According to the best assignment writing service uk reviews, our world is changed into a modern world due to the advancement of technology. Similarly, the traditional way of the transaction is changed into mobile or digital wallets that carry money and cryptocurrencies. With so many similarities it is hard to understand the difference between various currencies for investment.
NFT and cryptocurrency is also a type of currency. The word cryptocurrency is new to the financial world (bestassignmentwriter, 2022). And nowadays NFTs vs cryptocurrency is a hot topic in the world of technology. Both currencies are based on blockchain technology and use the same method, principles, and technology. Both draw the same type of people towards their technology but their functioning and identity are totally different from each other.
This blog will give you a closer look at the aspect of whether NFTs are a better investment than cryptocurrencies or not? The research on taxation law assignment help this blog to cover every aspect of NFT. Let’s first give a glance at a basic understanding of NFTs.
The basics understanding of NFTs
NFTs are a form of cyber currency token that is unique. Each NFT is unique and associated with a certain digital asset. This digital asset can be any digital file, such as music, video, or photo file, and others argue that it can also be a physical asset, such as a pair of sneakers (Braun, 2022).
An NFT datum is stored in the system of a blockchain, and any users on that blockchain can trade it. The blockchain stores all the information regarding transactions in its blockchain ledger that takes place on it. The blockchain does not store the digital asset itself, simply proof of ownership; copyright holders, while NFT creators can store the digital asset wherever they like (Braun, 2022).
Comprehension between NFTs and Cryptocurrencies
- NFT stands for Non-Fungible tokens. Anything that is non-fungible means that it is unique and can’t be replaced with something else.
- Each NFT contains unique information such as “who has a particular digital asset”, “who sold the asset” and “to whom the asset is sold”, which makes them unique and easily verifiable because such information cannot be duplicated.
- NFT creates a blockchain-based digital certificate for your virtual items including music, games, and art. This certificate gives your work a special identity.
- Cryptocurrency is basically defined as virtual money that uses cryptography to secure and verify transactions, as well as monitor and control the generation of new currency units.
- It is decentralized and can’t be changed by the interference of a third party. Unlike traditional payment systems which are handled by banks or governments, it is not issued nor regulated by any government or central body.
- In cryptocurrencies, fees or hidden charges are almost non-existent or very cheap, and there is no limitation in transactions.
- Each NFT serves as a valid certificate, demonstrating that a digital asset is one-of-a-kind that can’t be duplicated or stolen.
- Due to the cryptographic principles of the blockchain, an NFT can never be modified, edited, or stolen.
- Just like traditional currencies such as the US dollar, is a medium of exchange designed to interchange digital information while avoiding the issues that existing currencies have.
- It enables the purchase and payment of products and services in a quick, safe, and decentralized manner.
- NFTs are non-tradeable because they are purchased and exchanged online and controlled in a digital ledger. Instead of purchasing a physical photograph of Monalisa to display on the wall, the buyer purchases an original digital file.
- Any cryptocurrency can be traded or exchanged without losing any of its value. Their peer-to-peer system, which is based on blockchain technology, allows anyone to transact payments in any digital currency.
- As compared to cryptocurrency, the NFTs are considered to be less volatile. However, the artists and traders have drawn their attention to NFTs due to their creative and artistic appeal.
- The crypto opponents and regulators have often said in their condemnation of cryptocurrencies that cryptocurrencies are high-risk investments.
Uses and marketplace
- NFTs are used in Digital content, gaming products, investments and loans, domain names, and other items.
- Currently, there are three NFTs marketplace that is Rarible, OpenSea, and Foundation
- Cryptocurrency is used for a variety of purposes, including low-cost money transactions, asset management, and ethical business operations.
- The largest cryptocurrency exchanges are Binance, Coinbase, Kraken, and eToro.
Which is better: NFTs or Cryptocurrency
NFTs are viewed as keeping the records of ownership of unique digital assets, and as such, they are non-fungible which means they cannot be traded for one another because they are not identical. They are also used in cybersecurity. NFTs can be bought and sold in the same way that any other cryptocurrency can. The real difference between them is that NFTs are unique and non-fungible, however, cryptocurrencies like bitcoin are fungible which means that you can exchange bitcoin because they are exactly the same. This is what distinguishes cryptocurrencies from NFTs, with fungibility, you know what exactly you’re receiving. Hence, Trading NFTs is more challenging than trading cyber currencies due to their uniqueness (Braun, 2022)
For those who are technologically inclined and want to make money from their digital work, NFTs are a feasible choice for them. Due to the creative, and artistic component of the market, artists and traders have been drawn to it.
On the other hand, cryptocurrencies come as a surprise. Some cryptocurrencies were specifically created to be more stable than others. Such as Stablecoins which has lower volatility than Bitcoin and Ethereum. Tether and USD Coin are two examples of Stablecoins. The value of the US dollar determines its worth.
It is concluded that NFT vs. Crypto is a heated topic. So the main question is how to pick between two possibilities? It depends on the trader’s desire and tendency to take risks.
Braun, P. (2022, February 25). Why NFTs are harder to value and trade than cryptocurrencies. Forbes. Retrieved June 5, 2022, from https://www.forbes.com/sites/phillipbraun/2022/02/24/why-nfts-are-harder-to-value-and-trade-than-cryptocurrencies/?sh=4c35f8212f07
Miller, J. BAW., (2022). What Is Cryptocurrency? Everything You Need To Know!. Online Available at <https://www.dissertationproposal.co.uk/guide/what-is-cryptocurrency-everything-you-need-to-know/> [Accessed on 4th May 2022]