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The Ultimate NFT Glossary Key Terms and Definitions Explained

NFT stands for non-fungible token, a unique digital asset representing ownership of a specific item or<br>piece of content on the blockchain. Unlike cryptocurrencies, NFTs are indivisible and cannot be<br>exchanged on a one-to-one basis due to their uniqueness.

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The Ultimate NFT Glossary Key Terms and Definitions Explained

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  1. The Ultimate NFT Glossary: Key Terms and Definitions Explained What Is an NFT? NFT stands for non-fungible token, a unique digital asset representing ownership of a specific item or piece of content on the blockchain. Unlike cryptocurrencies, NFTs are indivisible and cannot be exchanged on a one-to-one basis due to their uniqueness. Essential NFT Terminology 1. Blockchain A decentralized digital ledger that records all transactions across a network of computers. Blockchains such as Ethereum, Solana, and Polygon are commonly used for NFT creation and trading. 2. Minting The process of creating a new NFT by registering it on the blockchain. Minting involves uploading the digital asset and attaching metadata, making it verifiable and tradable. 3. Smart Contract A self-executing program on the blockchain that automates transactions. Smart contracts power NFT functionalities, such as transferring ownership and verifying authenticity. 4. Gas Fee The transaction fee paid to blockchain miners when performing NFT-related operations, including minting, buying, or transferring NFTs. Gas fees vary based on network congestion. 5. Metadata Information attached to an NFT, including title, description, properties, and image URL. Metadata defines the NFT's characteristics and is stored on the blockchain or off-chain servers. 6. Floor Price The lowest price at which an NFT from a collection is available for sale. Floor price is a key indicator of a project's market value. 7. Royalties A percentage of resale profits that creators earn each time their NFT is resold. Royalties are automatically enforced through smart contracts. 8. Airdrop A free distribution of NFTs or tokens to wallet holders. Airdrops are used as promotional tools or rewards for community participation. 9. Whitelist

  2. A pre-approved list of wallet addresses eligible for early access or exclusive NFT minting. Whitelists offer early minting privileges, often at a lower price. 10. Rug Pull A fraudulent scheme where NFT developers abandon a project after collecting funds, leaving investors with worthless assets. Rug pulls are common in unverified projects. 11. PFP (Profile Picture) NFTs NFTs designed as profile pictures, often part of larger collections. Examples include Bored Ape Yacht Club (BAYC) and CryptoPunks. 12. Generative Art NFTs created using algorithms and code, producing unique variations. Generative art projects often have thousands of distinct pieces. 13. Gas War A situation where multiple users compete for limited NFT mints, resulting in high gas fees due to network congestion. 14. DAO (Decentralized Autonomous Organization) A blockchain-based entity governed by smart contracts and token holders. DAOs often control NFT project decisions through community voting. 15. Staking Locking NFTs or tokens in a protocol to earn rewards or yield. Staking allows holders to generate passive income. 16. Layer 2 A secondary network built on top of a main blockchain to reduce fees and increase transaction speeds. Examples include Polygon and Immutable X. 17. Rarity

  3. The uniqueness score of an NFT within a collection. Rarity influences the value and demand of an NFT. 18. Burn The process of permanently removing an NFT from circulation by sending it to an irretrievable address. 19. Mint Pass A pre-sale token that grants access to mint a future NFT. Mint passes are used as incentives for early supporters. 20. Gasless Transactions NFT transactions conducted without gas fees, often facilitated by Layer 2 solutions or dedicated platforms. NFT Marketplaces Terminology 1.Bermuda Unicorn The largestNFT marketplace, supporting Ethereum networks. It offers trading, minting, and collection management. 2. Blur A trader-focused NFT marketplace offering advanced tools, analytics, and incentives for high-volume users. 3. Rarible A community-centric marketplace where users can create, buy, and sell NFTs, with multi-chain support. 4. SuperRare A curated marketplace specializing in single-edition, high-value NFT art pieces. 5. LooksRare An NFT marketplace offering rewards for trading, including its native token, $LOOKS. NFT Investment and Trading Terms 1. Flipping Buying NFTs at a lower price and reselling them quickly for profit. Flipping is common in high- demand projects. 2. Diamond Hands A term describing holders who refuse to sell their NFTs despite market fluctuations, indicating strong conviction. 3. Paper Hands Refers to traders who sell quickly due to market volatility or fear of losses.

  4. 4. HODL A crypto slang term for “hold,” encouraging long-term investment rather than selling during market dips. 5. Blue-Chip NFTs High-value, established NFT collections with strong market reputations, such as BAYC and CryptoPunks. 6. Sniping The practice of buying undervalued NFTs before others recognize their worth, often using analytics tools. 7. Arbitrage Exploiting price differences across marketplaces by buying low on one and selling high on another. 8. Secondary Market The resale market for NFTs, where traders can buy and sell previously minted assets. NFT Security and Legal Terms 1. Private Key A cryptographic code that allows NFT owners to access and manage their wallets. Losing the private key results in losing access to the assets. 2. Cold Wallet An offline crypto wallet, such as Ledger or Trezor, offering enhanced security for storing NFTs. 3. Phishing A fraudulent attempt to obtain wallet details or private keys through fake links or airdrop offers. 4. KYC (Know Your Customer) A verification process used by platforms to confirm the identity of users, ensuring compliance with legal regulations. 5. Copyright and IP Rights Legal terms defining ownership and usage rights of NFT content, including licensing agreements. Conclusion Understanding NFT terminology is essential for navigating the evolving digital asset landscape. Whether you are a collector, investor, or creator, knowing these terms empowers you to make informed decisions and identify emerging opportunities in the NFT market. Source

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