NFT Is 2021’s Word of the Year Amid Cryptocurrency Surge, According to Collins Dictionary

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An NFT is proof of ownership of a unique digital item that can be bought and sold in the cryptocurrency market. Here’s what you need to know about buying and investing in crypto. (iStock)

Cryptocurrency has officially entered the mainstream after having a historic year in 2021. About 1 in 6 Americans have invested, traded or crypto used, depending Research bench. The emerging financial tool has become so established, in fact, that a common cryptocurrency term has earned its place in a popular online dictionary.

the Collins Dictionary The word of the year is NFT, an abbreviation for a “non-fungible token” that is traded on the cryptocurrency blockchain. He beat out other timely phrases like “climate anxiety” and “hybrid work.”

An NFT is a certificate that represents ownership of a digital asset, such as a work of art or collectible. Virtually any digital file can be turned into NFT, from GIFs and music videos to digital artwork and memes – former Twitter CEO Jack Dorsey’s first tweet sold as NFT for 2 .9 million, Reuters reported.

It is difficult to understand the value of an NFT without having a basic understanding of how cryptocurrencies work. Keep reading to learn more about crypto, including whether you should take out a loan to invest. You can compare rates on a variety of financial products on Credible’s online marketplace.

IS IT BETTER TO INVEST OR TO PAY OFF THE DEBT?

What is cryptocurrency and how does it work?

Cryptocurrency, also known as crypto, is a digital currency that you can use to purchase goods and services. Unlike traditional banking systems, cryptocurrency uses decentralized blockchain technology that securely manages and records transactions.

Among its enthusiastic supporters, crypto is seen as the currency of the future. Some of these investors view cryptocurrency as a long-term investment, betting on its eventual widespread use. Other speculators invest in crypto to take advantage of its short-term gains, which can be difficult to predict.

Take bitcoin (BTC) as an example. Since the token was first introduced in 2013, its value has risen from around $100 to around $58,000 as of November 30, according to the cryptocurrency exchange. Coinbase. In the last year alone, the value of bitcoin has fluctuated between around $17,500 and $69,000.

Of course, bitcoin is just one of thousands of cryptocurrencies currently on the market. The total value of all cryptocurrencies in the world is $2.64 trillion, according to CryptoMarketCap, although bitcoin makes up the lion’s share of the crypto market. Here are the top 10 cryptocurrencies by total market value:

  1. Bitcoin ($1.1T)
  2. Ethereum ($553.9 billion)
  3. Binance Coin ($104.7 billion)
  4. Tether ($73.4 billion)
  5. Solana ($64.9 billion)
  6. Cardano ($53.3 billion)
  7. XRP ($48.2 billion)
  8. USD coin ($38.7 billion)
  9. Peas ($37.9 billion)
  10. Dogecoin ($29.3 billion)

There is an important distinction between the cryptocurrencies listed above and NFTs. Fungible cryptocurrency tokens like bitcoin can be replaced with other fungible tokens. NFTs, on the other hand, are one-of-a-kind assets that cannot be replaced, which contributes to their overall resale value.

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Should you borrow money to invest in crypto?

With the unique growth potential offered by cryptocurrency, you may be wondering how you can get your hands on it. A recent the wall street journal report found that rookie lenders are offering cryptocurrency asset-backed loans — which some borrowers are using to buy more cryptocurrency.

However, it is not recommended to take out a loan to invest at all, let alone in a volatile asset like cryptocurrency. This is because the money you make investing in crypto is very unlikely to offset the borrowing costs of a loan.

While your return on investment (ROI) is based purely on speculation, the interest cost of borrowing money is guaranteed. Use Credible loan calculator to estimate borrowing costs and see this concept in action.

DO I HAVE TO SUBSCRIBE TO A PERSONAL LOAN TO INVEST?

3 Reasons to Borrow Money with Long Term Gains

Although To borrow money buying crypto is not advisable, taking out a loan with interest is not always a bad investment. Here are some examples of how loans can pay off in the form of financial gains and long-term savings:

  1. You buy a house. Real estate is an asset that appreciates over time, and housing costs are usually built into the borrower’s budget, whether they rent or buy. And since mortgage rates are relatively low, you are unlikely to lose money buying a home as long as you borrow within your means and repay the loan strategically.
  2. You have to fund higher education. Many high-paying jobs require an advanced degree or certification. In certain circumstances, borrowing student loans can pay in the form of higher earnings down the road – although this is not always the case.
  3. You are consolidating an existing debt. Debt consolidation loans let you pay off high-interest credit card debt with better terms, like a lower interest rate. A recent analysis predicts that well-qualified borrowers could save nearly $2,400 by consolidating their credit card debt. Just be careful not to go into further debt while you are repaying the loan amount.

Visit Credible to compare loan offers on a variety of financial products, including mortgages, private student loans and debt consolidation loans. The rate comparison is free, which can help you get the lowest possible rate for your financial situation.

HOW TO INVEST FUTURE STIMULUS CHECKS

You have a financial question, but you don’t know who to contact? Email the Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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