You may already be familiar with the NFT world and have read a lot of crypto-related content up to this point, which is great, you should be proud of that. Or maybe you've tried to learn a little bit about crypto, but you're more confused now than when you started. Well, "GM" to you in any case! that means "Good Morning" in the crypto chat space, we will go over all the most important terms you need to know to understand the NFT and crypto markets.
NFTs, or non-fungible tokens, can be bought and sold using cryptocurrencies like Bitcoin and Ethereum. They are powered by the same technology that makes cryptocurrencies like Bitcoin and Ethereum possible. When digital artist Beeple sold one NFT for $69 million at Christie's last March, you might have been surprised that a simple jpeg photo, even if it was made up of 5000 different photos, could get such a high price.
You probably know by now that NFTs are more than just jpegs. NFTs are a type of digital asset, to put it simply. The code, or smart contract, that makes them work is more important than the image they have. The NFT is useful because of the smart contract. In some cases, that use is just proof that the person owns the image. In other cases, it can be a pass to join a community. The blockchain stores all of this information and keeps track of all transactions. NFTs can be created on different blockchains, such as Ethereum, Solana, or Flow. Blockchains are safe because transactions are checked. It helps to know what some of the technical terms mean, but you don't have to worry too much about how they work.
No matter what, NFTs have taken over the art world. The market for NFTs as a whole will be worth more than $17 billion in 2021. Damien Hirst and Tom Sachs have both started NFT projects, and galleries like Pace, Jack Hanley, and Galerie Koenig have joined the trend along with auction houses. As of right now, Beeple (known for his work on Christie's) and Pak are the only two crypto-native artists who have come close to making it big. Pak is an anonymous artist (or group of artists, we don't know) who made an NFT collection that could be the most expensive art ever made. It could also just be a group of NFTs.
If you want to learn more, the following list of terms should help you get started on your way to understanding crypto and NFT. There is a lot of slang, and it can be hard to keep up. Here are some terms you might hear on different platforms. And a disclaimer: There are good reasons to think that crypto is bad for the environment, the economy, and society as a whole. There are also good reasons to like crypto. One of the best is that it gives artists a way to take control of their royalties. The sale of NFTs helps creative projects get money quickly, makes it easy to build communities, and brings people together around a shared goal.
credits: freepik
NFT glossary
AIRDROP
Like exchanging files on an iPhone, but it uses cryptography. NFTs can be "dropped" between crypto wallets in the same way that a file can be "dropped" between iPhones. It's usually a good thing when it's used in the context of an NFT project that gives existing holders more NFTs or tokens as a reward for their loyalty or to get them to do more.
ALLOWLIST
NFT drops can be competitive, so some projects make a "allowlist" (also called a "whitelist," but that term is used less often now because of its problematic roots) so that you can mint before the public. Some allowlists make it harder than others to get on. They can ask you to do things like use the project's Twitter and Discord accounts or play games in the metaverse.
DAO
DAO (pronounce "dow") stands for "Decentralized Autonomous Organization." Think of it like a company that goes public before it's built, and anyone can buy a seat on the board. In theory, they are completely automated companies that run on decisions made by people and carried out by code. In practice, they work more like a group chat with a shared wallet. Some NFTs work like membership cards, so you have to buy the NFT in order to join. NFTs can also be used as governance tokens that let you vote on how the DAO is run. The sales of the NFTs, in turn, pay for the DAO's work. The goal of each DAO is different. Some of them, like VectorDAO, are run by the community. Another tried to buy a very old and rare copy of the U.S. Constitution at Sotheby's in 2021!
DISCORD
A messaging app like Slack that many crypto projects use to coordinate. Allows for gated channels that only people with the project's NFT can access. You might be told to "join the Discord" for a certain project if you want to know what's going on behind the scenes.
EXCHANGE
Where you can buy your NFTs. OpenSea, LooksRare, Rarible, and Nifty Gateway are all popular exchanges. NFTs must first be "minted" on the blockchain before they can be used. Minting is like buying art directly from the artist, which is called a "primary sale." When you buy an NFT on an exchange like OpenSea, that is usually a secondary sale. Don't forget to think about "gas fees" when you buy NFTs. These are the transaction fees you have to pay in order to complete the purchase. They can cost anywhere from a few dollars to a few hundred dollars, depending on the time of day and how many other deals are going on at the same time.
FLOOR PRICE
The lowest price at which you can buy a certain NFT. This is like a low estimate at an auction. A floor price that is higher than the mint price (the price at which it can be made) means that there is demand for the project. An investment-wise bad sign is a floor price that is lower than the mint price.
HODL
Stands for "Hold on for dear life". This phrase is often used as a rallying cry on Twitter when a project's floor price goes up or down. Means, "Calm down and hold on to your stuff." It's said the way it's written (hod-el).
Asset
A digital collectible can also be talked about in this way.
Bitcoin
This is the well-known currency that you use to buy and sell NFTs.
Blockchain
Think of it as an open spreadsheet that everyone in the crypto world can see and that keeps track of any changes or transactions.
Bridge
You can use a bridge service like Rarebits if you want to trade your NFTs but don't have a way (like Shapeshift or Kyber Network). For a fee, a bridge will move your tokens from one blockchain to another. You can then get your tokens back on the new chain.
BTC
This is an abbreviation for Bitcoin.
BURN NFTs
It is the process of sending an NFT to the address on the NFT contract if you want to get rid of it. This will destroy your tokens, so you can't give them to anyone else.
BURST
These are NFTs you want to buy, which are also called assets on the market.
Buyers
These are the people who buy digital collectibles to sell them later for more money. It's like trading in the real world, where you try to get more money than you put in.
CAT
This stands for Cryptocollectible Asset Token and is short for CryptoKitties. It's one of Ethereum's most popular NFTs.
Collectible
Think of this as something with value or that is hard to find, like a mini-figure or a limited-edition pair of shoes.
Community Designated Sellers (CDS)
These are people who set up their addresses with specific purposes and fees for people who want to sell their assets.
Crowdsales
When making an NFT project, companies sometimes do a pre-sale, which lets everyone use ETH (or their own altcoins to purchase the new tokens). The investors and people who have been around since the beginning get the tokens that people buy.
Crypto
This is another word for a digital currency.
Cryptocollectibles
These are blockchain assets that can't be traded because they are unique digital things, like crypto art or crypto kitties (crypto kitties are the first NFTs! created).
Cryptocurrency
This is a type of digital currency, like Bitcoin, that uses cryptography to keep financial transactions safe and control how new coins are made.
Dapps
Decentralized Apps. Think of these as apps that run on networks without a central server (and not just Ethereum, but any platform). They have to do with crypto.
Decentralized Exchanges (DEX)
These are places where people can trade with each other directly instead of going through a third party.
DeFi
Acronym for Decentralized Finance.
Drop
This is an event where people who hold on to certain types of assets get free tokens.
ETH
This is the short form for Ethereum, which is the blockchain where all NFTs are stored.
Ether
An alternative currency that has its own blockchain, like Bitcoin does with BTC. The Ethereum blockchain is what makes Ether work. It is used as "gas" to make transactions happen or for Dapps to work properly. If you want to buy an asset, you have to pay more ETH than what the asset is actually worth.
Ethereum
This is the name of one cryptocurrency, which is also called ETH and can be used for Dapps and smart contracts.
Etherscan
This is the most popular way to find out how much your digital collectibles are worth. You can also use it to check transactions and balances.
Exchange
If you want to trade your crypto assets for other crypto assets, you'll need to use an exchange like Binance. You can also use credit cards to buy things here.
ERC-721
What's the ERC? The Phrase "Ethereum Request for Comments" is what "ERC" stands for. Ethereum is being built by its GitHub community, and ERC-721 refers to a specific discussion that developer William Entriken started on GitHub in early 2018. Since then, the Ethereum network has made ERC-721 a standard: ERC-721 lets you move a specific token on the Ethereum blockchain and add a specific token to a wallet. If you can own a particular token, it is not a "fungible" token (NFT).
ERC-20 is another ERC standard that is similar to this one. This standard made it possible for new tokens to be added to the Ethereum blockchain, and it was used to make cryptocurrencies (such as Tether, Binance Coin, USD coin, Dai, and many more).
Farm
You can "farm" NFTs instead of buying them with money by using your GPU to mine their tokens. Your computer will join the other mining computers on the blockchain.
FIAT
This is the regular money, like the USD, the Euro, and the GBP.
Fungible Tokens (FT)
These are tokens that can be swapped and traded, like ETH and BTC.
Gas fees
A certain amount of cryptocurrency that is needed to make transactions on the blockchain. When you buy an asset, send ETH, or set up a smart contract, you have to pay gas for the transaction to go through.
GPU
This is a graphics processing unit, which is needed to mine cryptocurrencies like Ethereum.
Hashrate
A number that shows how fast your GPU can mine cryptocurrency tokens.
HODL
In the language of cryptocurrency, HODL means to hold on to something, like your investment. It started during the Bitcoin era, when early adopters bought bitcoins for just a few cents or dollars, held on to them, and became filthy rich. HODL (with all capital letters) is also used in the NFT community these days.
ICO (Initial Coin Offering)
Think of this as an event where early adopters buy digital assets from a company.
KYC
Stands for "Know Your Customers". You know those annoying forms that ask for your name and all your personal information when you sign up for a new service? It's just something that blockchain companies do to follow KYC rules. Know Your Customer is another name for it.
"Layer 1 and Layer 2"
Layer-1 is the basic blockchain architecture in the world of blockchain. For example, the blockchains for Bitcoin and Ethereum are both layer-1 blockchains. Layer-2, on the other hand, is a protocol built on top of the structure of Layer-1. The Polygon protocol is an example of a Layer-2 protocol: Polygon is a side chain to Ethereum. It is built on Ethereum and aims to solve scaling problems with Ethereum. But if and when Ethereum and Ethereum 2 merge, it will be a Layer-1 upgrade because it changes the basic structure of blockchains.
Miner
A person on a blockchain network who uses their GPU to mine tokens.
Mining
This is the way that cryptographic problems are solved. The first person to figure it out gets to add the current block to the chain of blocks and get new tokens in return.
"Mint"
There are two ways to mint something: Mint-A-Token is when the person who made the asset decides who else can make tokens/NFTs. Burn Minting gives all NFTs a new digital wallet private key, so they can't be destroyed or moved. Instead, they are locked forever and can't be destroyed or moved.
"Minting"
Think of this as the process of making something.
"Minting interval"
This is the number of times you can make tokens.
NFT
Stands for "Non-Fungible Token". It is a digital asset that is one of a kind and is stored on a blockchain. It can't be replaced by any other coin or token.
Noncustodial Wallet
Think of this as an online wallet that you control with private keys that you keep on your own computer. MetaMask is one example. It is a browser extension that lets you run Dapps in your normal web browser (instead of a centralized app).
Noob
Someone who just heard about blockchain for the first time and doesn't know how it works.
Nuclear NFTs
Some of them are rare collectibles that more than 1,000 people own. You can't send them to anyone without their permission first, since you have to ask everyone on the list if it's okay before each transaction. If someone makes it impossible for the NFT to be traded even once, it will never leave its original wallet again.
Peer To Peer (P2P)
P2P trading is used when you need to make a transaction without going through an exchange. It is also called direct trade or person-to-person trade.
Permanent Records
The Ethereum blockchain stores digital collectibles forever, so unless you take them off the ledger yourself, your crypto collectibles will never go away.
Private Key
Think of this as a password that is different from usernames or email addresses. It lets you use information or digital property that is stored on blockchains. On Etherscan, you can always see your public address, but you may need a private key to get to wallets or assets that are stored on the blockchain.
Proof of Stake (PoS)
Another way that crypto projects check transactions is by giving you tokens if you keep them for a certain amount of time. Like mining, this process needs to use some electricity and computer power.
Proof of Work (PoW)
This is one way to make sure that transactions are legitimate, and it requires miners to solve hashing problems as part of their work. With this method, hackers would need more than 51 percent of all the computing power in the world to break into the network.
Public Key
It's a cryptographic key, like a private key, that lets people get into your wallet or NFTs. The difference is that you don't have to keep it a secret. It is posted in public places so that the blockchain knows who you are and what you can do with your tokens.
PFP
Literally, it means "profile picture," but in the world of NFT, it also refers to a project that often has no use other than as a social media avatar. CryptoPunks was the only "PFP project" for a while, but by the end of 2021, there were thousands. They are usually put out in editions of 10,000, and each NFT has its own special qualities.
QR Code
If your mobile wallet can scan QR codes, this is the easiest way to send NFTs or Ethereum because all you have to do is scan a code and confirm everything before hitting "send."
Quantity
This is the number of a certain asset that is available.
Rarities
On the Ethereum blockchain, each type of item is given a number based on how rare it is. They'll have unique IDs and metadata, and they'll be labeled "Legendary" or "Mythic."
Re-Mint
When you make coins or tokens on a blockchain, you have to give out the private keys to digital wallets so that they stay locked forever. This means that no one can destroy or move them except the original owner of the wallet.
Ring Signature
A type of transaction that only lets the sender know that someone signed it, but not who. This means that the sender can't spend the money until another person also signs it.
"RUG PULL/GETTING RUGGED"
Getting ripped off. There are a lot of sketchy links in the crypto world, so don't click on anything that asks you to connect your wallet before you've checked it out. Legally, there is not much that can stop the people who made an NFT project from selling NFTs and taking the money. People call any kind of scam a "rug pull," which means "the rug is pulled out from under you." You may hear someone say, "I got rugged."
Satoshi
It's the smallest unit of Bitcoin (0.00000001 BTC), and it's named after Satoshi Nakamoto, who is thought to have made Bitcoin anonymously and was the first person to develop the blockchain.
"Seed Hash"
Random value of 32 bytes that lets you make new public and private keys.
"Smart Contract"
An agreement between two or more parties that goes into effect on its own if certain conditions are met. They can't be changed and can't be undone on the blockchain network.
Solidity
A programming language for smart contracts that use crypto tokens and are based on Ethereum. It stands for "Secure Interoperable Datamarketplace," which is what this language does when people design any new NFT on the blockchain, such as illustrations and 3D models with metadata underneath to describe each asset's unique history or story.
Staking
Putting tokens in a wallet and locking them up for a certain amount of time. As long as other bettors are also taking part, the more you lock up, the more chances you have to win a prize. This usually happens on Proof-of-Stake (PoS) blockchains, where users stake their tokens and get rewarded every few seconds or after processing a certain number of blocks.
Tokenomics
The part of economics that looks at how crypto tokens are made, how they are traded, and how they are regulated.
Tokens
These are digital assets, like ERC-20 tokens, that let people raise money for projects using crowdfunding/ICO protocols.
(The) Moon
All crypto and NFT projects want to go to "the Moon." If you think that a project will "go to the moon," you think that its value will go up over time.
OpenSea
OpenSea is the most popular marketplace for NFTs. It's kind of like eBay for NFTs. Investors think it's worth more than $13 billion right now (significant-tech hedge funds).
Scalability
As the blockchain grows, it becomes harder and harder to keep up with the number of transactions, or "Scale," of its activity. Scalability is the ability of a blockchain to handle a certain number of transactions at the same time. Between 7 and 15 transactions can be confirmed per second on the Ethereum network. But credit card companies around the world can handle about 100,000 transactions per second. So, they can be used on a larger scale.
Shill
Shilling means to give a crypto or NFT project you don't really believe in a fake endorsement. For example, it was recently reported that Lindsey Lohan got about $30,000 for promoting two Crypto Projects that failed and lost the investors' money.
WAGMI
We'll all get through this. This phrase is often used in an excited way on Twitter to show that a project is "going to make it." Can also be used to tell people not to give up on a project just because it's not going well. "Making it" can mean a lot of different things, but most of the time it means that a project is financially successful and/or gets a lot of attention. You might also hear someone say that a project is "GMI" and that they are going to "ape in." On the other hand, "NGMI," which stands for "not going to make it," means that someone or something is going in the wrong direction.
WALLET
The place where you keep your crypto assets is in a wallet. MetaMask, Coinbase Wallet, and Rainbow are all common wallets. When you buy an NFT on an exchange, you have to connect your wallet to the exchange. You can put both coins and NFTs in a wallet, and you can have more than one wallet. There are "hot wallets," which can be accessed through the internet, and "cold wallets," which work more like a flash drive and let you take your assets offline. This is where your tokens go when you don't need them. Think of it like a house where you keep all your digital collectibles until you want to sell them or send them somewhere else. A wallet could be a cold storage wallet, but it could also be any place where you can send and receive items using something like Metamask with MyEtherWallet.
ZK-Rollups
ZK-Rollups, also called Zero-Knowledge Rollups, are a layer-2 solution that let you combine several transactions into one and verify them off-chain. It is, in fact, a scaling solution, which is very important since no one knows when phase 2 of the Ethereum 2 merge will be finished.
You now know the most important NFT words!
With the development of blockchain technologies, NFTs will only become more useful. Not only do you need to know what they are, but also how they work, why they exist, and the many terms that people who trade them use every day.
Now that you know some of the most important terms, it's time to go out into the exciting world of NFTs and have some fun.
Pierre Charmetant