Cryptocurrency & NFTs 101
Many of us have heard of cryptocurrency and NFT’s at some point, but you may be unsure of what they actually are and why they have been all the rage. Because of their digital use, many people tend to confuse the two and we are here to clear things up.
WHAT IS CRYPTOCURRENCY?
Cryptocurrency, otherwise known as crypto, is a form of digital currency created to use over the internet and doesn’t rely on banks as the middleman in terms of verifying transitions. Instead, cryptocurrency utilizes cryptography and a blockchain to secure transitions. Cryptocurrency is used for peer-to-peer transactions that allows any holders to send and receive payments that are stored in your digital wallet. Cryptocurrency utilizes encryptions, which are in place to verify all transactions. This provides extra security and safety for those who use it.
There are many different forms of cryptocurrency out there in the world, including but not limited to: Bitcoin, Ethereum, Litecoin, Dogecoin, among many others. Bitcoin was the first cryptocurrency that was launched in 2008 and remains to be one of the biggest, most known, and influential cryptocurrencies out there today.
Cryptocurrency is not tangible, as it is considered a digital currency that allows crypto-owners a key that permits them to move a record or a unit of the measure from one person to another, without the need of a third party, such as a bank.
WHAT CAN CRYPTOCURRENCY BE USED FOR?
Cryptocurrency can be used for a wide range of goods and services, although it is most popular as an investment vehicle. This means that much like stocks, cryptocurrency is often used to buy, sell, and trade. However, there are a variety of ways that crypto can be used, including:
- E-commerce websites
- Luxury goods
Keep in mind that these are quite vague examples of how cryptocurrency can be used. In actuality, not every e-commerce website, tech company, luxury goods seller, car dealer, or insurance company accepts crypto as a form of payment. It is certainly worth checking out who does, though, if you own crypto and plan to use it in that way.
Crypto has become extremely popular for many reasons, some of the most common reasons include:
- Crypto owners view certain cryptocurrencies as the future of currency and they believe that it will only become more valuable in time
- Crypto owners like that cryptocurrency doesn’t involve banks managing the money, as many central banks have reduced the value of it due to inflation
- Crypto owners like the fact that it has a blockchain, which means that the processing and recording of the currency and payment system is decentralized, making it a more secure system
- Crypto owners like the fact that certain cryptocurrencies have gone up in value
What is a NFT?
A non-fungible token, otherwise known as a NFT, is a digital file that utilizes blockchain technology, which is the same system used for cryptocurrencies. However, NFTs are completely different in their use and instead are authenticated by a rightful owner as a completely one-of-a-kind item. NFTs can be bought and sold online and are a digital collectible that comes in many different forms. Currently, NFTs are all the rage in terms of the world of art, but have actually been around for longer than you would think.
NFTs have been around since 2014 and have been purchased as trading cards, in-game items, artwork, real estate, and much more. But it recently became widely known in the world of digital artwork, as it allows the owners of NFTs the rights of ownership and authenticity of their purchase.
You may be wondering exactly why that would cause such a craze for the world of NFTs. But think about art collectors – as more and more NFTs have become unique collectables for the world of art, they are trying to diversify their holdings in the digital world. NFTs allow the buyer to own the original item and the item itself includes built-in authentication, indicating proof of ownership and cannot be replicated. Many NFT collectors love the fact that they own the rights to a specific item.
EXAMPLES OF NFTS
There are a wide range of NFTs out there. Some of the most popular include:
- Sports trading cards
- In-game items, such as avatars
WHAT IS THE DIFFERENCE BETWEEN A NFT AND CRYPTOCURRENCY?
Much like cryptocurrency, NFTs also use the same type of blockchain technology; however, that is the only similarity they have.
This is because like physical money, cryptocurrencies have the ability to be traded for one another. This means that they are essentially equal in its value, meaning one dollar equals another dollar and one Bitcoin equals another Bitcoin. Because crypto is fungible, it is considered to be a trusted use for transactions.
On the other hand, NFTs have unique identification codes that are distinct in each and every NFT that exists. This means that they cannot be traded equally because not every NFT carries the same value as the other.
CONSIDERING CYRPTOCURRENCIES OR NFTS?
If you are considering owning cryptocurrency or NFTs, it is important to know that both are extremely volatile, making it very risky for those who are trying to make a quick buck – because it doesn’t exactly work like that. You also should ask yourself that should either of them fail, can you afford the risk that comes with it? Both crypto and NFT investors should understand the logistics behind them, as well as the other risks associated with them.
WHY IS THIS IMPORTANT FOR MARKETING?
Although the volatility of both crypto and NFTs is not certain, it doesn’t look like either of them will be going anywhere given their popularity. Therefore, it’s time to start thinking ahead and about the future of how this will impact us. Marketing certainly is proof for this already and now is the time to take advantage of this emerging market of NFTs, especially.
For example, think of how the NBA was one of the first businesses to engage in the world of NFTs with NBA Top Shot. Now sports fans are able to buy and sell player cards. And with that in mind, each card has a certain value, ultimately meaning that each player has a certain value that corresponds to how well they’re currently playing in the league. For example, one of the most popular cards was a Los Angeles Lakers Lebron James dunk that sold for a whopping $280,000.
And while many sports fans are purchasing cards based on the teams and players they love, they are also purchasing based on how well the player’s performance is to increase their investment.
NBA Top Shot is just one prime example of how NFTs can increase your value as a business or individual.
With that being said, now is the time to consider NFTs for your business. Study your target audience, find a common interest among your target audience, and start collaborating with other businesses or influencers to create a NFT that can attract new people and add more value to your brand. CONTACT US TODAY TO GET STARTED!