Cryptocurrencies have many uses as an investment, as a payment currency, as a store of value, and more. Like any investment, it’s important to know what you’re talking about and more importantly, what the person trying to sell you is really saying. And like any other field of finance, industry, art, or basically any human endeavor, it has its own language, acronyms, and definitions—and especially in matters of law and finance, definitions matter.
In this series of articles, we will create a series of glossaries for different parts of the crypto industry, which we will combine into a larger reference tool. Today we’re talking about one of the trickiest parts of the crypto world: the NFT, or non-volatile token.
Tokens – no two are alike – can contain any type of media, including art, audio, video and documents. This means you can put an album on an NFT, but also a bond or deed. They also provide proof of ownership and origin of the NFT itself.
Marketers have embraced them even more than the metaverse. This is because NFTs exist, while metaverses are mostly in the early stages of construction, at best.
Another thing to note is that media on an NFT is not necessarily — actually, not generally — stored on the cryptocurrency token itself — meaning artwork, music, video, anything that isn’t written to an immutable blockchain, because that can be very expensive . That means it’s stored somewhere else on the internet — meaning that if the wrong server or cloud goes down, the NFT could be destroyed.
Airdrop: Distribute cryptocurrency tokens, including NFTs, to a specific group by sending them directly to participants’ wallets — which requires a pre-existing community such as early token buyers or existing NFT holders.
Attribute: Many NFT collectibles are built around a base image – say a bored monkey – with randomly selected characteristics (fur color, accessories such as hats, clothing, facial features, etc.) called traits. In general, some are rarer than others, which makes them more valuable. For example, nine CryptoPunks have the “alien” feature of blue skin, 115 have a top hat, 261 have a scowl, 961 have a cigarette, 2,459 have earrings, and 6,039 are male. The number of traits or attributes can also affect rarity. Look Trait.
Avatar: Your representation, this can be a profile picture (PFP) or an animated character that you control, like in a video game. In this context, an NFT avatar is a metaverse or game character. It can often be supplemented with other NFTs to add items like clothing or game pieces like a magic sword.
Beep: Digital artist Mike Winklemann. He put NFT in the eyes of the general public on March 11, 2021, when a collage of his works, “Daily: First 5,000 days” auctioned at Christie’s for $69.3 million on air, making Winklemann the fifth best-selling living artist, behind Jasper Johns, Damien Hirst, Jeff Koons and David Hockney. Please note that the owner has not acquired any rights to the collage or the individual works from which it is made. All he got was ownership of the NFT, the non-exclusive right to display it publicly, and the immutability of the blockchain proving that it was the only true, original NFT of that artwork. That’s why you can see full work on Christie’s website.
Bored Ape Yacht Club (BAYC): One of the best NFT collections, 10,000 Boring Monkeys has many attributes created by generative art. They often sell for hundreds of thousands of dollars, with rare ones selling for more than $2 million. One of the reasons for its success is developer Yuga Labs’ decision to build a community with features ranging from a private Discord channel to exclusive owner events to NFT drops from related collections. They also gave the owners full commercial rights to NFT’s artwork, which led to things like branded lines of marijuana and actor Seth Green’s White Horse-produced TV show, in which his Annoying Monkey will star — which it builds a brand.
burn: Destroy token cryptocurrencies, including NFTs. Despite the destructive moniker, this is usually done by sending the token to an address that no one can access, thus rendering the private key inaccessible and the token non-transferable. Look PYMNTS Cryptocurrency Glossary: The Basics. In the case of NFTs, the artwork can remain on the blockchain.
Collectible: Any NFT designed to be collected and displayed – unlike baseball cards. Avatars and generative art are prime examples.
CryptoKitties: The NFT collectible/game that started it all. The first breakout hit, CryptoKitties was the first cryptocurrency to heavily clog Ethereum, back in late 2017. The game basically required you to “raise” two cats to produce another. The attributes and rarity made them highly collectible.
CryptoPunk: The most valuable collection of NFT generative art avatars at an individual selling price. The 8-bit pixelated punks have attributes like mohawks, dyed hair and earrings. They very rarely sell for less than $100,000 and many have sold for millions of dollars.
mismatch: instant messaging platform popular among NFT projects, including some (like Bored Ape Yacht Club) that have private Discord channels as a community building tool
drop: To release. Like publishing a collection of NFTs for sale on the market.
ERC-721: An open source Ethereum compatible token standard most commonly used to build NFTs. An ERC-721 token is essentially an NFT.
Ethereum: 2 blockchain by market cap — and the first smart contract blockchain to give blockchain technology the capacity to outgrow bitcoin-style payment tokens. Like decentralized finance (DeFi), it is by far the most popular platform for NFTs. The high cost of minting, blockchain clogging, and environmental concerns have left other blockchains like Algorand, BNB chain (formerly Binance Smart Chain), Cardano and Salt flats bidding for NFT business.
Bottom price: The lowest price for any NFT in the collection is sold at that particular time.
Partial ownership: Ownership of an NFT can be divided into smaller pieces that can be sold separately, managed via smart contracts.
replaceable: Something that is replaceable is like anything else of its kind. Any green M&M is fungible, as is any bitcoin. (In a way. While bitcoins have unique public key codes, each bitcoin is worth the same as any other.) See Irreplaceable.
gas: A transaction fee on the Ethereum blockchain. Gas is denominated and paid for in Gwei. Gwei is 0.000000001 ETH.
Generative Art: Essentially computer generated, random art, generally starting with some kind of image and adding various features. These can be attributes to the avatar collection, but Art Blocks the site allows forging generative art for art’s sake based on works uploaded by creators. More than 35,000 people have bought and sold art blocks worth $1.3 billion by August 2022.
Marketplace: In this context, the location where NFTs are minted and sold.
MetaMask: One of the most widely used and useful Ethereum wallets, it is a favorite for NFT and usable in top NFT markets.
metaverse: 3D, immersive virtual reality where people can socialize, shop, play games, watch marketing and more. It’s still more of an idea than a reality, based on the dystopian cyberpunk novel “Snow Crash”.
mint: To create a new NFT. This includes adding media (images, video, music) or other content stored on the NFT, as well as any smart contracts (for example, a royalties smart contract can send the smith a percentage of any subsequent sales.
Indispensable: Something that is unique, unlike anything else like it. Fungible tokens, unlike most cryptocurrencies, are not fungible — the image is fungible.
open sea: The largest marketplace for Ethereum NFTs.
PFP: Profile picture. As well as a collectable NFT avatar as a Twitter profile picture. Expensive and rare NFTs (such as BAYC and CryptoPunks) are used to show membership in an exclusive club. Moreover, Twitter and other sites use special frames for NFTs that indicate verified proof of ownership, not copy-paste.
Play to earn: A controversial type of online multiplayer video game, these blockchain-based games use cryptocurrencies and NFTs to allow players to collect and craft items that have value for other players, who buy them on an exchange. Those “things” are on NFTs.
rarity: In this context, the property in the NFT collection that gives the value of the avatar. Look Attribute for examples. Only 78 CryptoPunks have Buck Teeth, but 696 have Hot Lipstick.
rights: Owning an NFT is not necessarily the same as owning what is on it. For example, an NFT of an album would give you the right to listen to the music and probably sell the NFT (possibly with a fee going back to the musician or studio), but not ownership of the rights to the song. Look Royalty. Look Beeple.
Royalties: The NFT’s smart contract can be installed to automatically collect and send a percentage of any future sales to the person who owns the media on the NFT (or anyone else selected at the time of minting).
Smart contract: Look PYMNTS Cryptocurrency Glossary: The Basics
features: Look Attribute.
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