Compare NFTs vs. cryptocurrency vs. digital currency

There are several differences between NFTs, cryptocurrencies and digital currencies.

The main difference is that NFTs, unlike digital currencies and cryptocurrencies, can’t be traded or replaced with one another. Every NFT is different, setting it apart from fungible tokens, such as digital currency and cryptocurrency, that can be traded or exchanged for one another with no loss of value.

Digital currencies are centralized, meaning there’s group of people and computers regulating the state of the transactions in the network. Cryptocurrencies and NFTs, on the other hand, are decentralized, and most of their respective communities make the regulations.

Also, digital currencies aren’t transparent. For example, an individual can’t select the address of the wallet and see each money transfer, as this information is confidential. Cryptocurrencies and NFTs, however, are transparent. Any user can see any transactions of another user because every transaction is placed in a public blockchain network.

Basically, a central bank-backed digital currency is electronic cash. Similar to cryptocurrency, such as Bitcoin, a CBDC is data-based and doesn’t exist in the real world. Unlike cryptocurrency and NFTs, CBDCs are backed by governments, which means they are more likely to be recognized as money that individuals can use to purchase goods and services.