NFT VS Cryptocurrency
How Does An NFT Differ From Fiat Money?
Non-fungible token (NFT) differs from Fungible (Physical money and cryptocurrencies) in how they are exchanged. NFTs each have their own programming or digital line of code specifying their makeup including the authenticity of the owner. This makes them impossible to be traded or exchanged one for another. They are unique within themselves. So, an NFT is “minted” or created for digital objects like works of art, designer sneakers, music pieces, videos, or even sports highlights. Some unique Tweets have been digitalized including the signature of the Tweeter. The first tweet of Twitter co-founder Jack Dorsey was digitalized and sold for $2.9 Million.
What sets an NFT’s value?
The “value” of an NFT is whatever someone is willing to pay for it. It is a digital file, and the author may include his/her signature as part of the NFT’s metadata or programmed line of script attempting to give it more value. One value is that a person who purchases the digital file can then claim exclusive rights, like a collector’s item. Since the code is unique, there can be only one owner at a time. The unique data in the file makes it easy to verify ownership of the work. So, if someone is willing to pay for the exclusivity of ownership of the digital file, the file can be transferred between owners. The blockchain, where the file is stored is a public ledger recording the code of the item-what the item is, and where the file is stored. The NFT’s value is based entirely on what someone else is willing to pay for it. Therefore, demand will drive the price rather than fundamental, technical, or economic indicators, which typically influence investment stock prices and at least generally form the basis for investor demand. The basic fundamentals, other than demand, dive the price which may drop to zero from the price paid.
Where Can an NFT be purchased or sold?
The Nonfungible.com website attempts to cover all the NTS being offered and sold and to tally the total value of these transactions. In their “Market View” which covers Art, Gaming, DeFi, collectibles, sports, and other NFTs, today they show 22,890 total sales valued at over $11M. Sites such as the popular opensea.io/, rarible.com/ and foundation.app/are examples of listing sites for NFTs. Since most, if not all, NFT contracts are written on the Etherium blockchain, one can transact business using Etherium Coins.
One should approach NFTs investing like they would any investment: Do the research, understand the risks—including that you might lose all your investing dollars—and if you decide to take the plunge, proceed with a healthy dose of caution. For every NFT there is, there must be a willing buyer with currency to risk for purchasing it. Currency can be any currency the buyer and the seller are willing to exchange within the NFT contract on the blockchain ledger. The contract must include built-in authenticity that proves ownership. So the new owner has bragging rights which many times is worth more than the item itself. The NFT is a one-of-a-kind item in the care if the new owner.
Is Digital Currency Taking Over Fiat Currency?
The money we use in everyday business is being taken over with money changing hands through exchanges done digitally. Every time you strike your debit card, credit card or tap your smartphone to pay for a Starbucks or pastry, you are digitally paying for the purchase. No cash changes hand but payments are given and received. You have agreed that what you are purchasing is priced to your liking and the company selling is saying they will pay the cost of the transaction from their profit on the asking price. Think about how the government handles taking a share of every part of these transactions for the benefit of society and the infrastructure supporting that society. You work, earn, and are taxed on your income. The government takes also social Security payments from your earnings as well as taxing the employer for your earnings. You place your earnings in a banking operation that charges you fees to give you checking, debit cards, credit cards. Late fees, overdraft fees, and other fees for services offered. Currently, the transactions mentioned have time factors connected and when a transaction is made digital communications and records take time and employee efforts. All this is at a cost of doing business in the fiat world.
Fiat money costs the governing agency while digital currency is a line of code on the Blockchain. The cost of digital currency is electricity to run computing, the time of entering and verifying (Miner operation) the authenticity of the transaction-is this operation real. Is there a buyer and a seller who can each handle their part of the transaction? Has it been recorded on the master ledger of all digital transactions? How long does it take for the transaction to be verified by the computers in the digital system? Today countries are looking at these decentralized digital transactions to see what they can do to control the oversite and taxation of the individual transaction. If they get control, the digital transaction, like the credit card swipe can be charged, taxed, and monitored for fraudulent activity. A decentralized transaction is publically transparent and cannot be controlled except by the parties, so many governments are looking at viewing them as a transaction the is an asset and much like stocks or property can be taxed for capital gain. They cannot be controlled since they exist as a transaction between two parties. They cannot be hacked since they are transmitted over the entire blockchain and to hack would mean that every computer sharing the transaction and verifying its authenticity would have to be hacked. It appears to most researchers of digital crypto contracts on behalf of governments are moving toward making blockchain technology the “money” of the future. Soon governments will issue their own centralized (under their control) digital currency to use in general commerce. If this takes place, those paper dollars in your wallet will be replaced with a public ledger all tracked on the blockchain.