NFTs Versus Cryptocurrencies: 5 Things You Should Know

There is a sudden shift in people to leverage financial transactions on digital wallets with cryptocurrencies and NFTs, here are 5 things your should know.

There are plenty of software-based programs that securely save user payment details and let you access your cash whenever you need it.

These digital wallets can also hold Cryptocurrency. Not only that, but even the non-fungible tokens (NFTs) can also be stored in these digital wallets.

Both of these are one-of-a-kind digital assets representing real-world items. However, NFTs are not the same as Cryptocurrency, and even though many people confuse these two, there are distinctive differences between these that state otherwise.

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Now, let’s focus on the top differences between NFTs and Cryptocurrencies.

What Are NFTs?

NFTs are Crypto assets with a unique id, and they represent something collectible with the help of Blockchain technology. NFTs have grown in demand recently after so many celebrities started purchasing them.

These nonfungible tokens could also be helpful if you want to complete a collection or if you want to show them off on your social media bio. They are also beneficial in playing online games.

Have you ever heard of the NBA Top Shot?

Probably not, but it is a digital collectible basketball card game. These trading cards work just as fine as physical trading cards, but Blockchain technology guarantees their credibility. Some of these cards are even rarer than others, but each has a different valuation.

What Are Cryptocurrencies?

Cryptocurrency is the encrypted version of a digital currency that is not reliant on the banks or the government to verify financial transactions. You can store Cryptocurrencies in a digital wallet.

It is a peer-to-peer system that works on Decentralized Blockchain Technology. So when you use these digital currencies as a mode of financial exchange, they are recorded in a digital public ledger.

Different organizations have different Cryptocurrencies known as tokens. You can use these tokens to buy a product that the company offers exclusively. However, you have to spend real cash to purchase Cryptocurrencies and use them in other financial exchanges.

NFTs Vs. Cryptocurrencies-5 Things To Know

Cryptocurrency is a type of digital currency that you can withdraw in the form of cash from your ATM. However, NFTs don’t work like that. You cannot withdraw them but can use them to access several online goods that would have been impossible to access otherwise.

Let’s take a look at the top differences between NFTs and Cryptocurrencies:

Exchanging

Cryptocurrencies can be exchanged with one another. For example, if you have 10 Bitcoins and want to exchange them to buy 10 Ethereum, you can do that. 1 Bitcoin lets you buy 67.9 Ethereum, which is different for every kind of Cryptocurrencies.

On the other hand, you cannot exchange one type of NFT to buy another. So when you have an NFT in your wallet, you can use it to access different online goods, but never can you exchange it like Crypto coins.

Taxation

Both Cryptocurrencies and NFTs are taxed when you use them as a trading medium. However, you are an eligible taxpayer if you use Cryptocurrencies regularly to buy online goods. You are subjected to pay 30% tax on your income alongside a 1% deduction.

The NFT tax amount is not fixed. When people sell NFTs on digital platforms, the tax charge can go as high as 37% or as low as 10%.

User Number

Cryptocurrencies are more popular than NFTs, which is why so many people possess these digital currencies. According to recent statistics, there are 80.27 million users of Cryptocurrencies, and the number is still rising.

On the contrary, people have just started buying NFTs, and so far, only celebrities have had access to it. Furthermore, studies suggest that only 360,000 people own NFTs, which is pretty lower than Crypto users.

Value Determination

The value of Cryptocurrencies is judged like any other tradeable asset such as stocks, bonds, etc. it depends on how many people are interested in the Crypto market and how many people are buying them.

However, the value of an NFT depends on its rarity. For example, some people may find the #1 NFT desirable, and some may find the #13 desirable, which is how the value of an NFT is determined.

Potential To Become The New ICO 

ICO stands for Initial Coin Offering. If you are asking whether Cryptocurrencies have the potential to become the new ICO, they have. They rose to popularity around 2017 and have survived many crashes in the market so far.

On the other hand, NFTs became popular a bit late, and they don’t yet have the potential to become the new ICO. People only use them to access a limited number of online goods, that’s it.

Signing Off

The differences between NFTs and Cryptocurrencies have a distinct perspectives, and we have mentioned a few of those perspectives here for you to get a good idea of them.

If you want to learn more about them, don’t shy away from asking your questions in the comment section. We promise to get back to you with an answer ASAP.

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