For all those who have not yet had the opportunity to discover the world of cryptocurrencies or with the world of NFTs, the whole mechanism that governs these economic sectors may prove to be hostile.
In fact, while making staggering numbers, the basic concepts governing these areas are often incomprehensible to many.
This position is clearly understandable. The arrival of new technologies such as blockchain with all the corollaries it has brought with it, including NFTs, has turned the entire Internet world upside down.
The reaction then to the advent of blockchain was in some ways exactly the same as with the first internet connections. All new technologies are often accompanied by an aura of skepticism and fear. Indeed, the current unknowns are focused on cryptocurrencies and NFTs.
Before understanding these technologies, however, it is useful to understand the entire technological infrastructure behind these two revolutions.
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Blockchain: what is it?
In fact, the definition of Blockchain is just that: basic technological infrastructure.
By thinking about this definition, it is indeed possible to begin to understand how everything related to both the cryptocurrency and NFT worlds works.
Trying to be more practical and clear, one can say that blockchain is a system with which one can manage and share data that allows one to store and control the data entered.
The network thus becomes democratic in the true sense of the word, data is controlled by both users and global giants, which is why we no longer speak of web 2.0 but web 3.0.
Wanting to be even simpler, one can think of blockchain as a collection of digital information not unlike a paper public ledger.
The record of transactions that occur within an enterprise can be accessed on the transaction ledger.
The blockchain brings all this to the Web in digital form, hence the reason for its name.
Each transaction is added to the ledger and the “nodes” or links that form the chain record and verify it. The nodes are represented in this case by the computers used to secure the chain. The registry is then secured by all the nodes involved in the verification process.
Therefore, if there are more computers within the chain, the registry will be more secure.
Considering the exorbitant number of computers that are now connected to the blockchain worldwide, one can get an idea of how difficult it is to hack the blockchain.
That said, the most important transactions that characterize the blockchain today involve precisely cryptocurrencies and NFTs.
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What cryptos are?
Cryptocurrencies, to be as simple as possible, represent digital currencies without a physical counterpart then. They are recognized as cryptocurrencies in order to offer right from the name an initial explanation regarding their security.
The noun crypto is in fact used to remind us that these currencies are crypto-protected, that is, impossible to spend against the owner’s will or to counterfeit.
Security here is achieved through processes and algorithms that rely on public and private key pairs. In the cryptocurrency industry, Bitcoin recognized by the acronym BTC and Ethereum ETH represent the best-known and equally expensive pair of cryptocurrencies today.
Each cryptocurrency thus has its own blockchain in which to record all transactions that take place in that same cryptocurrency.
There are also digital currencies that can be distributed on different platforms. OpenSea and Binance in fact are platforms that deal with decentralized transactions and exchanges in different cryptocurrencies.
Within the crypto world, however, it is necessary to have a wallet-that is, a cryptographic wallet in which to store one’s cryptocurrencies.
What characterizes cryptocurrencies, often also with regard to comparison with NFT technology, is their fungibility.
Bitcoin present in one e-wallet is exactly the same as that present in another wallet. The convenience of the cryptocurrency-related industry is the absence of banking intermediaries.
This makes all transactions simpler and easier. In fact, the blockchain is decentralized, which means no intermediaries and therefore no related fees.
What NFT are?
The acronym NFT stands for Non Fungible Token.
Diametrically opposed to cryptocurrencies, here non-fungibility is a crucial detail.
Just as cryptocurrencies enjoy fungibility as is the case with physical coins, NFTs enjoy non-fungibility as is the case with works of art.
Just as cryptography protects the fungibility of cryptocurrencies, here it conversely protects non-fungibility.
Whoever owns an NFT, be it even a digital image such as the common jpegs one owns on one’s pc, no one can steal or download it as the blockchain has in the ledger the only transaction related to the original NFT purchased or sold.
This puts artists and creators in every field in a prominent position as they can manage and make money from their art themselves. That is why more and more artists and more and more content creation industries of all kinds are turning their assets and businesses toward the opportunities offered by NFT technology.
Differences between Cryptos and NFTs
To differentiate NFTs from cryptocurrencies, it must be remembered that NFTs represent unique digital works while cryptocurrencies represent in some ways the money used to acquire these resources.
It is best to bring back the examples most adherent to the physical world to understand this relationship. If a photo posted on a social becomes viral, it will be shared and downloaded by everyone.
However, the person who takes that photo receives no compensation for all the success that content is receiving.
Using blockchain, however, one can authenticate that photo as an NFT. The photo is assigned a digital signature that makes it unique in the world at the expense of how many screenshots can be taken of it.
Anyone who wants that photo, not a copy but exactly the photo taken by the artist who posted it on the blockchain will then have to make a cryptocurrency transaction.
If the photo is minted, that is the term used, on the Ethereum blockchain, the photo will be sold in the same cryptocurrency.
So while in Web 2.0 anyone could have downloaded that photo for free, in Web 3.0 the artist is protected and makes money directly from his art.
The world of the Web is evolving very rapidly. The last two leaps forward have been precisely cryptocurrencies and NFTs.
These technologies have changed many of the pre-existing dynamics by making significant improvements especially from the point of view of used to carry out a creation activity that now sees a direct gain without the help of intermediaries to be subject to.
Web 3.0 presents itself to the world as a dynamic and rapidly growing, but no less secure, environment.