A cryptocurrency is a digital asset designed mainly to transfer or store value through a network, while a non-fungible token (NFT) is a unique digital token used to identify a particular asset or record. Both may use blockchain technology, but they have different economic functions.
Most cryptocurrencies operate through a distributed ledger, commonly a blockchain, which records transactions across many networked computers. Users transfer units between digital wallet addresses, and cryptographic methods verify control and protect transaction records. Cryptocurrencies may function as a medium of exchange, a store of value, or a speculative asset, although their acceptance and price stability vary.
An NFT is a blockchain-based token with a distinct identifier and associated metadata. It can represent a link or claim connected to digital art, game items, tickets, memberships, or physical assets. Owning an NFT does not automatically grant copyright or ownership of the underlying file; those rights depend on the sale terms and applicable law.
| Feature | Cryptocurrency | NFT |
|---|---|---|
| Fungibility | Usually fungible: one unit is interchangeable with another unit of the same type | Non-fungible: each token is distinguishable |
| Main function | Transferring or storing value | Recording identity, provenance, access, or a claim associated with an asset |
| Value | Units generally share the same market price | Value depends on the token's specific characteristics, scarcity, and demand |
| Divisibility | Usually divisible into smaller units | Usually transferred as one complete token |
The common misconception is that an NFT is simply a type of cryptocurrency. It is not: cryptocurrency primarily represents interchangeable value, whereas an NFT represents something individually identifiable. However, cryptocurrency may be used to purchase an NFT.
For IB Digital Society, this is shared SL and HL content within the economic context, especially goods, services, and currencies (4.2C). In an exam response, define both terms, distinguish them using fungibility and economic function, and avoid claiming that NFT ownership automatically includes copyright.
