You might hear of “cryptocurrency”, “token”, or “NFTs” and their roles in the success of GameFi projects as they help the in-game economy to enhance players' experience while earning notable profits from playing. Are you wondering the exact meaning behind these powerful terms that are changing the gaming industry forever? Let’s figure them out!
What is a cryptocurrency?
Take it simple, cryptocurrency is digital cash similar to cash on Paypal. However, cryptocurrency is not managed by any organization but operated by connected computers from all around the world. Therefore, it has some unique features compared to fiat currencies including:
- Faster transactions
- Lower transaction fees
- No censorship
- Improved Security
For example, you are living in New York but would like to buy a pair of sneakers in Paris. Instead of using an expensive banking service that possibly takes up to 2 days, you can send 100 DOGE coins directly to the wallet address of the seller in Paris and finalize the transaction in minutes.
What is a token?
As a typical example, THC token is the digital asset in Thetan Arena, a gaming project operated on the network of Binance Smart Chain. Users can use THC tokens for in-game activities such as opening new characters, donating for streamers, exchanges, etc.
What is an NFT?
There are two main categories of tokens, which are fungible and non-fungible tokens. Although they are both tokens, there are differences between these categories.
On one hand, fungible tokens are not unique and can be divided into smaller units. Regarding traditional fungible assets, gold is a fungible asset that can be divided into smaller units and exchanged equivalently as they are the same and not unique. Similarly, as fungible tokens like AXS are not unique, they can be traded at smaller units with the same value as any other AXS token on the market.
On the other hand, non-fungible tokens (or NFTs) are unique and indivisible. You can think of your passport as an example of a non-fungible asset as it is one-of-a-kind and cannot be exchanged for other passports. Equivalently, NFT is the digital version of non-fungible assets that is used to prove the authenticity or ownership of digital data such as photo, video, audio or in-game characters.
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