For just about anyone involved in the tech industry, it is common now to hear about Non-Fungible Tokens (NFTs). This has grown from a quick trend into a fad, and from a fad into a genuine business opportunity. However, if you are new to the industry, you might not have a clue what some people are talking about!
Getting into NFTs is like getting into a sport you have never watched before. There are so many terms and discussions that can sound like a foreign language. What, then, are some essential NFT words that you need to know?
A common term that you might hear in this industry is Airdrop, which means to get an amount of cryptocurrency, or a new NFT, added to your crypto wallet free of charge. These are typically promotional activities and it has become a good way for new NFT projects to reward those who get involved early.
Though rarely the cream of the crop in an NFT collection, some airdrops have been known to become coveted down the line.
2) Avatar Projects
Another important term is that of Avatar Projects. This is basically a project that involves the creation of a new collection of ‘avatars’ that are then collectible. A common example of this would be something like the Bored Ape Yacht Club, which has now spawned many other alternatives.
For that reason, this is among the most popular NFT terms that you might need to know. With many NFT projects being large-scale drops like this, it pays to understand that an Avatar Project is simple a grouping of numerous NFTs.
The term Burning within NFTs has two main uses. The first is when an NFT collection fails. For example, say you have 5,000 pieces within your collection but only 2,000 of them sold. You might choose to ‘burn’ the other 3,000 and move on.
Other uses of the term are when an NFT provider will offer those who have bought in to ‘burn’ two lower quality NFTs to earn a higher, rarer NFT in exchange. This is common practice in NFTs that do not sell as originally intended.
A DAO is a Decentralised Autonomous Organisation, and they are essential within the NFT space (if rare). These are essentially NFTs that give owners voting rights over the future of that particular NFT collection. This could be used to help ensure that those who invest within the project feel like they have a long-term say, or to try and encourage a more community-focused aspect.
DAOs are not very common at the moment, but they are steadily growing in popularity as more developers and founders want to get communities involved. Lazy Wolf Club is an example of a DAO.
5) Diamond Hands
This is a slang term used by those within the NFT scene that has in itself actually become a meme-driven NFT project itself. Diamond Hands are people who hold on to assets during periods of major market chance.
For example, if something was to go through a period of reputational strife, most will sell and get out while they can. A Diamond Hands owner, though, will sit through the storm and held on. In some case, surviving the negative feedback can lead to eventual returns on investment through patience.
Not speaking about the stuff you put in your car or power your heating system with, gas is the term used for the cost of buying NFTs. Most blockchains charge a small ‘gas’ fee, such as Solana. Other blockchains, though, can charge as much as $50 – or more – to help you make the transaction possible.
The level of ‘gas’ prices is determined by market activity and the protocol. Proof-of-work is the protocol that Bitcoin and Ethereum currently use. It is considered one of the most energy-intensive protocols.
Fear, Uncertainty, and Doubt – three emotions which are practically baked into the NFT experience for most. This is because the NFT industry is already filled with tattle, gossip, and in some cases downright lies. FUD is based around those collections that are brought down reputationally due to fake stories, lies, and inaccuracies. These are commonly associated with NFTs that tend to see a steep drop in their market value.
Buyers will attribute FUD to a previously successful NFT going down the tubes, blamed on a fear-driven marketplace overall.
The term minting within this industry refers to buying something that is totally new. Think about the term in the way it is used in fiat currency; if a new coin comes on the market, it is ‘minted’.
Well, NFTs which are new on the market are given the same kind of language around their appearance.The creation of a new NFT on the blockchain means that it has been minted. This is important to note, as it is a term that can sound confusing but shares its purpose with other financial industries overall.
9) Paper hands
We spoke about Diamond Hands, and Paper Hands is the total opposite. Someone who wants out – and fast – is known as Paper Hands. This is also regarded as a term for those who sell up at below the market price, meaning that they simply want to get out and move on.
This is important to note as, like any other investment market, people will jump out at the first sign of trouble and often make a loss just to escape.
And to end on a key term that you must know, a Rugpull is basically a scam project. You are buying into a project that disappears with all of the funds accrued not only after it has launched.
While you might get some form of NFT in return, you will find that it is not even going to be something that you can trade or show off. This is a rare thing to happen in the NFT market, thankfully, but you should always be aware of the potential risks of being ‘rugged’ by scam artists.
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