NFT vs Bitcoin: What’s the Difference?

NFT vs Bitcoin - What's the difference_

What’s the difference between non fungible tokens and Bitcoin? Some would probably answer this question correctly, but many others would struggle to pinpoint what makes these two crypto innovations what they are. While it is true that the general public is becoming more and more acquainted with terms like fungible token, crypto asset, or digital ledger, the vast majority should, nonetheless, take a look at this guide and figure how just what’s the real reason people talk profusely about NFT and Bitcoin and what makes them stand apart. Let’s break it down.

First: a non fungible token, or NFT, is a tokenized digital asset that can exist in multiple forms – artwork, digital media, social media post, and more – on blockchain technology. Bitcoin is a crypto currency, a digital currency with its own blockchain that is used for financial transactions online.

Second: both NFTs and Bitcoin are built upon blockchain technology. That means each NFT transaction or financial transaction that uses Bitcoin is safely recorded and archived in a blockchain. This ensures that the transaction remains secure, transparent, and above all, immutable – nobody can alter the record of that transaction thanks to the nature of the blockchain.

Third: Bitcoin, as a digital currency, was founded upon the principle of decentralization, which allows for users to complete transactions on its peer-to-peer network without the need for intermediaries – central banks and so on. Decentralizing finance was a core philosophy of Satoshi Nakamoto and the first enthusiasts that kickstarted the project and started mining. NFTs also embrace the decentralization of the digital revolution brought and powered by blockchain technology. Non fungible tokens allow creators of the digital item and interested buyers to negotiate an exchange without the need for powerful intermediaries and their astronomical commissions. For example, in the digital space an artist wouldn’t need ‘connections’ to museums and pretentious art galleries willing to sell their physical art and put the artist in direct contact with the buyer. In the Web3, this can be done directly and transparently. Smart contract(s) allow exchanges to be secured in a programming “if/when -> then” event structure that codifies and renders the process clear for all and self-executing when conditions are satisfied.

Fourth: Any digital asset can be “tokenized” (a process called minting) into an NFT, but the token itself needs to be stored away in the blockchain. Bitcoin as a currency exists only as a medium of exchange and a digital store of value. Most NFT art exists in the Ethereum blockchain, but many more blockchains are being developed that embrace the NFT experience and its ramifications at their core, for example, Solana.

Fifth: While the NFT market and the crypto currency market are growing steadily in the last years, the market for nonfungible tokens is an offshoot of crypto innovation. NFTs can be bought, sold, and traded via digital currency in an NFT marketplace. Such marketplaces, like OpenSea, operate in a blockchain (in the case of OpenSea, the Ethereum blockchain). You don’t need much apart from a digital wallet to buy and trade NFTs.

Sixth: An NFT is a token that represents the proof of digital ownership by a user over the asset. However, the ownership of a digital artwork does not necessarily mean getting a hold of the copyright over that asset. You can own the digital artwork, but a digital copy of that NFT art can be replicated and distributed across the internet. On the other hand, owning crypto coins means you are the sole owner of that much value. Nonetheless, digital currencies have proved to be a great source of fixed income for many, hence their worldwide adoption.

Seventh: NFTs and Crypto constitute, at their most basic, a new trust revolution. Digital art gives power back to the creators and the buyers who entrust in the decentralized system to come up with a fair price. The buzz and the interest make the price, it’s that simple. It’s all up to the people to decide, not to third parties and meddlers who want to set ‘standards’ or fixed prices based on a limited decision or limited understanding.

In short, nonfungible tokens and Bitcoin have much in common but operate on different levels of Web3 development. NFTs are digital collectible projects that are finding increasing operability in trading or even application in the Metaverse as proof of ownership of digital real estate. Bitcoin is, in a way, the first and foremost crypto currency and digital revolution tool that arose in the last decade, and its tremendous rise in value is evidence that people belief in its system and rules – above all, blockchain technology.

It’s going to be up to people on how these two innovations will change the internet – or even real life – as we know it. But think of this: the Mona Lisa was created by genius Leonardo Da Vinci over 500 years ago for the Medici family. There were no museums, no art galleries ready to act as intermediaries. It was a direct transaction between the creator of the most famous artwork in history and the interested party. In a way, if Leonardo lived today, he would most probably create his own NFT collection and enjoy the buzz and community that would praise his genius. And he would most certainly – like public figures Jack Dorsey or Elon Musk – embrace the change to come with an open mind.

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