NFT is 2021 Word of the Year Amid Cryptocurrency Boom, Collins Dictionary Says


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 experiencing a pivotal year in 2021. About 1 in 6 Americans have invested, traded or crypto used, according to Pew Research. The emerging financial tool has become so established, in fact, that a common cryptocurrency term has secured its place in a popular online dictionary.

The Collins Dictionary Word of the Year is NFT, an abbreviation for a “non-fungible token” that is traded in the cryptocurrency blockchain. He beat out other apt expressions 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 a collector’s item. Virtually any digital file can be made into NFT, from GIFs and video clips to digital artwork and memes – former Twitter CEO Jack Dorsey’s first tweet was sold as NFT for 2 , $ 9 million, Reuters reported.

It is difficult to understand the value of an NFT without having a basic knowledge of how cryptocurrencies work. Read on to learn more about crypto, including whether you need to borrow a loan to invest. You can compare rates on a variety of financial products in Credible’s online marketplace.


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 widespread use over time. Other speculators invest in crypto to take advantage of its short-term gains, which can be difficult. to predict.

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

Of course, bitcoin is just one of the 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 represents the lion’s share of the crypto market. Here are the top 10 cryptocurrencies by total market value:

  1. Bitcoin (1.1 T)
  2. Ethereum ($ 553.9 billion)
  3. Binance Coin ($ 104.7 billion)
  4. Tie ($ 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. Polkadot ($ 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 unique assets that cannot be replaced, which contributes to their overall resale value.


Do you need to borrow money to invest in crypto?

With the unique growth potential that cryptocurrency offers, you might be wondering how to get your hands on it. A recent Wall Street Journal report found that upstart lenders are offering cryptocurrency-backed loans – which some borrowers use to buy more cryptocurrency.

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

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


3 reasons to borrow money with long-term gains

While borrowing money to buy 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 the costs of housing are usually built into the borrower’s budget, whether they rent or buy. And since mortgage rates are relatively low, you’re unlikely to lose money buying a home as long as you borrow within your means and strategically pay off the loan.
  2. You have to fund higher education. Many well-paying jobs require a graduate degree or certification. In some circumstances, student loan borrowing can pay off in the form of higher income along the way, although this is not always the case.
  3. You consolidate an existing debt. Debt consolidation loans allow you to pay off high interest credit card debt with better terms like a lower interest rate. A recent analysis predicts that qualified borrowers could save nearly $ 2,400 by consolidating their credit card debt. Just be careful not to take on more debt while you are paying off 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.


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