The technologies and systems that support NFTs can be very confusing and contain many terms. That’s why NFTs are not easy to understand and we know that joining this world can be daunting. That’s why we, as Kriptokoin.com, have put together the NFT Dictionary. Here are all the terms you need to know about NFTs:
Blockchain (Blockchain)
Blockchains are distributed databases used to store data and information in a publicly accessible and secure manner. Rather than relying on a single central server, crypto networks powered by blockchains store data among globally distributed devices (nodes). As a result, these distributed devices can be anything like computers, laptops or even larger servers. They serve as the framework of the blockchain, communicating with each other to enable data to be stored, disseminated and protected without the need for a trusted third party. Thanks to the nodes, the blockchain provides an immutable record. It’s a decentralized proof of ownership tool unlike anything we’ve seen before.
The most popular blockchain for NFT projects ”Ethereum”
Ethereum (ETH) is the primary blockchain used in the Web3 ecosystem due to its size and security. It is the most popular blockchain for NFTs for the same reason. ETH is the native cryptocurrency of the Ethereum blockchain. It is used to power all transactions that happen on the blockchain, including peer-to-peer payments, NFT trading, crypto games, and more.
Tezos
Tezos blockchain gained popularity towards the beginning of 2021. While not as widely used as the Ethereum blockchain, it also supports NFTs and is preferred by community members looking to reduce their energy use. The Liquid Proof-of-Stake (LPoS) mechanism uses approximately two million times less energy than Ethereum. Tezos native cryptocurrency is XTZ.
Another blockchain supporting NFT projects ”Solana”
Solana is another popular blockchain supporting NFTs. The unique combination of proof-of-history (PoH) and proof-of-stake (PoS) consensus mechanisms results in significantly reduced verification times. As a result, the Solana blockchain is much cheaper to use. Solana’s native cryptocurrency is called SOL.
NFT
NFT is a digital token of information (data) that lives on the blockchain. Each NFT has its own identification code and metadata. The data contained in an NFT can be linked to digital files such as photos, poems, songs, albums, videos, avatars and more. In this context, NFTs are most commonly used for buying and selling digital items (especially art). However, they can also be used to provide NFTs owner-exclusive products and access to airdrops, live or digital event tickets, and more. As a result, NFTs are unique and cannot be changed.
NFT Marketplace
NFT Marketplace is a decentralized platform where people can buy, sell and trade NFTs. Most NFT marketplaces are built on the OpenSea Ethereum, while Magic Eden is built on the Solana blockchain, serving as the most popular marketplaces for each chain, respectively. OBJKT is the largest and most popular marketplace in Tezos.
NFT Roadmap
A roadmap is a bit like an investment deck. It is a document that maps the goals, milestones and strategies of an NFT project to communicate the value and benefit of the project. They help NFT creators and owners adapt to expectations. As an NFT project progresses, the roadmap is updated with new features and releases. In particular, NFT roadmaps are not legally binding. So while creators may make many promises in their roadmap, they have no legal obligation to keep them.
Gas Fee
Gas fee is what individuals pay to complete a transaction on a blockchain. These fees are used to compensate for the computing power that blockchain miners must use to verify blockchain transactions. It is usually paid in the native cryptocurrency of the blockchain. The price fluctuates depending on network congestion. As a result, the more people use the network, the higher the gas fee.
Gas War
A gas war occurs when users compete over whose transaction should take precedence in the blockchain’s next block. Gas wars are common during popular NFT drpo’s as many people compete for a limited number of NFTs. During the anticipated drops, only the first buyers will have a chance to hit an NFT. As a result, inclusion of printing transactions in the next block increases demand. The more gas you pay, the faster your transaction will be confirmed, so the gas fees increase significantly.
Adding NFT to the blockchain ”Mint”
In simple terms, mint is the act of adding, verifying and saving an NFT to the blockchain. Once pressed, NFT is available for public consumption and can be viewed, purchased and traded on the open market. However, NFTs do not need to be made public and can be kept private.
Custom NFT projects ”1/1”
One-on-one artwork or NFT is completely custom, will never be done again. These look a bit like real-life paintings because there is only one. Due to their rarity, 1/1s often carry a much higher price tag than NFT versions.
Limited Edition
Limited Edition is a collection of NFTs with limited edition NFTs to print. Many collections consist of 10,000 prints.
Open Edition
Open Edition is an NFT collection in which any number of items can be printed. However, do not confuse “on” with “unlimited”. Many open editions may only be printed for certain periods before they expire.
PFP NFT
Profile picture (PFP) NFT is a digital icon or work of art designed to be displayed as a person’s social media profile picture. Many of the world’s most popular NFT collections (like CryptoPunks and Doodles) are PFPs.
NFT Floor Price
The floor price of an NFT collection is the lowest price listed in the entire collection. The value of a collection is usually determined by its base price.
Whitelist
Whitelist is a group of users who are given early access to purchase an item from an NFT collection before the project is generally available. The whitelist is usually small in size and has a user group chosen by the NFT creators as a way to generate public pre-mint interest.
Art Reveal
Art Reveal is often the most exciting moment in an NFT collection launch; here, after waiting for a while, the owners and everyone else can finally see the particular works of art they have printed. Smaller Art Reveals often serve as previews that generate interest in the project.
Airdrop
Airdrop is the process of distributing NFTs or cryptocurrencies directly to users’ wallets, usually free of charge. There are several types of Airdrops. For example, individuals may receive an airdrop for sharing a social media post or signing up for a newsletter. Special airdrops are sent to the owners of a particular NFT collection or cryptocurrency as a thank you for their loyalty. Airdrops are a great way for blockchain projects to attract new users or reward existing users for their support.
Hot Wallet
A hot wallet is a digital wallet kept online. It allows you to store, send and receive tokens, depends on the blockchain. It can be accessed from any device anywhere in the world as long as you have an internet connection and private keys. Because they are connected to the Internet, they tend to be less secure and subject to hacking. MetaMask is an example of a hot wallet.
Cold Wallet
A cold wallet is a more secure type of cryptocurrency wallet that is stored offline. Examples of cold wallets include paper wallets and hardware wallets. Hardware wallets are physical devices, much like USB drives. Top brands include Ledger and Trezor. A paper wallet is a piece of paper on which your private and public keys are printed. Of course, it’s easy to lose or destroy a piece of paper. As a result, hardware wallets are typically seen as the safest way to store tokens.
Royalty
Royalty; Copyright is a certain amount of income earned in exchange for owning, creating or licensing a work. Many NFT creators receive secondary royalties or a predetermined percentage of the selling price each time their work is sold in an NFT marketplace. For this reason, NFT creators do not only make money when their work is first sold. They make money from every transaction.
Smart Contracts
A smart contract is a computer program that lives on the blockchain. It is governed by primitive “if/when…then” statements. For example, “if ‘a’ happens, execute step ‘b’” When these predetermined conditions are met, the transaction is automatically executed and recorded on the blockchain. This increases transparency and trust, as the transaction is immutable (cannot be challenged or changed) and no third-party agents are needed to complete the transaction. NFTs can be used by anyone who assigns ownership, accesses assets within the NFT, manages the transferability of the NFT, etc. printed and traded using smart contracts.
Decentralized Applications – NFT dApp
Decentralized applications (dApps), except when built and run on a decentralized network such as the Ethereum blockchain is like any other website or app you use. dApps are powered by smart contracts. NFT dApp is a decentralized application that incorporates the use of NFT into its software. Most NFT marketplaces like OpenSea are dApps.
DAO
A DAO (decentralized autonomous organization) is a type of organization run on the blockchain through the use of smart contracts. Smart contracts lay out the rules that govern the DAO and are used to execute the decisions. Unlike traditional businesses and organizations where decisions are managed by central primary shareholders, DAOs are operated by a community of token holders. All governance token holders in a DAO can vote and have a say in important decisions. If a proposal reaches a predefined consensus level (such as a certain number of votes), it is accepted and executed according to the rules in the smart contract. Many NFT projects create DAOs that allow NFT owners to vote on the project’s future.
Governance Token
A governance token is a token that functions as a democratic system for collective decision making within the DAO. Governance tokens provide holders with voting rights in key decisions that affect the future of the project, such as funding allocation, key hiring, creative direction, and more.
Utility Token
Utility Token is a cryptocurrency that provides access to (and interacts with) a decentralized application or service. Although this is sometimes speculated as such, it is important to note that these are not financial securities. Instead, tokens are used in the internal economy of a particular project.
P2E (Play-Win)
Play-to-win (P2E) is a type of online game where players are given utility tokens for successful gaming performance. These tokens can be used to purchase in-game commodity items and can even be converted into other crypto or fiat currencies.
Metaverse
Metaverse is described as the best mix of physical and virtual reality, as a kind of digital extension of the real world. According to this futuristic vision of the future, everyday reality will transform and people will live, play, shop and work with others around the world in a fully immersive, interoperable, augmented world. Many Web3 protocols such as NFTs can be used in future metadata storage.
Interoperability
In most digital platforms and games, users cannot migrate their data from one application to another. For example, players cannot wear Fortnite skins while playing Call of Duty. Interoperability is the ability to carry your data and virtual assets with you in decentralized applications and virtual environments. This is one of the core tenants of Web3 and is valuable as it gives users greater control over their data and real ownership of their digital purchases
Discord
Discord is a voice, text and video instant messaging platform. Users can chat and share files in private messages or in more general communities called “servers”. Each server can contain several chat rooms. Discord has become the primary communication tool for many NFT and Web3 communities. Most NFT projects have a dedicated Discord where creators, NFT owners, and the general public can connect and share updates. To access these servers, users need an invite link.
CC0
Creative Commons Zero (CC0) is the most authoritative requirement for creators to waive any copyright protection and allow the public to use, adapt or exploit their work. liberal form of copyright protection.
Staking
Staking is the process of locking a Proof-of-Stake cryptocurrency in a wallet or exchange for a specified period of time in exchange for interest rewards. The longer the crypto is staked, the bigger the reward.
On-Chain
On-chain refers to a digital token that lives on the blockchain. The term is also used to represent any transaction or interaction with a token or contract on the blockchain.
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