All the things you need to know about NFT space

All the things you need to know about NFT space

By mrkd | NFT&Crypto | 28 Jun 2022


In order to understand NFTs it is important to understand specific terms that are commonly used in the NFT space.

The members of the NFT community use these common phrases or words on daily basis, instead of long difficult sentences these small phrases make it easier to communicate and spread the word in the NFT space.
So if you are a beginner and finding trouble in interacting with people then this article will make it easier for you to interact in the NFT space.

Below are all the terms and things that we think are important for you to have knowledge about.

1:1
This means, one of one, or a unique NFT art piece that only exists in one edition. There are NFTs that also are 1/x meaning multiple people could have the same NFT as you.

Airdrop
Similar to how when someone sends something to your phone, this basically means that something is sent to your wallet for free. This is typically cryptocurrency, new NFTs or other DLC. This is typically done as a reward to a community (with our project we are airdropping our community our crypto coin and other special DLC).

Avatar/PFP
This is typically a collection normally of at least 10,000 pieces that people would use as their profile pictures on various social media sites; "PFP" means profile picture. Examples of this include; CryptoPunks, Bored Ape Yacht Club and Cool Cats.

Azuki
Is a digital brand that was created by a group of artists in Los Angeles. On January 12, 2022, the artists released 10,000 digital anime avatars.

BAYC
The Bored Ape Yacht Club is an Ethereum-based project that features 10,000 unique Bored Apes. Each of these animals has a basket of traits that are programmatically generated using over 170 traits.

Blockchain
This typically refers to every transaction recorded. It is basically an open ledger shared by multiple computers and as transactions occur multiple computers interact with this to confirm a transaction and then record it. This thusly verifies ownership of something (such as cryptocurrencies or NFTs).

Bitcoin
Unlike other digital currencies, Bitcoin does not require a bank to process its transactions. It allows people to buy and sell products and services directly without an intermediary. It’s creator, Satoshi Nakamoto, claims that its system should be based on a secure digital proof.

Collectible
Something that’s deemed to have value or rarity, such as typically NFTs in this area will have a rarity or scarcity to them, i.e. limited edition or uniqueness. Perfect example being Trading Cards or comics. For comparison Bored Ape Yacht Club launched back in April, with 10,000 NFTs being sold for 0.08 ether each -- about $190 at the time, as of today the highest sale was $3,408,000 which was in just over 11 months from the original minting. If you compare that to comics; a 9.6-graded copy of 1962's Amazing Fantasy No. 15—featuring the first appearance of Spider-Man which originally cost 12c. So you do that math on what has the greatest future potential growth.

Custodial Wallet
This is defined as a wallet in which the private keys are held by a third party. Meaning, the third party has full control over your funds while you only have to give permission to send or receive payments. Some examples include Free Wallet, Binance, BitMex, Bitgo, Blockchain.com

Decentralized Autonomous Organization (DAO)
DAOs are member-owned communities without centralized leadership, which means that they are not governed by one single person or entity. Instead, the rules and governance are coded in smart contracts on the blockchain and changes can only be made through voting by the members of the DAO. DAO often may own assets or projects and thus profits can be airdropped to members of the DAO. (We will be doing this with a proportion of the company and ensuring we support those who supported us).

Derivative Projects
These are projects which are derived from an original project, first popularized with a wide variety of “alternative” punks collections; in layman's terms these are projects which rip-off other projects and basically try to ride on their success.

Doxxed/Doxed
When the identity of an NFT team member or creator is public, known or verifiable. In the NFT market, when a NFT team is doxed it’s usually sign of confidence and transparency for NFT collectors to ensure they won’t be scammed by an anonymous creator. When you explore Opensea or other sites many NFT collections are created by people looking to make a quick buck, so when investing look into projects which are verified and their team are Doxxed (our team are fully doxxed and we have full documentation in regards to this by third party audit partners).

Drop
This refers to when NFTs or other DLCs are released. Typically, this is when a collection of NFTs is released i.e. "our next drop is on xyz date".

Ethereum
Through a peer-to-peer network, Ethereum allows users to perform various tasks without a central authority. Its smart contracts are designed to provide participants with secure and verifiable transactions. These records are then stored and distributed across the network. With full ownership of the data, participants can see how their transactions are being handled.

Users send and receive transactions through their Ethereum accounts. These are then sent and received by the network's users. To ensure that the transactions are conducted properly, a user must sign and spend Ether, the native currency of Ethereum.

Exchange
This is a platform where you can buy and sell cryptocurrency, trade one crypto for another and even purchase with credit cards. Some Wallets have exchanges in built into them, however most people will use a different platform to purchase from and then sent to their wallet.

Fiat
Government-issued currencies (e.g. USD, Euro and GBP) that are not pegged to the price of a commodity like gold or silver. So normal money in layman's terms.

Floor
The ‘floor’ or ‘floor price’ of a project is the lowest price you can buy an NFT from the collection on the secondary market.

Fractional Owernship
This refers to Partial ownership rights over an NFT or a physical item. Sellers can sell percentages of a work and buyers can buy a portion based on what they can afford. The best example of this is https://fractional.art/ - however this is very confusing and worth investigating more to people new to the industry.

Fungible
Typically, this refers to a token, which although on the blockchain does not have a unique identifier such as an NFT. These are interchangeable, tradable tokens, such as ETH and BTC.

Fungibility, Replaceability
The ability of a good or asset to be traded with other individual goods or assets of the same type. On the contrary, something that is non-fungible, like a piece of art, is one-of-a-kind.

Gas fees
is the amount (in native cryptocurrency) required by the network for a user to perform cryptocurrency transactions on the blockchain. For example, you’ll need to pay gas in ETH when you interact with the Ethereum network. There are some NFTs that require no gas or are on other networks with lower gas costs, however typically these don't have much value compared to Ethereum based NFTs.

GFT
Greater fool theory, what this means is that you buy something just for the purpose or belief that the next person after you will pay more.

HODL
HODL, as an acronym for "hold on for dear life," has become a mantra among crypto enthusiasts denoting a long-term approach to cryptocurrency investing.

Liquidate
This is a term for when an NFT project after selling pulls all their money out of a projects, in most terms this is someone selling something and then once you buy it they close the store. In some cases this doesn't matter typically with NFTs that are art projects, but projects that are bigger normally would never do this. To avoid projects that are likely to do this, do your homework and additionally look into company or projects which are verified by third party consultation firms (i.e. RON (Rug or not) Rugpull finder, and so on, projects which have their creators Doxxed are typically much less likely to liquidate.

Metamask
A free and widely used browser wallet (also available as a mobile app) allowing users to store and swap crypto, interact with the Ethereum blockchain and other dApps. MM is the shorthand for MetaMask. You can also store your NFTs within this type of wallet.
Download Metamask

Metaverse
A network of 3D virtual worlds focused on social connection. It’s typically a combination of multiple elements of technology, including virtual reality, augmented reality and video.

Minting
The creation process of an NFT (this refers to it's creation or registration on the blockchain, not the actual creation of the item i.e. the graphic design etc.)

NFT
Non-Fungible Token. It’s a unique, one-of-a-kind crypto asset (which can be anything from art to music) that’s stored on a blockchain.

Non-custodial Wallet
A non-custodial wallet that offers you sole control of your private keys. On the other hand, a custodial wallet gives another party (usually a web-based exchange) control of your private keys. Some of the most popular non-custodian wallets are Metamask, Ledger Nano X, Trezor One.

Presale
A funding method often used by companies or project developers to raise capital through an initial sale where investors, supporters and/or early adoptors use ETH (or other altcoins) to purchase the new tokens/NFTs. This can also refer to a sale of a limited number of tokens/NFTs before the public mint or whitelist mint in order to generate hype.

Rarities
Digital collectables and in-game NFTs typically come with different rarities (such as common, uncommon, rare, legendary and mystic) and get assigned with a certain edition number (e.g. #001/100). They’ll each have unique IDs and metadata; this could also be including within a rarity engine, i.e. 10% have a hat, 12% have this type of background. (We've designed our NFTs using an advanced smart contract, rarity system and asset generation system, meaning our NFTs are extremely unique).

Reveal
When you mint an NFT, especially for new generative projects, the artwork won’t actually be created until the minting is complete. This means that you’re purchasing a ‘blind box’ and won’t know exactly what you get until it’s time to reveal it. Depending on the creators behind the collection, the NFT may reveal immediately after purchase, when the collection sells out, or with a delay of 24 or 48 hours for instance.

Roadmap
The set of activities or development plans for an NFT project or P2E game. A project with a solid roadmap is generally viewed to have more potential, sustainability and designed to stay for the long haul as compared to one with no foreseeable updates. Generally most Roadmaps are not well thought out business plans, so when you read over a roadmap make sure it makes logical sense and if it were a business you would invest, not just a "Q3 we will buy land in the Metaverse".

Royalties
Money earned by an NFT creator through the token’s resale. Some NFTs automatically pay these commission each time an NFT is traded. An NFT can also be hardcoded to pay an artist royalties forever, which is a desirable use case that has the potential to reshape the music industry.

Rugpull
A rugpull is essentially a scam where the team behind a seemingly legit project disappear with all the money raised immediately after launch. While you might get an actual NFT or the tokens you purchased, they’ll most likely be worthless. This links into the above "liquidate" area of the glossary.

Secondary Market
Also called the aftermarket, a secondary market is the financial market where investors trade their assets with other investors rather than from issuing companies themselves. For NFTs, they can be sold or purchased on the secondary market after minting. Examples of popular secondary markets are OpenSea and Looksrare.

Smart contract
An agreement that automatically executes when predetermined conditions are met. They’re enforced on the blockchain network, irreversible, and not subject to change.

Utility
This refers to real world uses for your NFTs, i.e. there are examples of NFTs where you get access to clubs or parties, Flyfish Club is a restaurant where you get exclusive access if you own an NFT, owning a Bored Ape NFT grants exclusive members-only benefits such as access to a collaborative graffiti board. Most projects don't explain their utility and many don't have any.

WAGMI
Acronym used in the NFT communities which means (We All Gonna Make It Together).

Wallet
A digital wallet that allows users to store and manage their crypto-assets.

Web3
An idea/vision for a new iteration of the web based on a decentralized online ecosystem powered by blockchain technology.

Whale
Someone with a lot of capital, which grants them the power to single handedly move markets either upward by buying a lot from a given collection, or downward by selling.

Whitelist/WL
A whitelist is a special list that gains early access to an NFT drop before the general public.

Whitepaper
An officially released document by a crypto project team that offers investors with detailed technical information about its concept and roadmap.

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mrkd
mrkd

Interface Designer, Digital Product builder and Crypto Enthusiast Lead Designer at ALPACADABRAZ


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