What is an NFT? What is the difference between tokens and coins? What are cryptocurrencies?

 

Traditional methods of conducting business are gradually being replaced by digital wallets that can store money and cryptocurrencies. It is crucial to understand the workings of various currencies.

That’s why they introduced NFTs and Cryptocurrencies to the world.

What is an NFT?

It is also known as a Unique Token or a Unique Digital Signature.

NFT stands for Non-Fungible Token.

Fungible refers to something that can be exchanged or substituted and will hold the same value. It is interchangeable like dollars, gold, Bitcoin, etc. Non-fungible means that the asset is unique and cannot be replaced. It has characteristics that distinguish it from other assets within the same category, such as a paintwork, a house, and a piece of music or a trademark. Some assets are physical and tangible and others are digital and intangible.

A token is a digital certificate stored on a secure, decentralized database called a Blockchain. What is a Blockchain? CLICK HERE to learn.

NFTs are digital assets, publicly verifiable, and represent unique pieces of intellectual property authenticated on a Blockchain. It cannot be exchanged for other tokens or assets of equal value. Here is a popular place to browse a variety of NFTs indeed. It is a website called opensea.io. You can even upload your own NFTs or you can buy NFTs from there. Generally, all the transactions are being processed through Ethereum.  

How do NFTs work?

This generates a digital certificate for your digital treasures such as an original artwork, a piece of music, a video game, and so on based on Blockchain technology. This certificate gives your artwork a unique identity. NFT majorly exists on Ethereum Blockchain which is a distributed public ledger that records all the transactions.

If you own multiple artworks, then you have a chance to transform them into NFTs. Because of this, your artworks are protected from reproductions or any kind of forgery and also gain additional value for your stuff. Also, it contributes to increased sales as everyone is easily able to buy the artwork without any fear.

Where we can buy it? 

You can buy or upload your artwork to a non-fungible token marketplace such as opensea.io, and then your artwork becomes a non-fungible token (NFT). Anyone who owns an NFT can list it for sale.

But you have two options to sell your NFT. You can directly sell it at a fixed price or you can sell it through an auction.

All the transactions involving the creation, acquisition, transfer, or sale of NFTs are documented in a Blockchain. This document is a permanent statement that functions as an authentication certificate that is publicly accessible to anyone. A person who purchased an NFT from its original owner, may sell it. Additionally, the buyer has the option to sell it to still another buyer, and so on. This popularity of NFTs creates new opportunities for new art platforms. Motivating people to buy artworks from internet platforms and promoting copyright or originality of digital assets.       

However, the only valuable thing with NFT is the one that can’t be replaced. NFTs are digital files that can represent ownership of anything. Most of the NFTs are kept on the Ethereum platform but can also be found on other Blockchains.

NFTs are quite different from cryptocurrencies.     

What are cryptocurrencies aka Crypto?

This is defined as a virtual currency that utilizes cryptography to secure and verify transactions and regulate and control the generation of new currency units. Cryptography is the process of hiding or coding information.

It is decentralized and unaffected by third parties, meaning it is not issued or governed by any government or central authority, unlike the other traditional payment systems that banks or governments manage. Conducting transactions internationally is not subject to an additional fee or delay. To get started, simply register for a cryptocurrency account or create a digital wallet on a website that utilizes Blockchain technology.      

Bitcoin and Ethereum are examples of cryptocurrencies, which are fungible tokens. If you exchange Bitcoin or Ethereum with each other, you will get the same value or item in exchange for your money.

What is the difference between NFT and Cryptocurrency?

You could trade your NFT for another but since each NFT is unique, you could lose or gain value.

Cryptocurrencies can be exchanged for one another, each having its own exchange rate. For instance, Bitcoin can be exchanged for Litecoin. NFTs and cryptocurrency transactions are both kept in the track of a Blockchain, a peer-to-peer ledger that is controlled by a computer network. They are collaborating together to validate the data and produce new information blocks. Cryptocurrencies are based on Blockchain and use the same technology and rules.

Some people use cryptocurrencies the same way they use dollars to buy things or get paid for a service or product. Probably the Crypto is much less stable than stocks. They can gain or lose money in a short time.

Crypto is not the same as non-fungible tokens (NFTs). But they are very close relatives. In contrast to cryptocurrencies, NFTs are not changeable. Cryptocurrencies and NFTs both are digital assets and they are built with the same programming language and coded with the same underlying software. Both are kept safe in digital wallets.

Finally, most of the time you need cryptocurrency to buy NFTs.

What is the difference between a Token and a Coin?

Crypto coins are similar to dollars and cents, whereas tokens are more like vouchers or coupons. All coins may be considered as tokens, but not all tokens are considered as coins. Coins have their own Blockchain whereas tokens are built on an existing Blockchain.

Cryptocurrencies aka crypto coins have their own unique Blockchain. These currency coins are primarily meant to be used as a means of trade and a way to store riches. An instance, BTC is the currency used in the Bitcoin Blockchain as same as Ethereum has ETH on its Blockchain.

You can have a coin as a token but on a different chain. When Binance first introduced its coin, it was a token on the Ethereum network. Ethereum token on Binance is not the same thing as actually having an Ethereum coin. You don’t own Ethereum, you just own an Ethereum token that is supposed to be backed one-to-one.

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What is a Block Chain ? Simple Definition of Block Chain | Everything you need to know | 2024

Before we start to get to know about Block Chain, we have to get a better background understanding about what it is and how it is related to your day to day life indeed.  

How do we decide whether something fake or real? For example a Mobile device, a Laptop, or a License card. The mobile phone has an in-build serial number which was created by the manufacturer. Someone can check whether the serial number is fake or real by the manufacturer’s website. Simply it is a record kept by the manufacturer. Same as the Laptop. A license card is issued by an authority and they have the card number or whatever that is related to the card as a record. Therefore anyone who wants to check the verification of the license card can easily be done.        

These all records are centralized. Then it is not very difficult to change or modify those records or information by a single person since the changes will not be recorded again and can’t be visible to the other persons who engaged with the network other than the single person. But it is possible to change. To avoid those problems, Block Chain was invented.

 

What is a Block-Chain?

Simple Definition of block chain - Block Chain is a chain of blocks that contains some sort of information. This was originally invented in 1991.  

Block Chain is a solution for centralized networks since this keeps records of everybody who engaged with the network. 

If some data has been recorded in a block chain in a database, the data becomes very difficult to change. It is networked and it is visible to all the related persons in the network. Each block generally consists of three particular indexes and all the blocks contain interconnected links and all the blocks are interconnected.

1.       Data Amount

2.       Hash

3.       Previous Hash

All these indexes are interconnected and cannot be changed separately.  

What is the Data Amount in a Block Chain?

The Data Amount contained in a block depends on a model of the block-chain. It can be a,

·         Data of a Patient: Name, Age, Disease, etc.

·         Data of a Transaction: Amount, to whom, from whom, etc.

What is the Hash in a Block Chain?

The other important feature is Hash. It is always unique to each block in the chain. It can be a,

·         Unique ID

·         Face ID or

·         Fingerprint Print etc.

Hash is basically a digital ID or digital signature of some kind of particular data. As an example: There is an image stored in your data collection on your computer. Then you can create a digital signature or digital ID for the picture. It is Hash.  

Changing something inside the block will be recognized by the Hash and immediately the Hash will be changed. On the other hand, this is very useful for you when you want to detect the changes in the block when it has happened.

As an instance; if the transaction details were changed in a certain transaction block, the unique ID of the block will be automatically changed. Then the crowd who interact with the block chain can immediately identify the changes inside the block.  

What is the Previous Hash in a Block Chain?

Previous Hash aka Hash of the previous block, this element is caused to make chain among the blocks and make more secure.

When it comes to the very first block of the chain, the previous hash element will be four zeros indeed.

 

Block 1

·         Data – Patient 1 : Age, Name

·         Hash – p0923

·         Previous Hash – 0000

 

Block 2

·         Data – Patient 2 : Age, Name

·         Hash – p0924

·         Previous Hash – p0923

 

Block 3

·         Data – Patient 3 : Age, Name

·         Hash – p0925

·         Previous Hash – p0924

You can’t re-write, re-order, or delete those blocks in the chain, the only thing you can do is create a new block to the chain.

Block chain uses the peer-to-peer network for connectivity. Everyone can join. The persons who joined the network before can see the full set of clearly visible pictures of the block chain in detail.    

 
What happened when creating a new Block?

When someone creates a new block, all the participants can visible it. It is checked by all the participants who engaged with the network to verify that it is compatible with the existing block-chain. If it behaves without any problem, then it will be added to the block chain.    

All the computers that are connected to the block chain network, are typically known as Nodes.

 

How Block-Chain interact with Crypto Currency?

Simply the cryptocurrency operates in certain platforms or networks which enables users to exchange money in peer-to-peer methods with anyone who engages with those platforms or networks clearly. All the variants of the currencies are recorded in the blocks and all the blocks are interconnected together. Therefore the users can visible all the previous activities and the changes in the currencies since all are in the block chain.       

The most important thing is the reliability of the data. Even nobody in the network can change the values of the indexes in the blocks since it is decentralized.

 

What are the techniques that related to the Block Chain?

1.       Network - Peer to peer network. Those types of networks need to share and build communications with each other inside the block chain.

2.       Cryptography - Encryption is the cryptography method that is used in these networks. This is a secure communication method used inside the block chain network. This authenticates the authenticity of the data and information provided by the people who engaged with the network. Even this helps engagers to secure their data and records from bad insiders within the network itself.

3.       Consensus Rules - When someone adds a new record or a block to the existing chain, that person needs to agree with the rules before adding the block.

 

How does Bitcoin relate with Block Chain?

This was the first form of coin aka money which kept records in a block chain throughout the transactions instead of having records in an authority. All the records are kept by everyone since it is a decentralized method and there is no way of changing the transaction records by someone from the network.   

 

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