Are you new to NFTs and cryptocurrency? This handy glossary of terms should get you up to speed on industry lingo.
Introduction
What’s a Policy ID? And do you think a gas fee is just something you’re charged when you fill up your car?
Whether you already have a few NFT artworks in your collection or you’re just beginning to explore the market, it’s a good idea to get acquainted with commonly used lingo. This convenient glossary contains a list of terms you’ll likely encounter related to the NFT art buying experience.
Is there a specific word you’re searching for? If you’re on a laptop or desktop, use CRTL +F (Windows) or CMD + F (Apple) to quickly find the term below.
Airdrop
An airdrop is a perk used as a marketing strategy to attract buyers to an NFT project. It can also be used to reward those who’ve already purchased an asset. It involves the distribution of cryptocurrencies or other digital assets to a buyer’s digital wallet.
Ape In
“Aping in” became popularized by a Reddit investing forum called WallStreetBets around 2021. The “degen” ethos of the 10 million-strong community quickly spread to crypto enthusiasts, and its slang often pops up when cryptocurrency or NFT buying and trading is discussed. To ape in essentially means purchasing an asset without applying due diligence or conducting any research.
Blockchain
A blockchain is the underlying technology required for NFTs to exist. Essentially, a blockchain is a network of interlinked data blocks or computational nodes that work as an immutable ledger to verify the accuracy of transactional or content-based data. Theoretically, any data recorded on a blockchain is there forever and can never be overwritten, only added to.
Burn
In the NFT art and collectibles market, burning an asset means you destroy it or its associated blockchain token, so no one can buy it or mint more NFTs from it. With a digital work, a burn is accomplished by sending the non-fungible token it’s linked to to a “black hole” address where the token will be irretrievable for future transactions. With an analogue artwork, the physical asset is literally destroyed after being digitized and tokenized on a blockchain.
Crypto Bro
A derogatory term used to describe what some outside of cryptocurrency and NFT collecting view as an archetypical NFT buyer. This meme is usually a young male with a surface knowledge of cryptocurrency and NFTs, attracted to trading in digital markets purely for the promise of fast cash and clout.
Cryptocurrency Wallet
When you purchase NFT artwork, you will rely on cryptocurrency wallets to complete transactions. Wallets basically act as password managers for your private keys and provide a public addresses for ownership of assets to be transferred to you. You can learn more about how wallets work in this article.
Degen
Short for “degenerate” trader. Another term popularized by WallStreetBets, like aping in, it’s used to refer to people who jump into assets and trades with high risk and little research.
Doxxed
“Doxxing” was initially associated with a form of cyberbullying where someone’s private identifiable information was dispersed online. The term has taken on a new connotation with NFT buying. Because crypto and NFT markets are so new, there are sometimes bad players who launch fake projects with the sole purpose of stealing victims’ crypto. To avoid this, you want to buy NFT artwork from creators that are doxxed, meaning they have enough identifying information online (LinkedIn profiles, bio pages on their website, active social media accounts with real supporters, etc.) that assure you that you’re buying from an actual professional.
Drop
This term describes the time, date, and price a new NFT art collection is scheduled to be minted or released to the market. Depending on how much marketing has been conducted before an NFT collection’s release, a drop can be a highly anticipated event resulting in a collection quickly selling out.
DYOR
The NFT and cryptocurrency spaces are still maturing, so there are some shenanigans at play that need to be avoided to prevent you from losing a lot of money. DYOR is simply an acronym that means “do your own research” instead of relying solely on the marketing and advertising presented by NFT creators and and blockchain companies.
Floor Price
A floor is the lowest available price for an NFT artwork on the open market. The original floor price is set by a creator when an artwork is minted. Speculative buyers who seek to resell NFT art on the secondary market will often use the floor price as a metric to help determine an NFT artwork’s value.
FOMO
FOMO is an acronym for “Fear of Missing Out.” It describes the anxiety and pressure to buy a person may experience if they feel they are missing out on the best opportunity to purchase an asset.
FUD
FUD is an acronym for “Fear, Uncertainty, and Doubt.” It’s mostly ascribed to negative media stories, rumors, and events that influence trading markets to go down. When speculative buyers experience FUD, they are more likely to sell a project. The greater the selling pressure, the more significant the potential impact on an asset’s market value.
Gas Fee
Buying, selling, and transferring NFTs typically comes with a cost called a gas fee. A gas fee is a charge that users pay to transact on a blockchain and varies from blockchain to blockchain. When assessing the price of an asset you plan to buy, remember to include additional cryptocurrency in your wallet to cover this transaction cost.
Generative Art
Unlike an NFT collection composed of artworks where most or all of the assets are “made by hand,” a generative art collection is typically mass-produced with the assistance of an AI tool like GAN or Midjourney and minimal human tactile involvement. With this type of NFT project, an artist or group of artists will create a base template and then “train” an AI to generate a collection of assets with distinct features. Perhaps the most famous example of a generative NFT art collection is the Board Ape Yacht Club.
KYC
This is an abbreviation of “know your customer.” It refers to the requirement that people using some cryptocurrency exchanges and NFT marketplaces provide personal identifying information like government-issued IDs. As the crypto and NFT market expands, this will become a standard requirement in response to global government mandates to help counteract fraud and illegal behavior.
Metadata
Metadata is a vital component of an NFT’s smart contract. It provides essential information such as the title and description of the asset being sold, the date it was created, what rights are being transferred to the new owner, and the link to any relevant off-chain files.
Metaverse
The Metaverse is a fully virtual space where individuals can interact socially in an expansive 3D digital environment. While still a relatively new concept, enterprising individuals, companies, and creators have already begun setting up shops in the Metaverse, including virtual NFT art galleries.
Mint
“Minting” is a term borrowed from the coin collecting hobby. In the NFT art market, it refers to the process of programmatically linking an asset to a unique non-fungible token on a blockchain, and then making the asset available for sale.
NFT
For people not deeply acquainted with NFT technology, there can be some confusion about what an NFT actually is. An NFT or “non-fungible token” is an alphanumeric string or “token” assigned to an asset. Something that’s non-fungible is an object that’s uniquely identifiable compared to something that’s fungible or easily interchangeable with a duplicate of itself. For example, a one-dollar bill is fungible because it’s interchangeable with another one-dollar bill with no loss or increase in value. On the other hand, a one-dollar bill signed by Andy Warhol is non-fungible because it’s unique. In terms of NFT artwork, the NFT is the assigned token, while the artwork is the associated asset.
PFP NFT
A PFP NFT is a “Profile Picture” NFT that owners and creators often use in social media profiles in place of a real-life photo. A few of the biggest examples of this type of digital collectible are the Bored Ape Yacht Club, Clay Nation, and CryptoPunks.
Policy ID
This particular identifier is specific to assets minted on the Cardano blockchain. Like the non-fungible token assigned to an asset during the minting process, the Policy ID acts as a unique identifier on the project-level of an NFT collection. It also functions as a signature that authenticates a project and identifies who has the right to mint assets within a collection. Creators usually make the Policy ID publicly available so that art buyers can ensure they are purchasing authentic artwork.
Proof of Stake, Proof of Work
The deeper you delve into NFT art collecting and, by proxy, cryptocurrencies, you’re sure to come across references to Proof of Stake (PoS) and Proof of Work (PoW). Both systems are a way of validating transactions on a blockchain. There is current debate about which is better since PoW protocols require comparatively more computing power and electricity usage than PoS. With PoW, “miners” use powerful computers to solve complicated math equations that result in new cryptocurrency being minted (example chain, Bitcoin). PoS relies on a decentralized network of node operators and “stakers” who are rewarded with tokens for supporting the strength and decentralization of a blockchain. This is the validation process used, for example, by Cardano.
Provenance
While not specifically a word used in the NFT world, it’s slowly being adopted in reference to the history of a blockchain-backed asset. Borrowed from the traditional fine art market, it refers to the history of creation, sale, and chronological ownership of a piece of art. It’s used to establish and support proof of authenticity.
Private Key
Digital crypto wallets require private and public keys to interact with blockchains. A private key acts as a behind-the-scenes password verifying that it’s actually you making a transaction, and not someone impersonating you. You can think of it like a digital fingerprint. A private key should never be shared publicly. Anyone possessing a wallet’s private key can transfer an asset’s ownership rights to another address.
Public Key
Digital crypto wallets use private and public keys to interact with blockchains. Public keys are designed to be freely shared with the public—you can think of them as being similar to an email address. They allow a blockchain to record that you are now the owner of an asset when an asset is “sent” to the public key’s address.
Physical NFT
Most NFT artworks and collectibles on the market are digital, but increasingly, creators are using blockchain technology to mint and manage the sale of physical assets. A physical NFT is simply an NFT linked to a physical asset. Upon purchase, a buyer will receive an analogue artwork, and the NFT linked with it will function as a Certificate of Authenticity. Through the Addicted to Detail mailing list collectors are able to purchase both digital and physical NFTs.
Recovery Phrase
A recovery phrase (also sometimes called a seed phrase) is a string of random words generated when a new digital cryptocurrency wallet is created. These words act as a type of backup that allow you to regenerate a wallet and resume access to all of its blockchain-backed data if the original wallet is ever lost.
Roadmap
Many creators approach their NFT projects like a startup business and like a startup, they will often have a roadmap that lays out how they plan to deliver value to their supporters. Posting a roadmap that highlights accomplished and pending milestones helps win public trust while also providing transparency around a NFT project’s progress.
Royalty
Royalties are a component of an NFT’s smart contract that ensures the creator earns a small portion from each resale of their work, usually around 5% – 10%. Unlike traditional paper-backed sales contracts, royalty payments are automatically executed and require no additional effort from the reseller.
Rug Pull
Hopefully, readers of this glossary never have a personal experience with a rug pull. This term is used to describe a scenario where a person or team launches a fake project to attract paid support, only to suddenly close shop and abscond with peoples’ crypto or cash. Thankfully, such events are rare, but it’s always smart to follow best practices to protect yourself. Part of that involves “DYOR” defined further up on this glossary page.
RWA
RWA is an abbreviation of “real-world-assets.” In the NFT industry it references both physical and digital assets of value that exist outside of a blockchain (for example, real estate, physical artwork, or personal identification), that are tokenized to a blockchain for enhanced security, trackability, and verification.
Secondary Market
After an NFT artwork or collectible is minted and sold by its creator, some buyers opt to resell the asset if the artwork goes up in value. These sales are what make up the secondary market.
Seed Phrase
A ‘seed phrase’ or wallet recovery phrase is a 12-24 list of random words generated when you establish a new cryptocurrency wallet. The seed phrase is critical to you being able to regain access to your cryptocurrency and other blockchain-stored assets in the event your wallet is ever lost. If you lose your seed phrase it will be impossible to access your blockchain assets again, so keep it safe! Read this article to learn cryptocurrency wallet best practices.
Smart Contract
A smart contract is a crucial component of the NFT minting process. It’s a self-executing contract that contains all the terms and conditions of a transaction within its code. Once a smart contract executes, all information about the transaction is recorded as a block of data on a blockchain.
Spending Password
This is a password that you create when you establish a new cryptocurrency wallet. It’s different from a seed phrase though like a seed phrase, its used as a security feature. Unlike a seed phrase, you will supply this password to sign for cryptocurrency and blockchain transactions (like signing for a credit card purchase.) IMPORTANT: don’t get the the seed phrase and spending password confused. You should never supply your seed phrase to anyone. Read this article to learn more about cryptocurrency wallet best practices.
Token
Tokens are a alphanumeric string of characters assigned to an asset when it’s minted to a blockchain. tokens can be both non-fungible (unique) or fungible. A limited edition artwork minted to a blockchain would be an example of a non-fungible token, where as a cryptocurrency coin would be considered fungible token.
Whitelist
For some collectors, getting on NFT creators’ whitelists is a preferred strategy for accessing art and collectibles ahead of other buyers at an optimal price. Whitelists provide pre-approved NFT collectors with early access to NFT drops and mints after they’ve taken specified actions to earn list approval. Whitelists are also used by creators to help curb the potential for automated bots to buy up a collection at mint.
White Paper
Sometimes also spelled as one word (whitepaper), a white paper is a long-form document sometimes released by creators and project developers to inform supporters, investors, and collectors about what they are working on, and why they are working on it. A good white paper educates its audiences instead of pushing a heavy sales pitch.
