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What is Cryptocurrency?
Cryptocurrency = a digital payment system that does not rely on banks. “It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments” (Kasperky). When you move cryptocurrency funds, the transaction is recorded on the blockchain (a public ledger) and the currency is stored in digital wallets, like MetaMask.
For those who are unfamiliar with blockchain technology, a blockchain is a shared, unchangeable ledger (AKA a computerized record of all the transactions within a business) that enables recording transactions along with tracking assets within a network. An asset can be classified as tangible or intangible (cash/home/etc. vs intellectual property/patents/etc.). Basically, anything of value can be tracked and traded (like cryptocurrency) on a blockchain network.
What are examples of Cryptocurrency?
Bitcoin, Dogecoin, Ethereum, etc.
What is a Non-Fungible Token (NFT)?
Non-Fungible Tokens (NFTs) are unique, digital assets with blockchain-managed ownership.
What does fungible mean? Something that is easily exchanged with something of equal value is fungible.
To get super basic in explanation…
Fungible = my $20USD is the same as your $20USD.
“Fungible items like a dollar bill, gold – even cryptocurrencies like Bitcoin and Ethereum – can be substituted with one another without losing value. They are fungible” (OpenSea).
Semi-fungible = I bought a ticket for a concert, but it’s worth more than yours based off the seat I bought (even though it’s for the same concert).
Non-fungible = represents something of unique value (like the painting of the Mona Lisa or a really rad piece of digital art being sold as an NFT).
“If something is non-fungible, it means that it cannot be replaced. It represents something unique in value – and that’s what an NFT is! The token part of Non-Fungible Token refers to a digital certificate stored on a publicly verifiable distributed database, also known as a blockchain” (Opensea). This digital certificate (AKA a “smart contract”) makes each NFT unique. NFTs can’t be swapped (meaning they are non-fungible).
Examples of NFTs
- Digital art
- Virtual reality items
- Crypto domain names
- Ownership records for physical items
- And more!
Ready for the next bit of info? Ever heard of OpenSea? OpenSea is like the Amazon for NFTs. It’s a “peer-to-peer marketplace for NFTs, rare digital items and crypto collectibles.” You can buy, sell, auction, and discover. Once you’ve purchased some crypto off sites like CoinBase and transfer those “funds” to your wallet (like MetaMask). You can go on to OpenSea and get buying!
Different types of NFTs on OpenSea
- 1/1 NFTs, AKA ERC-721, are the classic definition of non-fungible tokens (described above). Each NFT is unique & distinct from other NFTs.
- Semi-fungible NFTs, AKA ERC-1155, are different from 1/1 NFTs. “They might have a quantity greater than one”. These type of NFTs are great for gaming items or creating membership passes for a community. If you’re looking to create an ERC-1155, look at creating them on Polygon (a platform for building and connecting Ethereum compatible blockchains).
Want to know if the NFT you’re looking at on OpenSea is an ERC-721 or ERC-1155, check the details tab on the bottom left of an item’s page.
Some NFTs are listed on auction, but on OpenSea, an ERC-1155 (AKA a semi-fungible NFT) can’t be listed for auction. With an ERC-721 (AKA 1/1 NFT), you can lower listings’ prices (but, again, the price for an ERC-1155 NFT is locked). It’s also important to note that some wallets, like MetaMask (mobile), may have issues displaying the ERC-1155 in the app. We recommend sticking to desktops when you’re diving into the world of NFTs (at least for now).