If you ask a random person on the street what the difference between non fungible tokens (NFTs) and cryptos are, they probably won’t be able to tell you too much.
Both are digital assets with unexplored growth potential, but although they are part of the same asset class, there are many important differences between them that should be accounted for, especially by those who are considering an investment in either.
MetabaseNFT is a dedicated marketplace for NFTs, facilitating both buying and selling of these assets. We asked the specialists from this brand to give us some insights on the key differences between crypto and NFTs, for anyone who hasn’t decided which way to turn yet.
Alt-text: NFTs based on artwork
NFTs are more valuable due to their uniqueness. Since there are no two identical NFTs in the market, there is a major imbalance between growing demand and very low supply. In such an environment, MetabaseNFT highlights that NFT valuations have the potential to grow even more over time, rewarding investors who buy and hold on for the long term. However, there is no guarantee for that, and values can also drop.
Traditional cryptocurrencies are not unique digital assets. Compared to NFTs, the maximum supply is much larger. A total of 21 million Bitcoins can be mined and, in the case of other altcoins, the supply is capped sometimes at billions. Because there is an abundance of tokens available for purchase, the demand/supply equation is much more balanced - and prices are accordingly.
NFT platforms like MetabaseNFT emerged in order to ensure that every investor can make NFT purchases with ease. Even though this market has been growing in popularity, it’s relatively small compared to traditional cryptocurrencies. There’s a limited number of platforms that let users buy/sell NFTs and finding assets with high growth potential is more challenging, given the fact that optionality is reduced.
Those who are interested in Bitcoin, Ethereum, Dash, Cardano, or other altcoins have access to multiple exchanges or can choose to work with brokerages that cover derivatives based on crypto. On the industry website coinmarketcap.com there are close to 19,000 registered tokens, so optionality is greater. For those seeking NFT marketplaces, there is a limited supply, and since this sector is relatively new, they should be especially wary of unprofessional service providers.
Each market has its own history. There is no denying that cryptocurrencies came first. They’ve been around for almost 15 years, with Bitcoin emerging back in 2008. This means that people buying and selling these assets can grasp their performance over time in different conditions. NFTs, on the other hand, have only been around for a few years. While it is harder to understand just how they function on the market, this also presents an opportunity, a type of “first foot to virgin snow” situation.
Alt-text: first NFT in the market
The first NFT dates back to 2017 when the American studio Larva Labs developed CryptoPunks, a series of collectible digital characters traded through NFTs. This shows that the market has a shorter track record.
As the comprehensive analysis by MetabaseNFT is showing, both types of digital assets have particularities that could influence valuations in the long run. NFTs benefit from uniqueness and that creates favorable conditions for prices to rise when there’s growing demand. At the same time, this is a relatively new market, so people need to conduct their own research before deciding to buy.
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