Thinking of purchasing digital assets for your collection but don’t know where to start? Perhaps you’d like to understand the basics of non-fungible tokens (NFTs) and their importance in the crypto world? NFTs have been around since the early days of crypto, but they have only recently come into the mainstream because of projects such as CryptoKitties.
What are Non-Fungible Tokens?
Non-fungible tokens (NFTs) are pieces of digital information that can be stored virtually. This could be a picture, a document, or, with cryptocurrencies, a token. NFTs are unique and cannot be interchangeable, which is what differentiates them from fungible tokens.
NFTs first appeared on the Ethereum blockchain in late 2017. The first NFT to be created was Cryptokitties, a game that allows users to collect and breed digital cats.
Since then, NFTs have become increasingly popular and there are now several projects that are built on top of them. These projects include games, digital art galleries, and collectible card games.
How Are NFTs Different From Cryptocurrency?
The reason NFTs and cryptocurrency attract the same traders is that they are built on a blockchain, making them use the same technology and principles. However, their major difference is indicated in the name.
Cryptocurrency is a currency, meaning that it is used to buy things, whereas NFTs are assets. This means that they can represent anything that has value, such as goods, services, or even other cryptocurrencies.
NFTs are also different because they can represent digital things. For example, you could create an NFT that represents a virtual world and allows users to trade different parts of it. This would be a very different concept to cryptocurrency, which is mainly used as a way to trade money.
Niche NFT Terms to Keep in Mind
It doesn’t matter if you’re a beginner or pro in NFTs. Technology is fast-paced, hence why you need to keep yourself updated with the latest industry lingo. Here’s a list of 20 niche NFT terms you should be aware of.
ERC-721
This non-fungible token protocol is used for unique digital assets. They can also be utilized for a variety of purposes, such as collectibles, digital ownership, or even digital rights.
ERC-20
ERC-20 is a standard for tokens on the Ethereum blockchain. All ERC-20 tokens are compatible with Ethereum wallets, making them easy to store and transfer.
Stablecoin
Stablecoins are cryptocurrencies designed to maintain a stable value. This makes them ideal for use as a currency or a store of value.
Blockchain
Blockchain is the technology that underlies most cryptocurrencies. It is a distributed database that allows for secure, transparent, and tamper-proof transactions.
Mining
Mining is the process of verifying transactions and adding them to the blockchain. To do this, miners are rewarded with cryptocurrency for their work.
1:1 Art
This often pertains to the unique piece of NFT from an artist. The usual price of 1:1 art costs higher than the average price of other NFTs, since it is a one-of-a-kind item. One example of this would be a rare digital painting that is sold through an online auction.
AB
AB stands for Art Blocks. It is commonly confused as a type of NFT art or NFT collection, but this is a type of NFT-focused digital platform that allows users to create and trade digital artwork and other collectibles. One of the famous collections under Art Blocks is Fidenza, which is sold for around $1 million.
BTD
BTD or “buy the dips” means to purchase an asset once its price has dropped in the market. This is usually considered a bargain and is meant to provide investors with a higher return on their investment in the long run. It can likely happen to investment vehicles like stocks, cryptocurrencies, and others.
For example, if the price of a stock falls by 10%, a trader might buy the dip by purchasing the stock at the new lower price. In this instance, the trader is hoping that the stock will rebound and they can sell the stock at a higher price than they originally paid for it.
Degen
Short term for “degenerate,” this often refers to people who are only in it for the money and have no interest in the underlying technology or game. Most of these people would be classified as “non-players” and usually rely on automated bots to farm or generate tokens for them.
Difficulty
The difficulty is a measure of how hard it is to mine a block. It is determined by the amount of hash power that is currently being used by miners.
Genesis Block
The genesis block is the first block in a blockchain. It is used to create the initial state of the blockchain.
Blockchain Explorer
This refers to a website that allows users to view the transactions and blocks on a blockchain.
Diamond Hands
This niche NFT term pertains to someone who has a high-risk tolerance for investment and is looking to invest in rare and valuable virtual assets. They are often considered “diamond hands” because they are willing to take on more risk to earn a higher return.
Many people in the crypto community consider diamond hands to be a key part of the ecosystem because they are more likely to invest in new and innovative projects. This helps to drive innovation and growth in the industry.
GWEI
Gwei is also known as nanoether to denote the ninth power of the fractional ETH, which is 1,000,000,000,000,000,000. The term is also used to denote the smallest subdivision of an ether.
Block Reward
The block reward is the amount of cryptocurrency that is awarded to a miner for verifying a block.
Hash Rate
The hash rate is the number of hashes that a miner can generate per second. It is used to measure the mining power of a blockchain.
Moon
In NFT terminology, the moon is referred to as an entity that exists on a blockchain that is not controlled by anyone. It can be thought of as a digital asset that is not owned by anyone but managed by the community of users who interact with it.
It can also pertain to the phrase “to the moon,” meaning the price goes up in the market.
Rug or Rug Pull
This pertains to when a team behind an NFT project abandons it, often leaving investors with nothing. The term is derived from the rug being pulled out from under someone, metaphorically.
Smart Contract
This is a self-executing contract stored on the blockchain that allows for trustless transactions between parties.
dApp
A dApp is a decentralized application that runs on the blockchain. It is controlled by its users rather than a central authority.
Final Words
In conclusion, understanding NFTs and how you can use them to your advantage can be a powerful tool for any business or individual. By being aware of the different terms and their meanings, you will be in a better position to implement them in your work. While this list is by no means exhaustive, it should give you a good foundation on which to build.
