NFTs and cryptocurrencies have been quite the talk of the town these days, especially ever since 2020 when the global pandemic swiped itself across the globe. It sent citizens and governments into a panic mode as their economy fell into pieces. The crypto and NFT market, on the other hand, took advantage of the economic ordeal by bringing more attention and interest towards digital assets.
Both markets are equally lucrative and fast-growing.
You might have come across headlines about cryptocurrencies values or people earning thousands or millions of dollars thanks to NFTs. But if you are not familiar with the two digital assets, you might have wondered or assumed that NFTs and cryptocurrencies are the same. But are they?
The answer is simple.
They. Are. Not. The. Same
Let’s start with simple definitions.
What is an NFT? What does NFT stand for?
An NFT or a Non- Fungible Token is a digital asset representing real-world objects like art, music, in-game items, and videos. They are bought and sold online, frequently with Cryptocurrency, and they are generally encoded with the same underlying software as many cryptos. (forbes.com)
According to Forbes, an NFT token has “a unique value and cannot be exchanged for another of equal value.”
Celebrities and famous brands have invested in NFTs, singer Katy Perry, football player Tom Brady, Tesla, SpaceX CEO Elon Musk, and luxury fashion brand Dolce & Gabbana.
What is Cryptocurrency?
On the other hand, Cryptocurrency is a virtual currency that uses the cryptography model to secure and verify transactions and manage and control the creation of new currency units.
Examples of cryptocurrencies include Bitcoin, Ethereum, Polkadot, and XRP.
Cryptocurrency is, however, fungible, meaning a Bitcoin can be traded for another Bitcoin; it has the same value. A USD Coin can be exchanged for another USD Coin.
How NFTs and Cryptocurrencies are different
NFTs and cryptocurrencies are different; NFTs are non-fungible, meaning the digital asset is coded as unique and therefore not interchangeable.
NFTs are usually artworks, collectibles, games, music, and memes. In comparison, cryptocurrencies are virtual currencies that are immune to government interference.
The only similarity is that both NFTs and cryptocurrencies experience unstable volatility. An NFT’s value depends on asset value, while cryptos’ value depends on market fluctuation, both impacted by supply and demand.
PolkaCover and Cryptoinsurance:
Due to the high rise in demand for NFTs and cryptocurrencies, they are susceptible to risks.
Potential risks for NFTs are cyber attacks, impermanent loss (value of deposited assets changes compared to when a user deposits them), and smart contract vulnerabilities.
Cryptocurrencies experience similar risks where hackers take advantage of bugs in the code and drain projects and wallets immediately.
There is a rise in demand for crypto Insurance Covers, and PolkaCover will be the first-ever to provide coverage against such risks.
PolkaCover is the world’s first platform offering crypto and traditional insurance products under one marketplace, primarily to cater to the global crypto market. As a user-centric insurance platform working towards optimizing the insurance experience, The marketplace will provide a one-stop-shop solution to purchase traditional and crypto insurance products!
PolkaCover is the First DeFi insurance marketplace for the global crypto ecosystem. Our aim is to lower transactional and administrative costs of insurance policies and coverage while providing high-value, cost-effective insurance products bought using a host of cryptocurrencies.
Our platform will be connecting users with multinational insurance providers for all global insurance products such as crypto-related protection, health, life, and travel policies. The platform will include a frictionless insurance marketplace experience that incorporates next-generation blockchain technology and tokenized incentives.