NFT Glossary: Words You Need to Know & What They Mean

Brazil Nut
nft-glossary-blog-image

Non-fungible tokens (NFTs) aren’t easy to get your hands on. As a result of this complexity, NFT infrastructure is riddled with acronyms and technical terms. And there’s more to it than that. Everywhere you look, you see acronyms and project plans that read like textbooks. It’s not hard to get discouraged.

Never fear though. We understand how difficult it can be to get started in the NFT world. That’s why we created the NFT Dictionary in the first place.

In order to go from NFT bewildered to NFT enthused, you’ll need to be familiar with all of the terms listed here. For your convenience, we’ve arranged the dictionary so that it can be read sequentially from beginning to end, and you’ll walk away with a thorough understanding of the NFT ecosystem. Due to the sheer size of encyclopedias, we decided to use this method instead because it was the most efficient. We set out to create a tool that would be easier for people to use.

Remember that this document is for your benefit.

Please let us know if there is a term that we are missing. Is there anything you still don’t understand? If you have any questions, feel free to contact us. Help is at hand. To stay on top of the ever-changing ecosystem, we’ll be adding to the dictionary on a regular basis. As a result, make sure to save this page and return to it as you progress on your NFT path.

Blockchain

Distributed databases, such as blockchains, can be used to store sensitive data in a way that is open to the public. Distributed devices (nodes) all over the world store data instead of relying on a single central server.

Everything from computers and laptops to servers can be used as distributed devices in the future. There is no need for a third-party trusted third-party in order for data to be stored, spread, and preserved in the blockchain framework. Unlike any previous decentralized proof-of-ownership system, blockchains provide an immutable record thanks to nodes.

NFT

Blockchain-based digital tokens known as NFTs are a type of digital currency. There are unique identifiers and metadata for each NFT. Because of this, NFTs are “non-fungible,” or not interchangeable with any other NFTs.

Digital files such as photos, poems, songs, albums, videos, avatars, and more are linkable to data contained in an NFT. Typically, NFTs are used to buy and sell digital products (specifically, art). NFTs, on the other hand, can be used to gain access to exclusive goods and airdrops, tickets to live or digital events, and other benefits for the NFT owner.

Roadmap

NFT project plans resemble investment decks in many ways. To convey the value and utility of the project, an NFT project’s goals and milestones are laid out in a document. Help the NFT owners and creators understand each other’s expectations.

New features and releases are added to the roadmap as the NFT project develops. Legally speaking, NFT roadmaps aren’t binding at all. As a result, even though NFT roadmaps may contain many promises, creators are not legally obligated to keep them.

Gas Fee

Individuals must pay a gas fee in order to complete a blockchain transaction. By charging blockchain miners a fee for their processing power, these fees can be offset by using a cryptocurrency native to the blockchain.

The price is subject to change based on the level of congestion in the network. This means that the higher the gas fee, the more people are using the network.

Mint

An NFT is minted when it is added to the blockchain, validated, and recorded. The NFT can be seen, purchased, and traded on the open market once it has been minted. But NFTs need not be made public; they can remain confidential.

1/1

There will never be another copy of a one-of-a-kind artwork or non-functional object (NFT). There is only one of these in existence, which is similar to paintings in real life. Because of their scarcity, 1/1s often command a higher price than NFTs.

Limited Edition

A limited-edition NFT collection is one in which the total number of NFTs that can be produced is set at a specific number. 10,000 editions are common in many collections.

PFP

A profile picture (PFP) NFT is a digital token or piece of art that can be used as a user’s profile picture on social media. CryptoPunks and Doodles, two of the most popular NFT collections in the world, are PFPs, as are many others.

Floor Price

An NFT collection’s floor price is the collection’s lowest listed price. A collection’s worth is frequently determined by the price at which it was purchased.

Whitelist

A “whitelist” is a group of people who are given early access to an NFT collection before the project is made available to the general public. As a prelude to the public mint, the NFT creators handpick a small group of users for inclusion on the whitelist, which is typically only a few hundred people.

Art Reveal

After a long wait, holders and the general public finally get to see the specific artwork that they’ve minted in an NFT collection launch. To get people excited about a project, smaller art reveals are often used as pre-teaser teasers.

Airdrop

Distributing NFTs or coins to the wallets of users directly via airdropping is a common practice. Airdrops come in a variety of forms. An airdrop may be given away as an incentive for a social media post or a newsletter subscription, for example. Airdrops are given to holders of a specific NFT collection or cryptocurrency as a token of appreciation. With airdrops, blockchain projects can reward their supporters while also bringing in new ones.

Hot Wallet

A digital wallet known as a “hot wallet” is one that is always accessible via the internet. Tokens can be stored, sent, and received via the blockchain connection. As long as you have an internet connection and your private keys, you can access it from any device. They are more vulnerable to hacking because they are connected to the internet. A hot wallet like MetaMask is an excellent illustration of this concept.

Cold Wallet

Many hardware wallets resemble USB drives in appearance. Ledger and Trezor are two of the most popular. When you have your private and public keys printed on a piece of paper, you have a paper wallet. Of course, a piece of paper can easily be lost or destroyed. The most secure and safe method of storing tokens is to use a hardware wallet.

Royalty

When you own, create, or license a work, you’ll be compensated with a set amount of money known as royalty. In many cases, NFT creators receive secondary royalties or a percentage of the sale price every time their work is sold. To put it another way, NFT creators aren’t just paid once their work is sold. Every time someone buys something, they get paid for it.

Smart Contracts

Smart contracts are computer programs that are stored on the blockchain and are used to facilitate transactions between parties. It is governed by “if/when/then” statements that are very simple. “If ‘a’ occurs, then execute ‘b,'” for example. The transaction is automatically executed and recorded in the blockchain once the predetermined conditions are met.

There is no need for a third-party intermediary to complete the transaction, which increases both transparency and trust. In order to issue and trade NFTs, smart contracts are used. These contracts manage the transferability, ownership, and access to NFT assets.

Decentralized Apps (dApps)

Like any other website or app that you use, dApps are built and run on top of a decentralized network, such as the Nervos blockchain. The decentralized nature of dApps eliminates the need for a centralized third party or gatekeeper because they are powered by smart contracts. Apps that use NFT in their software are known as decentralized applications.

DAO

“Decentralized Autonomous Organization” or “DAO” is a type of organization that is managed on a blockchain using smart contracts. The DAO’s rules are laid out in smart contracts, which are then used to carry out decisions. A DAO is governed by a community of token holders, rather than a centralized board of directors, as is the case in most traditional businesses and organizations.

In a decentralized autonomous organization (DAO), every token holder has a vote and a say in major decisions. Proposals are accepted and implemented if they meet a predetermined level of consensus (like a certain number of votes). It is common for NFT projects to create decentralized autonomous organizations (DAO) that let token holders vote on the project’s future direction.

Governance Token

Tokens that act as a democratic system for community decision-making within a DAO are known as governance tokens. Those who own governance tokens have a say in the project’s funding allocation, hiring of key personnel, creative direction, and more.

Utility Token

Access to (and interaction with) a decentralized application or service is made possible through the use of a utility token, a form of cryptocurrency. As a reminder, these are not financial instruments, despite the fact that they are frequently referred to as such.

The tokens, on the other hand, are used in a specific project’s internal economy.

P2E

An online game where gamers are rewarded with utility tokens for successful gameplay. P2E Play-to-earn It is possible to buy virtual goods in-game with these utility tokens, and they can be exchanged for other cryptocurrencies or fiat currencies.

Metaverse

As a kind of digital extension of the physical world, the metaverse is best described as an amalgamation. People will be able to live, play, shop, and work with others around the world in an immersive, interoperable augmented reality in the future.

Metaverse protocols based on Web3 technologies such as NFTs may find application in the future.

Interoperability

It’s currently impossible for users to move their data between different digital platforms and games. For example, Call of Duty gamers can’t wear their Fortnite skins. Interoperability refers to the ability to transfer data and virtual items between decentralized applications and virtual environments, such as the Internet.

One of the core principles of Web3 is that users have more control over their personal data and can truly own their digital purchases (which is obviously important when it comes to NFTs).

Discord

Discord is a messaging app that allows users to communicate via text, voice, and video. Servers are places where users can communicate and share files with each other in a more public setting. There are no limits to the number of chat rooms that can be hosted on any given server.

Many NFT and Web3 communities now communicate exclusively via Discord. For the most part, NFT projects have their own Discord server where users can communicate with each other and share information. These servers require an invitation link in order to access them.

Staking

In order to earn interest on a cryptocurrency that is held in a wallet or exchange for a set period of time, you must stake it. The greater the reward, the longer the crypto is staked.

On-Chain

Having a digital token on a blockchain is what it means to be “on-chain.” Any transaction or interaction with a token or contract on the blockchain is referred to as a “blockchain transaction.”

Total
0
Shares
Leave a Reply

Your email address will not be published.

Previous Article
Behind the Artist Bubble machine

Behind the Artist: Bubble Machine

Next Article
Behind the Artist WebStepLegacy

Behind the Artist: WebStepLegacy

Related Posts