pay for them.
Copyright 2022, NFTChronicle.com/
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