As Web3 and financial technology expand, the terminology proliferates. It’s important to understand NFTs, cryptocurrency, and the metaverse to differentiate how they work together and where they stand individually. We will break down some important things to know about these buzzing topics.
What is NFT?
NFTs are non-fungible tokens that serve as digital assets that can be sold and traded on the blockchain. NFT collections are created by artists and brands, with full ownership held by the creator or the buyer. The relationship between NFT and copyright is a common confusion.
When people purchase a full-rights NFT token, they are free to use the design commercially. NFTs vs copyright isn’t a problem unless the buyer does commercial use without the consent of rights. An NFT can be a variety of things, from art to music to videos to poetry to graphics.
For example, an NFT like Pokemon is any token that resembles Pokemon cards, characters, badges, or other items. NFTs like Bored Ape are all a part of the family of generative NFT collections. This is when a generator takes a set of images and creates upwards of 10,000 unique combinations. There are a variety of NFT collections, sizes, and available customization options that incentivize investors.
The most considerable debate about NFTs is the environmental impact. Many people question NFTs and the environment; meanwhile, sources reveal that alternate platforms are using substantially less energy than Ethereum. As technology grows, solutions are being put in place to create a sustainable process for NFTs.
What is Crypto?
Cryptocurrency is a collection of binary data designed to work as a medium of exchange in a decentralized manner. In layman’s terms, crypto is a digital payment system that can’t be placed into your bank account nor controlled by any third party. Individuals and businesses alike use crypto for buying, selling, and exchanging goods. It’s a method of decentralized banking that has restored a sense of freedom and autonomy over personal capital.
What is the Metaverse?
The metaverse is described as a virtual-reality space where users can interact with a computer-generated environment and other users within the platform. The primary connection between the metaverse and NFTs is in the exchange of digital assets. Many NFT games allow users to interact with the Web 3 metaverse while using NFT as monetary assets within the game.
How Are Crypto, NFTs, and Metaverse Connected?
A common pathway for an individual would be using cryptocurrency to buy NFTs, which then grant them access to a unique metaverse with play-to-earn features. In this scenario, all three of these worlds are coming together. However, all of these things can be interacted with separately. NFTs assign a price to commodities within the metaverse, and the metaverse is a place where people can showcase these assets.
Now, don’t let this confuse you. NFTs are technically cryptocurrencies. They are decentralized tokens built off of decentralized ledgers, just as a cryptocurrency itself. The main difference is that each NFT is unique. For instance, if you own 5 Bitcoin, each bitcoin only represents bitcoin. The bitcoin may also be fractionalized unlike an NFT. An NFT, on the other hand, typically represents a piece of art. This could change over time, as NFTs may represent anything from ownership of a digital asset, to pseudonymous personal identification (as ironic as that may sound).
The NFT vs metaverse debate is extensive but put simply, they are two unique technological advancements that have proven to pair very well together. In the case of incentive and economic gain, they work in tandem in favor of buyers and sellers. NFTs within the metaverse are to what real estate in the physical world. The gaming and Sci-fi culture has helped spawn that of the Metaverse, and by owning an immutable asset within the metaverse, you become an early investor into a whole new era.