NFT, or non-fungible tokens, has taken the world by storm, as everyone now wants to get some! NFTs geeks may sound a bit gibberish to most newcomers, so if you’re nodding your head yes and wondering what the heck these crypto enthusiastic nerds are talking about ? read more!
In this article, we attempt to break down 10 formal NFTs terms for you. Plus, we’ll cover NFTs slang, abbreviations, intentional misspellings, and Twitter terminology to help you understand and navigate around NFTs.
10 NFT Terms You Need to Know
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Fungibility
Replaceability. Dollars are fungible because every dollar in existence can be used to pay a dollar due. If an asset is fungible, it’s interchangeable, meaning it can be exchanged for another item in the same category without losing value.
For example, if you exchange BTC for another, you would still have a BTC. That means that one Bitcoin is fundamentally identical to another. However, that's not the case for non-fungible assets. Therefore, each NFT is unique and couldn't be exchanged for another NFT. Something non-fungible, such as a picture or NFT, is one-of-a-kind.
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NFT
A special kind of token that contains identifying information recorded in smart contracts on the Ethereum blockchain but can’t be exchanged like other cryptocurrencies which are fungible.
NFTs are proof of ownership that utilizes blockchain technology to connect with a unique digital asset (like rare stones, customized jewelry, digital paintings, or any works of art or rare traits and accessories in video games), that cannot be replicated.
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Minting
Minting, one of the most important NFTs words, is the process of converting digital files into digital assets suitable for NFTs trading. Anyone can use this to make their own NFTs from their own files, which they can then keep as a unique token or trade on NFTs marketplaces.
NFTs can be created by content creators using a process known as "minting," in which they generate a representation of their material on a blockchain network. These distributed networks can retain immutable records of when an asset is bought and sold, as well as who currently owns it.
NFTs, like cryptocurrencies, are recorded on the blockchain. As a result, all NFTs must be maintained in a decentralized, distributed ledger so that their ownership can be monitored. As a result, all digital data, including music and digital artwork, must be converted to NFTs.
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Airdrop
Airdrops are promotional tools used to build the user base for NFTs collection. Airdrop NFTs are sometimes handed to holders as a gift for their loyalty or positive feedback on social media for a project.
When you receive a 'airdrop,' a set amount of a certain coin or new NFTs is immediately put into your wallet for free. It's a long-standing practice in the wider crypto realm, but it's also become a popular technique for NFTs projects to reward early adopters with new artworks, for example.
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ERC-721
A token standard that enables the generation of non-fungible, unique tokens. It varies from ERC-20, which is used to create fungible tokens.
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Floor price
The collection's lowest NFT pricing. The phrase "purchase the floor" or "floor sweep" refers to purchasing the lowest NFT in a collection. When someone says "sweep the floor" in the NFT world, it means to encourage members of the community to acquire the NFTs at their floor price in order to increase the project's worth.
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Fractional ownership
Rights to a portion of an NFT. Sellers can sell portions of a work, while purchasers can purchase only what they can afford.
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Gas fees
Gas is essentially the fee you must pay for any trading on NFT platforms. Gas must be paid in every step of various platforms, from minting to NFT sales. Gas is paid for using bitcoin. Because most NFTs operate on the Ethereum blockchain network, Ether is the chosen digital currency for gas.
Anyone trading in NFTs should be aware of the gas fee. Because it must be paid at each stage — from minting to selling and purchasing — it is gradually added to the transaction cost.
As a result, the price of the NFT must include the gas charges. Otherwise, the seller may suffer a loss, especially if they are new to NFTs.
Similarly, the buyer must pay a petrol surcharge for each transaction. Even canceling an order entails a gas cost.
Gas prices are controlled by both blockchain traffic and the size of the NFT. Gas prices will be high if the network is congested. Larger files necessitate higher gas costs.
Gas prices can be modified depending on the NFT platforms where it is traded. Experts know how to keep gas costs as low as possible by using strategies such as setting gas limitations and trading time.
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Shilling
Marketing, promotion, and advertising of NFT. A shill is someone who promotes an NFT. As a marketing tactic, someone promotes an NFT project and urges others to invest in a specific NFT to hype its price.
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Diamond Hands / Paper hands
"Diamond Hands," a term coined by a Redditor on the r/WallStreetBets subreddit, refers to someone who has a high risk tolerance for high volatility assets.
Diamond Hands never sell their assets in a panic, no matter how rapidly the value of their NFT rises or falls. However, Diamond Hands has a negative meaning, referring to a tenacious investor who refuses to sell their NFT despite its declining value.
Paper Hands, on the other hand (pardon the pun), is the polar opposite of Diamond Hands. It refers to someone who sells or flips their possessions too quickly rather than holding them for the long term.
