In the 21st Century cryptocurrency has become a new and revolutionary thing that many have interest in and even the least tech-savvy person knows about.
Whether it is bitcoin, or DeFi, or yes, NFT’s, cryptocurrency is a phenomenon that came alongside the internet. Before we explain what an NFT is, we should tell you first what cryptocurrency is.
Simply put, cryptocurrency is a form of payment that can be exchanged for online goods or services. It is a lot like the cash in your wallet, except it is designated to online practice only, and not all online services and goods will accept it. It is, if anything, a niche modern day currency.
Cryptocurrencies work using a technology called blockchain, which is a decentralized technology that is spread over many computers that manages and records transactions, a bit like a huge bank/cashier system.
One of the biggest appeals of this technology is the security that comes with it.
So, how do NFTs tie into all this, are NFTs a cryptocurrency? Well, NFT stands for Non-fungible token, which doesn’t really clarify anything.
Let's break it down. Non means not, fungible means good contracted for, without an individual specimen being specified, or in other words replaceable by another identical item.
It is mutually interchangeable. This means that a non-fungible token is not mutually interchangeable.
Unlike some other kinds of cryptocurrency, NFTs are unique. Bitcoin for example is fungible, you can trade one bitcoin in for another and have the exact same thing.
NFTs are less like the currency we carry in our wallets, and are instead more like a one-off trading card you would brag about in the school yard.
There have been many sprouts of cryptocurrency revolution in recent years, and NFTs have been the latest one, but the revolutionary bout of it, was about as short and sweet as spring break. The mania over NFT was over very quickly, but that doesn’t mean that it is not notable, because it is.
Ethereum blockchain is famous for an ERC-20 token, but NFT is very different, with each token being unique. It started with something called Cryptokitties, a game of owning and breeding digital cats (sounds a bit obscure right?) was represented by NFTs.
This was the first focus of NFTs that brought the Ethereum blockchain to a standstill, and resulted in the ERC-20 tokens being about as valued as the coins in your wallet pocket.
NFTs are a part of the Ethereum blockchain, which is a cryptocurrency, so directly we can say yes, NFTs are a cryptocurrency, however they are really something called cryptographic tokens.
Blockchain is a cryptocurrency a lot like the most famous one, Bitcoin. However, this blockchain also supports these NFTs which store extra information which makes them differ from something like an ETH coin.
NFTs strictly speaking, can be anything digital, drawing, music, a meme, a gif, an AI version of yourself you uploaded onto the internet, use your imagination, it can be anything… as long as it is digital.
However, the biggest bit of excitement here is the ability to use this technology in order to sell digital art.
So while this could mean that some random person is buying your tweets, or your Facebook posts, or your best Instagram images, a vast majority of the conversation surrounding NFTs is in the evolution of digitally focused fine art collecting.
Remember that while NFTs are technically a cryptocurrency they are more of a cryptographic token.
We want you to focus on this factor because a currency is generally widespread, and interchangeable with other versions of itself, whereas a cryptographic token, or NFT is unique and is not.
They are made the same way as a crypto coin (think of bitcoin), but they are all unique digital items.
Understanding how NFT’s work as a cryptocurrency is a bit like diving head on into the art world when you have spent all your life in banking. As we say there is a large focus on digital art in the NFT world.
While anyone on the internet can save a copy of digital art, or download it, the focus here is that the NFT gives you something that cannot be copied. To clarify, it gives you ownership of the art.
Much like anyone could have a print of Da Vinci’s paintings, however only one person can own the original. This is how NFT’s work.
What prompted the interest in NFTs was the massive blow out that came about on March 11th 2021. A collage composed of 5,000 digital pieces was auctioned for a remarkable $69 million.
The artists created this piece, made an NFT from it and offered it for sale at auction. Similarly, the infamous ‘Nyan Cat’ was sold as a piece of art.
Twitter's founder transformed the first ever tweet into an NFT and put it up for sale. These are some of the examples that rocked the online world and made NFTs blow up in online trading and currencies.
This is basically the transformation of online art and concepts into a currency.
One of the more confusing parts of how NFTs work as a cryptocurrency/ cryptographic token is that there is no clarification in legal terms of what the buyer is actually paying for.
This means that the value of any NFT is speculative, its value is determined by what a person is willing to pay for it, no other guidelines are there, it is simply based off of what it is worth to the buyer.
Unlike at a normal auction where you can expect to have a vague idea of the worth.
The process for selling an NFT is much like it is for cryptocurrency which is why the two concepts are very similar. Turning some such as a tweet, or the ‘nyan cat’ gif into an item that is sellable on the market requires two things, a uniqueness and proof of ownership.
This goes for everything, any sellable item must at least have a proof of ownership, and you cannot ‘create’ a new product if it is not unique. Think of it like in the show ‘Shark Tank’, the sharks won’t invest in a product that is not unique.
Similarly, you cannot sell a cryptographic token that is not unique. This is also true for cryptocurrencies, which turn strings into bits of virtual coins that have actual value in the real world. Simply you must prove ownership, and with NFT’s, it's got to be unique.
NFTs are basically a way to own a digital asset with a blockchain based certificate of authenticity. Some cryptocurrency specialists have said that this may be the way we are buying things in the future, however we are not so sure.
You could with NFT’s, buy a music track, a gif, and so on, and receive the ownership of it through a ‘key’.
This key is basically a blockchain based crypto key, meaning that to anyone but you (the buyer) and the seller the message will appear as an unintelligible sequence of characters, but using your special private key you put it back into its original form.
This is part of why cryptocurrencies and NFTs have skyrocketed into popularity, as their security and privacy codes are outstanding.
Blockchain is crucial for creating an NFT, as it uses cryptography to chain blocks into a growing list of records.
And to buy a NFT you need to have a cryptocurrency wallet, but bear in mind that having bought an NFT does not mean that you own the rights to it, you won’t go getting royalty checks, and the item can still circulate online.
To the normal person who is not familiar with the online phenomenon of cryptocurrencies and cryptography, then these two things could sound rather interchangeable.
NFT’s and cryptocurrency are oftentimes mentioned in the same sentence now, and the use, buying and selling of these things are linked very closely, however they are not the same thing.
While in some ways, if you took a stretch you could call an NFT a cryptocurrency, it is not. It is something you can purchase with a cryptocurrency, generally. You need to have a cryptocurrency wallet in order to buy an NFT, such as the first ever tweet that was sold.
A NFT is simply an identifiable and unique digital assets which is exchanged between the creator of the asset and the guy via a financial transaction using a cryptocurrency such as Ethereum or Bitcoin.
An NFT is not just the asset itself, so if you bought Nyan cat then you are not just buying Nyan Cat in its original form, but you are also buying the digital certificate of authenticity.
Pretty much any digital content can be bought and sold and used as an NFT and when it is bought you buy a verifiable digital token that represents your ownership of that asset/ token on that specific blockchain.
Is bitcoin an NFT?
The defining difference between bitcoin and NFTs are the definitions and how they are used, as well as technically what they are. Bitcoin is a cryptocurrency, NFTs are, generally speaking, cryptographic tokens.
NFTs are non-fungible tokens, whereas cryptocurrencies such as Bitcoin are fungible. Fungible means that it is replaceable by another identical item or is mutually interchangeable, which bitcoin is and NFTs are not.
Despite their differences the cash in your wallet and a single bitcoin have one thing in common, they do not differ from the rest of their currency. A $10 bill looks like any other $10 bill and has the same worth, one bitcoin is no different to any other bitcoin.
Like any currency they are designed to be mutually interchangeable with one another.
In contrast, NFTs are a class of cryptocurrency assets. These are non-fungible, and so each item, or token is totally unique from any other. This means they are useless as a currency, but they are very useful for other things.
They are technically not a cryptocurrency like bitcoin is, as you could not use them like you use bitcoin, however they are cryptographic tokens.
Bitcoin gives you a form of currency, which you can buy things with. In fact if you did not know this, as of May 10th 2021, a single bitcoin is the equivalent of USD$58,229.50.
Bitcoin is a cryptocurrency, completely non-physical, and kept on a public ledger. All transactions made by bitcoin are verified by a huge amount of computing power and this currency is not issued or backed by banks or governments.
It is not even a legal tender, however it has led to the launch of many other cryptocurrencies.
On the flip-flop, NFTs are purchasable assets of value, bought typically with Ethereum-based tokens. NFTs are primarily focused in the artistic or creative based world currently, through GIFs, music, artwork, and original online content, such as the first ever tweet.
These Non-fungible tokens make it possible for artists to release their work without risk of counterfeits. You can copy a file from someone else, but you cannot get the original.
NFTs are often expensive, as you are not just getting the file or asset, you are also getting the ownership rights to the piece that you receive.
So, this means that while bitcoin is a currency, or to be more specific, a cryptocurrency, with which you can make purchases. An NFT is a way to securely sell and buy online digital assets of any type through the use of cryptocurrency.
In order to buy an NFT, you need to have a cryptocurrency wallet.
Bitcoin is not an NFT, they are within the same category as digital currencies and purchases. However, they are not the same. In fact, realistically they are vastly different.
Saying they are the same would be a bit like saying that the dollar bill in your pocket is the same as the rights to the Mona Lisa.
Is NFT a Blockchain?
We already know that NFT stands for Non-fungible tokens, and that this can mean that you can receive the rights to assets, and original digital content from the owner/ artist. A blockchain is, in simple terms, a digital record of transactions.
The name ‘blockchain’ comes from how it is structured. It is structured in a way that individual records, or ‘blocks’ are linked together in a single list, which is referred to as a ‘chain’.
So blockchain, really means a linked together list of individual transaction records. A blockchain is used to record transactions made by cryptocurrencies such as bitcoin and the like.
Think of it a bit like your bank's transactional database, but on a wider, online-only scale that focuses on cryptocurrencies only.
An NFT is not a blockchain, however in the use of NFTs blockchain is used, in fact it is critical. This is down to the use of cryptography.
Cryptography is the technique that is used in order to protect the privacy of any message by transforming it into a structure that can only be understood by the intended parties, i.e. recipient and seller.
Anyone else who tries to see this will only see a selection of totally random and unintelligible characters. The message hidden by this cryptography is made viewable by a pair of keys.
You can have a public key which you can share with your friend who will use it to transform their message into this unintelligible gibberish, and then you use a private key to turn that gibberish into its original format and see the message.
How does this tie in with the relationship between NFT and blockchain? Well, blockchain is the crucial technology that is used to create NFTs, so while NFTs are not blockchain and vice versa, NFTs require blockchain.
Blockchain uses cryptography to chain blocks together into a growing list of records… or a chain. Each block is locked by a cryptographic hash, or characters that uniquely identify a set of data.
To interact with NFTs one must use blockchain, and to be a party in these blockchain based transactions each user needs to create a set of keys, the public and private keys. This unique design makes it very difficult to alter any transaction data that is stored within the blockchain.
Blockchain was initially created to support more fungible assets- such as the infamous bitcoin and the other cryptocurrencies that followed.
However, over time blockchain has evolved, and now it enables users to create a special kind of asset that is non-fungible.
The Ethereum blockchain is the one that is offered for NFTs as it supports a token standard known as ERC-721, which means that creators capture information of relevance to the digital artifacts- be it an image, gif, song, etc., and store it as tokens within the blockchain.
NFTs and blockchain are not the same, and they are not interchangeable, however NFTs require blockchain, specifically Ethereum blockchain, as it provides the creative aspects to develop the crypto asset that makes non-fungible tokens a supported feature.
Is NFT a DeFi?
Before we tell you if NFT is a DeFi, we need to understand first what DeFi is. DeFi is, in some ways, inspired by blockchain, which is the technology that supports the digital currency of bitcoin.
It allows several entities to hold a copy of the history of transitions, meaning that it is not controlled by a singular central source, like you imagine a bank would.
This is something of a revolution in currency and transactions because human involvement and centralized system gatekeepers intervening can limit the speed of a transaction while offering those who use these systems of financial management less focused control over their money.
DeFi differs from blockchain because it expands the use of blockchain from a simple value transfer to more complex financial uses. DeFi and blockchain do something that you can’t get when you pay with normal money, they remove that annoying middleman from the picture.
So, if you went into GameStop and bought a new Xbox game, a financial institution, like your bank, will sit between you and GameStop. This institution has the power to stop, pause, or even in stop irritating instances not allow the purchase in its private ledger.
When it comes to paying with bitcoin, through the use of blockchain or DeFi, these institutions are non-existent, and it is just you and the seller.
How this ties in with NFTs, it's that most applications that are called DeFi are build on Ethereum, which is the world's second largest cryptocurrency platform, and the Ethereum blockchain is especially required in the creative aspects that develop the crypto assets of NFTs.
NFTs are non-fungible transactions, you cannot use NFTs to buy a cup of coffee or rent a movie, you can only use it for the intended purposes.
Whether that purpose is listening to a song, attending an exclusive event, or raising an online cat. NFTs have value propositions and key characteristics.
DeFi works with all kinds of financial instruments, solutions, and processes. When you throw NFTs into the mix of DeFi and cryptocurrencies, it is basically like adding in an additional asset to the pre-existing portfolio.
NFTs are value-based assets, either by growth in the sense that the value of said asset can increase, or by income in that the asset will likely accrue some income to the owner of said asset.
NFTs can be used in DeFi, for one DeFi project can offer loans, and these loans are typical in order to encourage commerce using cryptocurrencies more.
If you were to buy an online cat from us for $80K, you could take out a loan through the DeFi protocol for 100 ETH.
When you make back money on this cat you return it to the DeFi protocol and get your 100 ETH back. You pay us for the cat, and after your money is made back you get your ETH returned from the DeFi protocol.
So, while NFTs and DeFi are not the same, they, much like Blockchain do have relevance to the existence of NFTs and the inner workings of how NFTs are used among those digital savvy people who indulge in cryptocurrencies and cryptographic tokens.
Are NFTs real?
Are NFT’s real? Well, they are about as real as that post you put up on Instagram the other day, or your latest tweet. NFTs are best known as being a computer file that is combined with a proof of ownership and authenticity, much like a deed.
We get deeds when we buy a house, why not when we buy someone else's work off the internet right? Much like cryptocurrencies such as bitcoin, NFTs exist on a blockchain.
However, like dollars cryptocurrencies are fungible, or that each coin is always worth exactly the same as another bitcoin, they are interchangeable.
NFTs are the opposite, each NFT has unique values that are set by the highest bidder, much like when you go to an auction and everything is worth a different amount, generally decided upon by those bidding on said item.
Artists are using NFTs more than others. An artist who wants to sell their work as an NFT will have to sign up with a marketplace and then ‘mint’ digital tokens by uploading and validating the information on a blockchain, this is often done on the Ethereum blockchain, which is a rival to the platform that uses bitcoin.
Ethereum is often used for this due to its specialty in producing the crypto asset of NFTs.
When initially considered, the whole premise of NFTs may seem a little weird. As it is basically big-money collectors paying obscene amounts of money for work that can easily be viewed or shared online any day.
However, the phenomenon of NFTs is attracting a large number of artists and collectors, it is also bringing to the surface many speculators that are looking to bring in the big bucks off of the latest online fad.
While you cannot hold NFTs physically in your hands like you could if you bought the rights and content of a Picasso painting, the ownership and rights are just as yours as they would be in that instance.
The only difference is that the content purchased in NFT tendencies is that the content is online, digital content, this is often GIFs, memes, songs, digital artwork, and so on.
Wondering if NFTs are real is really more of a philosophical debate. Generally it depends if you would consider online content that you see everyday on the internet and social media as real.
It is more of a personal definition of reality, and if your spectrum of reality includes the online world and digitization then yes, NFTs are indeed real.
Online posts, content and any form of digital artwork or presentation can be turned into an NFT by the owner should they wish to sell it. And while you cannot hold this possession, the possession and rights to it, can be sold as realistically as you can sell your house.
Is Theta an NFT?
What is Theta? Theta is a network that is the leading video delivery network powered by blockchain technology. It allows users to simultaneously watch video content and earn token rewards for relaying these videos to other users who are watching the same content.
It is in the same ballpark as other sharing economy models. Users will oft-in to volunteering their spare bandwidth and computing resources to relay video, and earn token rewards for doing so.
Theta is a purpose-built blockchain that is designed for video and data relaying. It has a multi-BFT consensus design that combines a committee of 20-30 enterprise validator nodes, and thoughts of community-run guardian nodes.
The validator does produce new blocks in the blockchain, and the guardian nodes finalize them, acting as a check on malicious or non-functions validator nodes.
There has been an implementation of NFTs on the Theta network, with items such as badges, emotes, and more. These are the tokens that are rewardable for engaging with the Theta network.
The decentralized streaming platform has launched these NFTs for content creators to mint and share with fans.
In addition to the NFTs for the gaming-oriented network means that the 800 or more streamers on the platform can then create their own unique items, including badges and emotes that they can share with their viewers.
It is a new engagement tactic that Theta Labs has added, in the hopes of internet personalities finding unique and new ways to monetize their fan engagement.
It seems to have been a new revelation that came about as people were staying home, and digitization in our lives reached a new height.
Furthermore, it has been put into place as it hopes to add to the plethora of ways that internet creators can mint their own digital collectibles in exchange for earnings, adding to the already large number of ways that streamers, gamers, influencers and the like monetize their content.
NFTs once again are not Theta and Theta is not an NFT. But, Theta is making use of the NFT trend that hit the internet like a wrecking ball and took the cryptocurrency world by storm, in the early months of 2021.
Whole Theta is not an NFT, Theta is using NFTs to entice and invigorate online content creators to use their network and build their own monetization by using their own digital collectibles as NFT content to turn a profit in terms of cryptocurrency through cryptographic tokens.
NFTs are taking over the cryptocurrency world as a new spending point for users of cryptocurrencies and blockchain networks.
And while the most notable of these NFTs so far have been the big spenders, such as the purchase of the first ever tweet, and nyan cat, NFTs are now drifting into smaller domains that don’t need those big spenders and instead back the lives of less spend-heavy individuals on content creation networks such as Theta.
Thetas video delivery network includes Google, Samsung, Blockchain ventures and more, and now you can get NFTs from the content creators too.
Is XRP an NFT?
XRP is a cryptocurrency, much like bitcoin, that is tailored to work on the Ripple network. It is consistently listed among the top five cryptocurrencies. It works on Ripple which is a money transfer network, which is designed to serve the needs of the financial services industry.
Despite its ambitions, Ripple has been tied up in a few legal troubles however it has not prevented its currency XRP from surging in value alongside the other cryptos.
You can buy XRP as an investment, as a coin in order to exchange for other cryptocurrencies, or as a way to finance transactions on the Ripple network.
However, XRP’s blockchain does operate a little differently to most others.
Many other cryptocurrencies will open their transaction ledgers and verification processes to anyone who is able to solve their complex equations quickly, however transactions are secure as the majority of these ledger holders must agree with the verification.
Instead of this XRP uses the Ripple network which centralizes things. Anyone can download it, and it maintains unique node lists that users can select in order to verify their transactions based on the participants that are least likely to defraud them.
Ripple allows the network to continue approving transactions without the company itself remaining involved, or even existing.
As a new transaction comes in, the validators update the ledgers every few seconds and make sure they match the other ledgers. If there's a problem, they will stop and figure out what isn’t right.
This allows for secure and efficient validation of transactions, and is their selling point when put in comparison to competitors such as Bitcoin.
How does this tie in with NFTs? XRPL Lab’s has been preparing to accommodate NFTs into the network, keeping quickly up to date with the newest trend in cryptocurrencies and cryptographic tokens.
With XRP they are looking to work with NFTs in a similar way to other blockchains. In general, you can pay with XRP (a currency) on an XRP ledger. You can then trade your NFTs for XRP.
XRP is a fungible currency that you can use to buy, or sell NFTs. XRP currency works on the Ripple platform. In contrast, NFTs are non-fungible tokens, a special type of cryptographic token which represents something unique and is not interchangeable with anything else.
XRP is not uniquely identified and is fungible. NFTs are used to create verifiable digital scarcity, as well as digital ownership, for things such as videos, GIFs, music, etc.
The biggest difference of NFT involvement when it comes to XRP, in contrast to bitcoin and other cryptocurrencies, is that XRPL requires its users to ‘opt in’ in order to receive a specific token from another specific user by singing a transaction that lists the issuer and the token code to trust.
NFTs are non-fungible tokens that are shared, bought, and sold between users, whereas XRP is a currency that can be used on the Ripple network, and can be used to buy NFTs or in exchange for selling them.