NFT Glossary

Understanding the language of NFTs is essential to interacting in the NFT community. Here is a brief glossary of terms that you will encounter throughout this course and your interactions in the NFT world.

We recommend that you download the PDF version of this glossary and keep it handy as you work through the course.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Asset In the NFT world this usually means a digital collectible, typically a smart contract that contains coded details of a digital collectible or code that points to a ‘real-world’ collectible.

B

Beeple Pseudonym for Mike Winkelmann, perhaps the world’s most well-known digital artist. Beeple’s Everydays: the First 5000 Days sold for $69,400,000, setting the current record for most expensive NFT.

Bitcoin The first blockchain-based cryptocurrency. Can be used to buy/sell NFTs.

Blockchain A distributed, immutable permanent record or ledger of all transactions of a cryptocurrency coin or token.

C

CEX A CEX is a Centralized Exchange with a physical address and a corporate structure that is subject to applicable laws, codes of practice and regulations of the jurisdictions in which it operates.

Coin A unit of digital currency. Coins are secured by encryption algorithms. Coins can be divisible and ownership can represent a share of the ownership and/or governance of a coin, token, protocol, company, or project.

Collateral In Decentralised finance (DeFi), collateral refers to the offer of one cryptocurrency or token as ‘collateral’ to secure a borrowing ofa different cryptocurrency or token.

Composability A measure of the usability and ability of a crypto product to be used as a building block in the construction of other products or domains. A protocol that is simple, powerful, and that functions well with other protocols would be considered to have high composability.

Cryptocollectibles These are blockchain assets that aren’t tradable because they represent one-of-a-kind digital items such as crypto art or crypto kitties. Regarded as the first NFTs.

CryptoPunk A unique collectible avatar stored on Ethereum. There are three CryptoPunks listed in the top 10 most expensive NFTs ever sold.

D

DAO Distributed Autonomous Organisation. Can be defined as an ‘organisation’ on a blockchain, represented by a set of rules encoded as a computer program (on a blockchain) that is transparent, controlled by the organisation members and not influenced by a central government.

dApp A decentralised Web3 software application that normally runs on a blockchain.

Discord An instant messaging platform and the go-to place for discussing NFTs.

Drop This is an event where users receive free tokens for holding onto certain types of assets. Sometimes also referred to as an airdrop.

E

Ethereum Bitcoin is the original cryptocurrency but its blockchain is limited to one use – recording transactions to do with Bitcoin. Ethereum, launched in July 2015 allows for much more complexity using smart contracts, its own design protocols, and its own programming language.

ERC-20 A cryptocurrency protocol based on the Ethereum blockchain. An ERC-20 token, by definition, uses this protocol.

ERC-721 A token standard that allows for the creation of unique, non-fungible tokens. It differs from ERC-20, for example, which is used to mint fungible tokens.

F

Fiat Money Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. Fiat currency is legal tender in (at least) its home jurisdiction, whereas many or most cryptocurrencies are not.

Flow A blockchain created by Dapper Labs that’s custom-made for games and collectibles.

G

Gas Fees Gas Fees are the fees that Ethereum miners receive to process and validate transactions on the Ethereum blockchain. They are levied in the native token ETH and usually broken down into tiny increments called Gwei.

Governance and Governance Tokens Governance refers to determining, maintaining, adapting and enforcing the rules of a blockchain ecosystem, product, project or distributed autonomous organisation (DAO). It specifically refers to control and use of a governance coin or token that carries the right to take part in governance processes.

H

Hashmasks Digital paintings made by a global team of 70 artists. Hashmasks are unique because consumers have some control over the art. According to the Hashmasks Manifesto, “Each holder has the ability to contribute to the completion of the art piece by giving a name of their preference to the Hashmasks they hold via the Name Change Token (NCT)”.

HODL/HODLer/HODling HODL was initially a spelling error of ‘hold’ that became a term that was embraced as an inside joke by the early adopters of Bitcoin and Ethereum. The choice or decision to ride out volatility and hold onto one’s crypto investments through bull and bear markets is called HODLing. A HODLer is a person that HODLs.

I

InterPlanetary File System (IPFS) A means of storing NFT data that is considered superior to storing on an HTTP gateway URL, since the latter is tied to a specific provider. IPFS addresses allow users to find a piece of content provided someone on the network is hosting it.

L

Legos A fundamental tenet of the decentralised finance (DeFi) space is building for interoperability. This allows the ecosystem to benefit from individual progress which pushes decentralised finance continually forward. As participants build useful pieces of data, they are able to be shared and combined in new ways, reminiscent of everyone’s favourite toy, Lego. When new people dive into the Lego ‘bin’, they find individual legos or preassembled combinations of Legos that they too start building with, creating bigger and better things.

Liquidity Liquidity measures the circulating supply and how much trading activity there is in an exchange, economy, or network. A currency with low supply and/or circulation is said to be illiquid.

M

Maker, MakerDAO and DAI Maker is a decentralised, governed financial ecosystem based on a Stablecoin called DAI. DAI is algorithmically pegged to $1 USD, with no volatility. The MakerDAO is a smart contract which runs on the Ethereum blockchain.

Metadata The collection of data that defines ownership and differentiates one NFT from another. Metadata can be on-chain or off-chain.

MetaMask A wallet used as a gateway to NFT apps like OpenSea, Rarible, and Axie Infinity.

Metaverse A virtual 3D world where people can interact. Popular blockchain-based environments that comprise the metaverse include Decentraland and The Sandbox which are virtual gaming worlds where users can buy and sell land as NFTs.

Mining Pool A pool of cryptocurrency miners that provides mining services to a cryptocurrency network. Mining Pool operators and contributors are incentivised by a coin or token’s programmed mining rewards to support transactions and provide liquidity on a coin’s network.

Mint(ing) The creation of new NFTs. There are two different types of minting. The first is Mint-A-Token which is when an asset creator chooses who can create tokens/NFTs. The second is Burn Minting which gives all NFTs another digital wallet private key so they become locked forever and are no longer destroyable or transferrable.

Minting interval This is how often tokens can be created or minted.

Multisig Wallet A type of cryptocurrency wallet that controls access and changes to one or more Smart Contracts or tokens. Community governed projects like a Distributed Autonomous Organization (DAO) often require multiple signers to approve a transaction before it will be executed.

N

NBA Top Shot A marketplace run on the Flow blockchain for exchanging one of the most unique forms of NFT: virtual basketball “moments.” Users can buy and sell short highlight clips of their favourite plays as if they were trading cards.

NFT Stands for Non-Fungible Token. It’s a unique, one-of-a-kind digital asset that’s stored on a blockchain. No other token or cryptocurrency can replace it.

O

OpenSea Launched in 2018, OpenSea is the first and largest NFT marketplace, boasting more than four million assets and 135+ dApps.

Oracle A trusted feed of data, such as the current market prices of an asset or assets, that provides confidence to users that the data is timely, accurate, and untampered.

P

PFP/PFP collections Is often used to describe Profile Picture NFT collections. PFP NFTs are purchased with the purpose of being used as a person’s online profile picture. A good example of this is Crypto Punks or Pudgy Penguins

Polygon An Ethereum-compatible protocol that aims to provide cheaper, faster and more secure payment transactions. Polygon is an attractive platform for NFTs because of cheap minting costs and low gas fees.

Private Key A password that’s separate from standard usernames or email addresses. It gives access to information or digital property on blockchains. Users can always see their public address on Etherscan, but might need to use a private key to access wallets or assets stored on the blockchain.

Proof of Stake (PoS) Another way crypto projects verify transactions where users are rewarded with tokens if they hold on to them for a certain period. Like mining, this process also requires some computing power and electricity usage.

Proof of Work (PoW) One way of verifying transactions where miners must solve hashing problems to do their job. This method makes it difficult for hackers to crack the network since they would need over 51% of all computing power available worldwide.

Protocol A set of developed rules or specifications that detail definitions, features, standards, limitations and potential stipulations of a high-technology product or project. Well-known technology protocols include TCP/IP and ERC-20.

Q

Quantity Refers to how many of a certain asset are available.

R

Rarible A community owned NFT marketplace founded in 2020. This Moscow-based platform mostly hosts digital art and is fuelled by its native ERC-20 token RARI.

Royalties Money earned by an NFT creator through the token’s resale. Some NFTs automatically pay royalties each time they are sold. An NFT can be hardcoded to pay artist royalties forever, which has the potential to shake up the music industry.

Rarities Items with different rarities get assigned with a certain number on the Ethereum blockchain. They have unique IDs and metadata and get labelled as “Legendary” or “Mythic.”

S

Slippage In the crypto trade, slippage refers to a difference in price between buyer and seller expectations. Slippage can lead to a final sale price of the asset that is either more or less than the requested transaction amount.

Stablecoins A stablecoin is a cryptocurrency that has its value pegged to the value of a stable asset. Stablecoins are most commonly pegged to the US Dollar but can be pegged to other assets like gold or a basket of crypto assets

Stake/Staking The act of depositing a cryptocurrency coin or token into a yield farming project and/or protocol, whether the access to the project is either through centralised or decentralised finance methods.

Solidity A programming language for Ethereum-based crypto token smart contracts. It stands for “Secure Interoperable Datamarketplace,” which is what this language does when people design any new NFT on the blockchain, including illustrations and 3D models with metadata underneath to describe each asset’s unique history or story.

T

Testnet A testing network for a new coin, project or product, or for potential improvements to an existing product or offering. A testnet can also be used by newcomers to ‘practice’ activities like staking and trading.

Tokens Similar to a type of coin but with much greater functionality. Tokens can also be used as a method of payment like coins, but unlike coins, they can excel at other use cases such as the identification of a digital collectible or the democratic governance of a protocol or system.

U

Utility-focused NFTs NFTs with real-world use cases. For example, NFTs can be used to improve event ticketing. Digital art can also have utility coded into it. For example, ownership of a Bored Ape grants members-only benefits like access to a collaborative graffiti board.

W

Wallet A software application or hardware cryptocurrency wallet that can hold a variety of coins.

Whale A person who HODLs a large amount of cryptocurrency or cryptocurrencies.