Explore our ETFs

  • $FIVG
  • $QTUM
  • $SPAK
  • $HDRO
  • $PSY
  • $CRUZ
  • $BIGY
  • $NFTZ
NFTs and Crypto, what’s the difference?

NFTs and Crypto, what’s the difference?

NFTs and NFT stocks are a big story right now. 2021 saw the NFT for Nyan Cat, a 2011-era cat GIF, sold at auction for almost $600,0001, NBA Top Shot NFTs generating over $500 million in sales by March, and a single LeBron James highlight NFT selling for more than $200,0002. Coindesk reports that since November 2017, approximately $174 million has been spent on NFTs3

But variations of blockchain have been in the headlines for the last decade or so. What is different about NFTs, and why are they making investors sit up and take notice? 

What are NFTs?

NFT stands for non-fungible tokens. Fungibility means that the individual parts which make up a good or commodity are interchangeable. 4 quarters, 10 dimes, and a dollar note, are all worth 1 US Dollar, no matter which way you cut them up. Currency is fungible because it doesn’t matter which dime you have, it’s worth a dime and there is nothing inherently more valuable in one dime than another.  A non-fungible item means essentially anything that is unique– that could be chairs, jewelry, artwork, etc – and hence each is valued individually.

As such, an NFT is a digital asset that represents a unique object, typically digital art, music, or video game items. It’s easiest to think of a sword that your WoW avatar made and sold to another player for virtual gold. The sword only exists in the digital world, but it can’t be interchanged with any other digital asset, and it has real world value. 

Why are people investing in NFTs?

NFTs enable private ownership of digital products, creating a system of ownership and tradeability that enables people to unlock value from digital items. Without NFTs, digital assets are easy to share but difficult to own. 

You may create a piece of digital art, but when you post it to social media, it becomes the property of the platform (unless you negotiate a deal otherwise). Additionally, anyone can copy the artwork and share it on their own channels. This can still happen with NFTs but the channel won’t own the artwork. NFTs give the owner a way to assert, brag and exercise unique ownership in a way previously impossible. 

NFTs prove ownership of a piece of artwork or any digital object, allowing users to sell and buy them freely and creating new value. Anyone can own a print of a Van Gogh painting, for example, but the original has value. Similarly, anyone can share a copy of a meme on social media, but the original has value. “A core piece of what makes physical art valuable is the ability to reliably prove the ownership of a piece and display it somewhere, something that’s never been as true in the digital world,” observes Devin Finzer, co-founder and CEO of NFT platform OpenSea4

NFTs are limited in number, so their value varies depending on demand and interest. They can be created, or “minted,” on the blockchain and can       represent either tangible or intangible items, including:

  • Limited edition sneakers like Kanye x Adidas Yeezys, which resell for over $1,0005
  • Digital art like “EVERYDAYS: The First 5000 Days” digital artwork sold by Beeple for $69.3 million6
  • Music tracks      
  • Jack Dorsey’s first tweet which sold for over $2.9 million7

How are NFTs different from crypto?

Both NFTs and crypto are built on blockchain, using the same technology and the same principles. As a result, they tend to attract the same players. NFTs can be thought of as a subset of the crypto culture, and you generally need cryptocurrency to buy and sell NFTs. 

But the main difference is indicated in the name. Cryptocurrency is a currency. Like every other currency, it has only economic value and is fungible. That means that, within a particular crypto currency, it doesn’t matter which crypto token you have; it has the same value as the next one, 1 $ETH = 1 $ETH. But NFTs are non-fungible, and they have a value that goes way beyond economics. 

What can NFTs do?

Initially, the benefit of NFTs was enabling true ownership of digital assets that mirrors that of the “real world.” But NFTs can do far more. NFTs allow creators to continue to earn royalties when their art is resold, which isn’t possible with, for example, a physical painting. Celebrities like Snoop Dogg8, Grimes and Paris Hilton9 are releasing unique mementos, art, and experiences as NFTs, recognizing the value they offer. 

NFTs promise to remove the middleman from digital publishing, allowing artists of all types to sell directly to their supporters and enabling fans to act as patrons. In this way, NFTs could be paving the return to an older style of art community, where individuals support the artists they enjoy. 

With NFTs, it’s possible not just to invest money in a rising artist by buying their early work and then benefiting when the work rises in value, but to invest time spreading their name, and still benefit when their value increases. “Now, creators can not only engage but transact with their fans directly: the community can voice their opinions and have a better chance of being heard, the perks can be designed to reward members who add the most value, and the community can benefit through token ownership and redeemable real world rewards,” comments Nichanan Kesonpat, blockchain entrepreneur10.

 Some analysts see NFTs as limited to digital art and/or limited-edition topics, but others see immense potential for new paradigms of work, economy, and social value. Andrew Steinwold, an NFT expert, writes “Crypto is going to radically alter finance, value, organization, governance, the internet, money, and more. But it’s non-fungible tokens (NFTs) that will radically alter human society and culture11.”

NFTs can include collectibles like ticket stubs from concerts; virtual real estate like the Bronx ZOO that is built in the metaverse platform CryptoVoxels12; or ownership of digital pets. 

Thought leaders suggest that NFTs could form the basis for virtual states, where every NFT holder has an equal voice in governance. In contrast, social media platforms today operate as dictatorships, with a small number of people able to eject members on a whim. Entire economies could eventually emerge built upon digital assets, with the merger of NFTs and cryptocurrencies. 

NFTs aren’t just another tech bubble

With NFTs, cryptocurrencies, and other blockchain applications capturing headlines on a regular basis, investors are paying renewed attention to something they may have previously dismissed as a techie-geek trend. NFTs are proving that they aren’t just a transient flash in the pan. An NFT ETF like Defiance’s NFTZ can be one way to gain access to a complex and sometimes high entry-level sector. The ETF aims to mitigate risk by spreading exposure across a number of promising companies that participate in NFT, blockchain, and cryptocurrency ecosystems. These are often collectively referred to as the metaverse, so in some ways NFTZ could be seen as a meta ETF. But whether its metaverse stocks or an NFT fund you are after, NFTZ is the first ETF to bring the NFT space within easy reach of retail and institutional investors.


1 “Why an Animated Flying Cat With a Pop-Tart Body Sold for Almost $600,000” February 22, 2021 https://www.nytimes.com/2021/02/22/business/nft-nba-top-shot-crypto.html 

2 “Dapper Labs, company behind NBA Top Shot, raises $305 million while being valued at $2.6 billion” March 30, 2021 https://www.usatoday.com/story/sports/nba/2021/03/30/nba-top-shot-dapper-labs-valuation-funding-round/7058307002/ 

3 “What Are NFTs and How Do They Work?” February 1, 2021 https://www.coindesk.com/what-are-nfts 

4 “The Non-Fungible Token Bible: Everything you need to know about NFTs” January 10, 2020 https://opensea.io/blog/guides/non-fungible-tokens/#What_is_a_non-fungible_token 

5 “Creators, Communities, and the Gray Space in the Middle” October 10, 2020  https://www.nichanank.com/blog/2020/10/9/gray-space-in-the-middle 

6 “Beeple NFT Artwork Sells for $69.3 Million in Christie’s Auction” March 11, 2021 https://decrypt.co/60971/beeples-nft-artwork-sells-for-60-3-million-in-christies-auction 

7 “Jack Dorsey sells his first tweet ever as an NFT for over $2.9 million” March 22, 2021 https://www.cnbc.com/2021/03/22/jack-dorsey-sells-his-first-tweet-ever-as-an-nft-for-over-2point9-million.html 

8 “Snoop Dogg Announces the Release of His First NFT Collection: “A Journey with the Dogg”” March 30, 2021 https://www.prnewswire.com/news-releases/snoop-dogg-announces-the-release-of-his-first-nft-collection-a-journey-with-the-dogg-301259014.html 

9 “These celebrities are bringing NFTs to the mainstream — and cashing in,” Spetmebr 3, 2021. https://www.businessofbusiness.com/articles/nft-celebrity-non-fungible-tokens-crypto-grimes-paris-hilton/ 

10  “Creators, Communities, and the Gray Space in the Middle” October 10, 2020 https://www.nichanank.com/blog/2020/10/9/gray-space-in-the-middle 

11 “Crypto Will Change Value, NFTs Will Change Society” July 19, 2020 https://andrewsteinwold.substack.com/p/crypto-will-change-value-nfts-will 

12 ZOO Token homepage, https://zootoken.club/ 

13 “Aavegotchi Takes Digital Pets To The Next Level With 100% On-Chain NFTs” April 26, 2021 https://chainlinktoday.com/aavegotchi-takes-digital-pets-to-the-next-level-with-100-on-chain-nfts/