How are NFTs different from cryptocurrencies?

Developers
1

I am a developer working on a NFT app development. I want to add NFT features to the app, but I am not sure where to start. Can anyone provide some guidance?

2

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3

It’s a great question, and it’s easy to see why people get them mixed up! Both NFTs and cryptocurrencies use blockchain technology, but their purposes and characteristics are fundamentally different. Here’s a breakdown

Cryptocurrencies (like Bitcoin, Ethereum, etc.):

  • Fungible: This is the key. One Bitcoin is identical to any other Bitcoin. You can exchange them seamlessly, just like you can exchange one dollar for another.
  • Divisible: You can divide cryptocurrencies into smaller units. For example, you can own 0.001 Bitcoin.
  • Primarily a Medium of Exchange: Cryptocurrencies are designed to act as digital currency, used for transactions and store of value.
  • Interchangeable: They are meant to be interchangeable.

NFTs (Non-Fungible Tokens):

  • Non-Fungible: Each NFT is unique. It represents ownership of a specific, one-of-a-kind digital or physical asset.
  • Indivisible (Usually): NFTs are typically whole units. You can’t divide them into smaller pieces (though, there are some newer exceptions called fractionalized NFTs).
  • Represents Ownership: NFTs are used to prove ownership of digital items like art, music, videos, virtual real estate, and even physical items.
  • Unique and Verifiable: They provide verifiable proof of authenticity and ownership on the blockchain.

In simpler terms:

  • Think of cryptocurrencies like digital cash. You can swap them with each other without any difference.
  • Think of NFTs like digital collectibles, like a rare painting or a limited-edition trading card. Each one is distinct and has its own unique value.
4

NFTs (Non-Fungible Tokens) and cryptocurrencies are both built on blockchain technology, but they serve different purposes. Cryptocurrencies, like Bitcoin or Ethereum, are fungible, meaning each unit is identical and can be exchanged for another of the same value. NFTs, on the other hand, are unique digital assets that represent ownership of a specific item, like artwork or collectibles. While cryptocurrencies are used for transactions, NFTs are primarily used to prove ownership or authenticity of digital items, making them non-interchangeable.