NFTs and CRYPTOCURRENCY: A BASIC GUIDE FOR ALL

WHAT ARE NFTs?

Lets understand the meaning of NFTs from various angles and viewpoint as explained below:-

NFTs, or Non-Fungible Tokens to give them their full name, are cryptographic assets held on a blockchain. Fungible, if you are not aware, is a word that originally derives from the Latin verb fungi meaning "to perform". In modern parlance, though admittedly mainly in legal jargon, it tends to mean "interchangeable".

NFTs (non-fungible tokens) might be the most confusing commodity on the internet right now. At its most basic, an NFT is computer code that represents ownership of digital items. But what does that actually mean? And why are they suddenly exploding in value?

NFTs are also called non-fungible tokens, and they are blockchain-held tokens that represent a unique asset – whether physical or digital. NFTs are secured on cryptocurrency blockchains, trading using Ethereum, Solana, Wax and other tokens. This means they are tied to the ebb and flow of cryptocurrency values, which is a positive and a negative.

NFT means non-fungible tokens (NFTs), which are generally created using the same type of programming used for cryptocurrencies. In simple terms these cryptographic assets are based on blockchain technology. They cannot be exchanged or traded equivalently like other cryptographic assets.

NFT stands for non-fungible token. “Non-fungible” means something is one-of-a-kind and can’t be replaced. Think of the Mona Lisa painting — there’s only one in the world. NFTs are digital assets that represent things like art, virtual avatars, GIFs, videos, trading cards and even memes.

NFTs are a special type of cybercurrency token. Each NFT is unique and tied to a specific digital asset. This digital asset can be any digital file, such as a music file, a video, or a picture file, and some also claim it can be a physical asset, such as a tennis shoe.

WHAT IS THE DIFFERENCE BETWEEN A NFT AND A BLOCKCHAIN ASSET?

BLOCKCHAIN are the basics for both NFTs and even cryptocurrency. NFTs are non tangible tokens that are essentially a digital file that can be created, traded and sold. Some NFTs are also attached to things like real estate.

NFTs have a nuanced relationship with the assets tied to them. While an NFT is designed to represent the original asset on the blockchain, the NFT itself is seen as a separate entity from any content it contains. Throughout this article, we’ve often compared NFTs to trading cards, and that analogy holds true here as well.

And as such, NFTs are ideal for storing real-world value. On the other hand, cryptocurrencies like Bitcoin are fungible – meaning that if you were to swap 1 BTC for another 1 BTC, nothing much changes. That is to say, you still have 1 BTC worth of value in your wallet.

Just like the money in your bank account, cryptocurrency is what you use for any and all transactions on the blockchain. Cryptocurrency can be purchased or converted into fiat currencies (dollars, euros, yen, etc.) via crypto exchanges. By contrast, an NFT is a unique and irreplaceable asset that is purchased using cryptocurrency. It can gain or lose value independent of the currency used to buy it, just like a popular trading card or a unique piece of art.

But the main difference is indicated in the name. Cryptocurrency is a currency. Like every other currency, it has only economic value and is fungible. That means that, within a particular crypto currency, it doesn’t matter which crypto token you have; it has the same value as the next one, 1 $ETH = 1 $ETH. But NFTs are non-fungible, and they have a value that goes way beyond economics.

Both are digital assets; and, while crypto came first, the general public began hearing about both around the same time in the late 2010s. According to Forbes, NFTs are commonly bought and sold with crypto and both tend to attract the same players — the NFT world branched off from crypto culture. Both are built using the same programming and encoded with the same underlying software and both are secured in digital wallets — but that’s where the similarities end.

WHAT ARE THE BENEFITS OF USING A CRYPTOCURRENCY FOR A BUSINESS?

By far the most important benefit of cryptocurrencies is their decentralized nature. This sets to remove intermediary institutions like banks from the equation when it comes to payment processing between the customer and supplier. Because of the secure nature of the blockchain, it is not necessary to have a "middle man" enforcing, tracking, and policing transactions like with traditional currencies. It also means there is not a single point of failure, such as a large central bank, which could mitigate against things like the 2008 banking crisis.

The next major benefit of cryptocurrencies is their ability to make fast and relatively cheap transfers between two parties. Since there is no intermediary processing data, transfers can be made very quickly and efficiently (although the time needed varies greatly). One example of this is something called "flash loans". These loans, in which capital is borrowed and repaid in one transaction, are processed without backing collateral, can be executed within seconds, and are used in trading.

The use of crypto for conducting business presents a host of opportunities and challenges. As with any frontier, there are both unknown dangers and strong incentives. That’s why companies venturing to use crypto in their businesses should have two things: a clear understanding of why they are undertaking that action and a list of the many questions they should consider.

From an investor's point of view, cryptocurrencies offer an unprecedented opportunity to grow your investment in a relatively short period of time - albeit with a lot of risks. The valuation of many of the older and tested cryptocurrencies like Bitcoin, Ethereum, etc, have skyrocketed over the last decade or so. Only ten years ago, for example, Bitcoin was valued at a yearly average of $5.27. At the time of writing, a single Bitcoin is now worth in excess of $37,000, which is a 7000% increase in ten years! Very few other investments have that kind of growth potential.

Another apparent benefit of cryptocurrencies is that they can, in theory again, be mined by anyone with a computer. While this was certainly true in the very early days of cryptocurrencies like Bitcoin, today it takes a considerable amount of computing power and energy to do so profitably. Nowadays, only more professional operations are able to reliably mine cryptocurrencies, which attracts enormous capital and energy expenses. Again according to MIT, somewhere in the region of 10% of miners produce 90% of all new cryptocurrency units.

If a company is ready to go beyond simply enabling crypto payments and intends to broaden crypto adoption within operations and the treasury function—in other words, to go the “hands-on” route—it may potentially find a significant increase in benefits, as well as in the number of technical matters to address.