Glossary
It can be overwhelming with all the new terms in the NFT space. We help you to quickly get started with the NFT and crypto terms through our glossary.
51% attack
An attack by taking control of a network's hash rate for mining or by taking control of more than 50% of staked tokens in a blockchain.
Airdrop
A free distribution of tokens or NFTs. It can for example be directed or distributed to existing addresses on a given network that have been early users of a system or to addresses that own specific NFTs.
Arweave
A new type of storage that supports data with durable and eternal resources, enabling users and developers to store data forever. The majority of NFTs use this system.
Block
A block is like a folder that contains data files. The contents of this folder are the transactions that occur during a given time interval. Each block contains a reference that links the block to the previous block – hence the term blockchain. New blocks are added to the blockchain by miners or validators of a blockchain according to a consensus mechanism where it is ensured; that balances are not spent twice; that each digital signature matches the public key of the message; and that the included reference matches the reference of the last added block. Blocks cannot be changed afterwards, hence the description that the blockchain is immutable.
Blockchain
Public decentralized database where every transaction is recorded and distributed over a network.
CC0
In practice, CC0 means that you, as a creator, waive all copyright and similar rights that you have to a work and instead dedicate these rights to the public domain. CC0 NFTs can basically be used freely by anyone.
Consensus mechanism
The entire stack of protocols, incentives, and ideas that allow a network of nodes to agree on the state of a blockchain.
Cryptocurrency
Cryptocurrencies are more than just a digital form of value. For permissionless blockchains like Bitcoin and Ethereum, cryptocurrencies are a critical part of the game theory and incentive mechanism that keeps the blockchains secure. Cryptocurrencies serve several different roles in a blockchain network.
Cold wallet
A crypto wallet that is not connected to the internet and is not used to sign transactions. Normally a wallet that acts as a vault for storing more valuable assets.
DAO
'Decentralized autonomous organization' is an organization running on the blockchain using smart contracts. The contracts state the rules that govern the organization and are used to enforce decisions. The DAO is powered by community and tokens that normally represent ownership and voting rights.
dApp
dApps (decentralized apps), are just like other apps except their code is written in a smart contract. This means that all the data and logic to run the app lives on the blockchain, rather than on a centralized server. Because of this, no entity owns the app or its data once the app is uploaded to the blockchain, which differentiates them from regular apps that are downloaded from the internet or purchased in e.g., App Store.
DeFi
DeFi (decentralized finance) refers to financial decentralized apps such as trading venues, lending and savings. DeFi apps are digital, open and decentralized as they are encoded in smart contracts on the blockchain. They combine traditional finance with software, enabling more programmable and powerful financial applications.
Digital signature
Just as fingerprints are unique to each person, digital signatures are unique to each crypto wallet. These signatures are mathematically derived from a cryptographic key pair consisting of a private and a public key. A digital signature is used to prove that you know the private key associated with the public key (or wallet address), without having to reveal the private key.
Drop
Launch of a new NFT collection.
Encryption
A technology that allows you to keep your data and messages private by providing you with the ability to control who has access to them.
ERC-20
The token standard for fungible tokens on the Ethereum blockchain. These tokens, for example Ether, are interchangeable with each other just like dollars.
ERC-721
The token standard for non-fungible tokens (NFTs), all ERC-721 tokens are completely unique and thus not interchangeable.
ERC-1155
A multi-token standard which means that both fungible and non-fungible tokens can be created.
Floor price
The lowest list price for an NFT in a collection on a marketplace.
Fungibility
Interchangeability. A dollar can be exchanged for any other dollar as all dollars have the same characteristics.
Gas
The fee you pay to transact on the blockchain e.g., when creating, buying or selling an NFT. On Ethereum, gas is paid in Ether (ETH). The fee varies depending on the computing capacity the operation requires and how much activity there is on the blockchain when you want to transact.
Generative art
Art created with code and using an autonomous system that intentionally introduces randomness as part of the creation process.
gm, GM or Gm
A good morning greeting used frequently on NFT Twitter.
Hot wallet
A crypto wallet that is connected to the internet, such as the software wallets MetaMask and Coinbase Wallet.
ICO
Initial Coin Offering, the crypto world's equivalent of an initial public offering (IPO). Through an ICO, a company raises money to fund its business plans.
IPFS (InterPlanetary File System)
A distributed file storage protocol that allows computers worldwide to store and serve files as part of a global peer-to-peer network. Any computer can download the IPFS software and start storing and serving files. The metadata for many NFTs is stored using this system.
Layer 1 blockchain
Blockchains can be structurally divided into different layers. Layer 1 serves as the foundation upon which other layers can be built, depending on the blockchain. Since layer 1 is the foundation, it should have strong security and zero fault tolerance. Examples of Layer 1 blockchains are Bitcoin, Ethereum, Tezos and Solana.
Layer 2 blockchain
Layer 2 blockchains are built on top of Layer 1 blockchains, making them more functional and composable. Layer 2 inherits the properties of the layer 1 blockchain they are built on, but at the same time expands the functionality of the system as a whole. Examples of Layer 2 blockchains are Arbitrum and Optimism, which allow fast and cheap transactions on the Ethereum network.
Liquid-Proof-of-Stake (LPoS)
Liquid-Proof-of-Stake (LPoS) is a type of consensus mechanism for adding new blocks of transactions to a blockchain that allows holders of a cryptocurrency to lend their validation rights to other users without relinquishing ownership of their tokens. This results in a high degree of flexibility of network participation.
Metadata
NFT metadata is data describing the characteristics defining an NFT, i.e., what an NFT actually is. Metadata for an NFT contains description of the digital file, its name, properties and link to where the digital file is stored.
MetaMask
The most used software wallet on the Ethereum blockchain. MetaMask is also for accessing decentralized apps and thus a gateway to NFT marketplaces.
Metaverse
A collection of realities that includes the real world or an alternate reality and a series of other worlds around which a community unites. Events, objects and identities can both exist and be modified in multiple worlds in a metaverse.
Minting
The actual creation of an NFT, when the digital file, metadata and code is immortalized by being converted into an NFT on the blockchain. By minting an NFT, the digital file becomes part of the blockchain where it can then be sold and bought.
Node
A node is an entity that participates in a network by following a network protocol. Individual nodes can perform a variety of roles on a blockchain network, such as storing data, validating information, or relaying messages to other nodes. Depending on the network, each node may have a unique role or multiple nodes may share the same role. Nodes keep a blockchain running.
On-chain
If NFTs are on-chain, they exist entirely on the blockchain. The digital file, metadata and code is stored on the blockchain. This means that all NFT data is permanently registered on the blockchain.
On-chain can also refer to the governance of a blockchain, which means that the rules for implementing changes are encoded in the blockchain's protocol.
Open edition
NFT drop with no fixed number of editions, which allows collectors to buy that NFT during a certain period (usually within 24, 48 or 72 hours). Open editions can also take place without a time limit.
Peer-to-Peer (P2P)
Interaction and collaboration between participants in a shared project or activity characterized by network-based organizational structures and shared resources.
Play-to-Earn (P2E)
In P2E games, players can earn real money or assets through in-game activities, usually by acquiring and trading NFTs and tokens. In-game NFTs can be used to represent in-game items, such as weapons, characters, virtual land, etc. P2E enables players to earn money through their in-game activities, instead of just spending money.
Proof-of-Stake (PoS)
Proof-of-Stake is a type of consensus mechanism used to validate and add new transactions to a blockchain. With this system, holderrs of a cryptocurrency can deposit their cryptocurrency, which gives them the right to verify new blocks of transactions and add them to the blockchain and thus receive rewards.
Proof-of-Work (PoW)
Proof-of-Work is a type of consensus mechanism uaws to add new blocks of transactions to a blockchain. The work that miners do generates a hash (a long string of characters) that verifies transactions. The miner who does this first wins the right to add that block to the blockchain and thus receive a reward.
Royalties
Revenues that can be earned by NFT creators when their NFTs are traded on the secondary market. The majority of NFT marketplaces automatically pay out royalties every time an NFT is sold, which allows creators to get paid for their works each time they are sold, which thus has the potential to completely change way creators can work.
Rug pull
When a project is created to solely generate sales and royalty income from the trading on the secondary market, for a period before the creators completely abandon the project.
Satoshi Nakamoto
The unknown creator of Bitcoin.
Smart contract
A smart contract is a script that, when called with a request, can automatically perform actions or calculations given that specific conditions are met. Everything from sending notifications to making payments can be handled on a smart contract. The parties on both sides of the contract can be assured of safe execution as the contract does not rely on any intermediaries, only code.
Solidity
A programming language used to write smart contracts on the Ethereum blockchain.
Staking
The process of actively participating in transaction validation on a blockchain. Rewards are distributed by the network in proportion to each validator's stake.
Trustless
Trustless refers to users not needing permission to use the blockchain, its decentralized applications or associated systems.
Permissionless
Permissionless refers to the fact that you do not need to trust a third party: a bank, an individual or any intermediary to use the blockchain.
Tokenized
The process of converting something of value into a digital unit (token) that is usable in an application on the blockchain.
Token
Tokens are units of value used to transfer and store value on a blockchain. Tokens can be fungible or non-fungible (NFT). Many fungible tokens are used to carry out transactions or provide the holder utility, e.g., to participate in governance and maintenance of a blockchain. Non-fungible tokens are instead used to store and represent digital assets.
Utility token
In the NFT world, 'utility tokens' are NFTs that are designed to give you as the holder specific utility and benefits. The creator of a utility token has stated that these give holders privileges, rights and rewards that they would not otherwise be able to access from that particular creator.
The difference compared to other NFTs is that utility tokens will explicitly give you some benefit in the future.
web3
The third generation of internet owned and operated by developers and users and underpinned by tokens. Blockchains, cryptocurrencies and NFTs are used to give users opportunities for participation and ownership of the resources they themselves build and use.
WETH
Wrapped Ether (WETH) is a form of ETH wrapped in a smart contract which can be used on platforms and decentralized applications (dApps) that support the ERC-20 token standard. WETH is used, among other things, to bid on NFTs and participate in auctions. 1 WETH = 1 ETH and can easily be converted back and forth.
Whitelist
If your wallet address is on a whitelist for an upcoming NFT project, you have the opportunity to buy an NFT from the collection at launch.
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