NFTs vs Cryptocurrency vs Digital Currency: What’s The Difference? In this video, we are going to be checking the differences between NFTs, cryptocurrency and digital currency.
The main difference between these three is that a digital currency is an electronic form of currency coins and notes as opposed to the fiat notes that we hold physically. NFTs stand for non fungible tokens and refer to unique digital assets that cannot be replicated and are sold online. The NFTs exist in digital ledgers. Cryptocurrency is an encrypted form of digital currency. Cryptocurrencies exist in digital ledgers like the blockchain.
NFTs
NFTs stand for non fungible tokens and it a term used for assets that are unique and cannot be exchanged for another. The opposite of a NFT is a fungible asset like Bitcoin. With Bitcoin you can exchange one coin for another as they are the same thing. However, if you have a unique painting or digital asset you cannot find another of the same kind hence it is called a non fungible asset.
NFTs can consist of almost anything from music, drawings, or even a tweet. The assets are sold online through an Ethereum blockchain. This means you will find the same encoding software that is used in cryptos being used with the NFTs.
Digital currency
This term denotes an electronic form of holding currency coins and notes in a digital wallet. You can withdraw your digital cash in an ATM. You can access the digital currencies via mobile phones or computers as they only exist in an electronic form. Since you do not need intermediaries with the digital currencies it makes for one of the cheapest modes of trading currencies. Here is the thing, all cryptocurrencies are digital currencies but not all digital currencies are cryptocurrencies. The advantage of having digital currencies is that they allow seamless transfer of value while the disadvantages for having them is that they are highly volatile hence susceptible to hacks.
Cryptocurrency
Crypto is a virtual currency that is secured by cryptography. The currency is decentralized in a blockchain and this makes it hard to counterfeit or double spend. The blockchain ledger is a distributed ledger that is enforced via a network of companies. A key element about cryptos is that they are not issued by a central authority like the money in circulation and this means they are kind of immune to government manipulation and interference. Some of the criticism directed towards the cryptocurrencies stem from the fact that they are decentralized hence can be used for financing of illegal activities and can cause exchange rate volatility. On the other side, they are praised for their transparency, portability, and divisibility.
