Digital assets have changed the way we see fiat currency, with Bitcoin and cryptocurrencies such as Ethereum and altcoins leading the way.
When looking at it from a newcomer’s perspective, it’s easy to get confused with terms such as tokens, NFTs and DeFi.
Let’s take a look at each and simplify matters for investors and enthusiasts alike.
What is NFT?
In order to understand NFT we will have to define digital currency and cryptocurrency.
Digital currency is electronic money, and cryptocurrency is a kind of electronic money that’s decentralized and encrypted. It’s powered by Blockchain, a remarkable system that’s not controlled by any single entity or institution.
NFT is short for Non Fungible Token, which is a digital asset that’s tied to a real world item. Perhaps the simplest definition of an NFT is that it’s a digital version of a physical item, such as a baseball card or commemorative award, for instance.
NFTs are then assigned a value that’s pretty much similar to the item it’s tied to. Also, each token is uniquely different. However, it has the same properties as a cryptocurrency because it’s based on the Blockchain technology.
The token creator maintains the right to copy them, and buyers will need permission should they want to make copies.
NFTs are quickly becoming popular, with cryptocurrency games and auctions featuring them. This means participants of a crypto game can earn NFTs as they play, then sell it for fiat currency or exchange it for a real world item.
What is Cryptocurrency?
Cryptocurrencies are digital money that’s protected by encryption. What’s unique about them is that they don’t require authentication from any existing financial institutions or banks. Any user can send and receive payment via the Blockchain network and the internet.
There are thousands of different cryptocurrencies that exist today, with some more popular than others. Bitcoin is the most famous and unsurprisingly, has the greatest value among them. Tether, Litecoin and Ethereum aren’t far behind.
Cryptocurrencies have evolved to a point that they’re considered to be invaluable assets. Bitcoin trading is one way to participate in the industry, and users can make a profit by selling at the right time and getting help from crypto trading platforms such as bitcoin era site.
Cryptocurrency trading is also more accessible compared to stock trading or Forex. There are dozens of reputable crypto exchanges available, and investors can sign up on the internet using their smartphone or laptop.
What is a Digital Currency?
Digital currency is a currency that can be stored in an app or digital wallet. The digital currency can be withdrawn via an ATM or bank and turned into its physical form.
Digital currency may have the same characteristics as fiat currency. People often exchange their fiat money into digital currency for convenience or when they want to purchase digital assets such as Bitcoin.
Digital currency can be transferred to any point in the world and usually in real time. They can be stored in apps such as Apple Pay or Google Pay so users can pay for an item even if they don’t have bills or their credit cards.