NFT vs. Cryptocurrency: Choosing Best to Invest In 2022
As cryptocurrencies continue to develop, there will be numerous new opportunities for investment in 2022. However, NFTs have been gaining popularity lately, attracting many crypto investors. It is now an NFT vs. crypto challenge in the world of digital investments. But which option is more advantageous? It is necessary to learn about the specifics of cryptocurrencies and NFTs to find it out. Read through this guide to know the basics of crypto and NFT trading.
Why Invest in Crypto and NFTs
Major cryptocurrencies like Bitcoin and Ethereum have been around for some time already, and the number of newly emerging altcoins is growing rapidly. Even without going deep into the specifics of digital currencies, there are two obvious points: they are highly risky to invest in, and they can make you insanely rich. People invest in crypto and NFTs mainly because they desire to receive a huge return on their investment. While this is totally possible, as we can see from the example of many crypto billionaires, there are many things to consider if you want to invest and make a profit.
What Is NFT?
NFT is an abbreviation for a non-fungible token. Non-fungible means that a certain item or asset cannot be exchanged for another asset of the same value. For example, currencies are fungible, and you can swap one dollar for another dollar or one BTC for another BTC. But NFTs are unique, and their value is not determined in relation to other currencies, market fluctuations, or anything else. Each of them has a unique value, much like a real-life art piece. Most NFTs are digital art pieces as well. However, not only images can be NFTs. You can buy ownership of an in-game item or even a specific tweet.
How NFTs Work
NFTs do not work in the same way as cryptocurrencies. Bitcoin and altcoins are virtual currencies you can use to buy other tokens, services, goods, etc. But NFTs are something you can buy, collect, and sell. Purchasing an NFT is like buying a painting in real life but in a digital format. And while you have official ownership over, say, an image, it still can be shared or viewed by other people. Think of it as owning an original copy of a book signed by its author while all other people can still have a copy of the same book, but it will be unoriginal.
How to Invest in NFTs
NFTs are generally bought with cryptocurrencies, developed within a blockchain network. Much like other digital assets, NFTs can be found on a specialized online marketplace or exchange. You need to have a crypto wallet with some currency, create an account on an NFT platform, choose a token you are interested in, and purchase it with your crypto. After buying the NFT, you should store it in a secure private system wallet.
What Is Crypto?
While there are many talks about NFT vs. cryptocurrency, the latter remains more demanded. Crypto is a digital currency created with the help of secure encryption methods. On the other hand, a cryptocurrency is a decentralized system developed on blockchain technology. Thanks to their decentralization, cryptos are not generally affected by governments, banks, or other official institutions.
Cryptocurrencies have several features that make them different and more desirable in comparison with fiat currencies:
Another important feature is the high value of many cryptos and incredible potential to grow in price, thus making the owners of certain tokens very wealthy.
While there are thousands of different cryptos already, most people know some of the top digital currencies. The first cryptocurrency as we know them today is Bitcoin. All other cryptos are called altcoins. Apart from BTC, some of the most prominent options are Ethereum, Litecoin, Dogecoin, Polkadot, and Tether.
NFT vs. Crypto: What Are the Differences?
When talking about crypto and NFT, it is important to understand their differences. Most people might seem similar, as they are both built on a blockchain and are digital assets, but they are completely different things.
Cryptocurrencies are digital currencies that have a value that goes up and down. They can be bought, sold, exchanged, and used for buying various services and items. They act like classic currencies but in a digital world. NFTs are digital assets, but they do not work as money. Instead, they are more like products that you can buy or sell. All kinds of virtual assets can be NFTs, from pictures to tweets.
What Is More Perspective to Invest In?
Cryptos are still more high-potential than NFTs. Despite being extremely volatile, cryptos are more stable and promising, especially if we are talking about such monoliths as Bitcoin and Ethereum. In addition, there are limits to most cryptos, and their limited amount will contribute to their value. With NFTs, their future is still unclear.
Crypto and NFT: Similar Features
As for similarities, both cryptocurrencies and NFTs are created with the help of the same blockchain technology. They are assets that can exist in the digital realm only. It is impossible to have a physical crypto token or hold an NFT in your hands. They can be sold, bought, stored, or exchanged online. NFTs are normally bought with cryptocurrencies.
How to Invest Safely
Investing in both crypto and NFTs requires doing thorough research beforehand. Learn as much as you can before attempting to buy tokens or NFTs. These investments are highly risky, so evaluate your risk carefully. Do not go big at first; try buying a small amount of cryptocurrency to learn the mechanics. Always use only reliable websites, exchanges, and digital wallets. Security is crucial when dealing with such expensive assets. Finally, try to keep up with the news to always have a clear idea about what is happening in the crypto world.
While cryptocurrencies continue to develop, new opportunities, such as NFTs, emerge on the market. NFTs are a great way of putting digital currencies to work for crypto users. It is still more efficient and promising to invest in digital currencies, both established and emerging digital currencies. However, NFTs can open new horizons on the crypto market. Right now, it is advised for artists to try and focus on NFTs, as these tokens can be a great source of income for various creators. Other investors can stick to crypto for now.
Frequently Asked Questions
What Are the Features of Crypto and NFT?
Cryptocurrencies and NFTs are similar in the sense that they both are digital assets built on a blockchain. NFTs can be considered a subcategory of crypto due to their similarities in nature.
NFT vs. Cryptocurrency: What Are the Differences?
The key differences are specified in their names, as crypto is a currency, while NFTs are not. In addition, NFT is an abbreviation for a non-fungible token, while cryptocurrencies are fungible, and each crypto token has the same value as any other token of this currency.
What Are the Best Places to Buy Altcoin Safely?
The best places to purchase your altcoins are crypto exchanges and peer-to-peer platforms. They are strictly regulated and offer security and certain stability. Some of the safest exchanges are Coinbase, eToro, BlockFi, Binance, and Webull.