NFT & Web3 terminology
If you are new to NFTs and Web3, the language can feel like another language entirely. There are wallets, chains, gas, minting, tokens, smart contracts and a whole collection of words that were not exactly part of everyday conversation a few years ago.
Here are some of the terms you are likely to come across.
Blockchain
A blockchain is a digital record of transactions that is shared across a network of computers.
Instead of one bank or company keeping the record, the information is stored and verified across the network. Once information is recorded, changing it is deliberately difficult.
Think of it as a public record book that keeps growing.
Web3
Web3 is a broad term for a vision of the internet built around blockchain technology, digital ownership and decentralised networks.
The idea is that people can own digital assets and interact with online services without everything being controlled by one central company.
The term is still debated, and people use it to mean slightly different things.
NFT
NFT stands for non-fungible token.
That sounds complicated, but the basic idea is fairly simple. An NFT is a unique digital token recorded on a blockchain.
It can represent an artwork, collectible, membership, ticket or other digital asset.
The image might be the thing we see, but the NFT is the blockchain record associated with it.
Token
A token is a digital asset recorded on a blockchain.
Some tokens represent ownership or access. Others are cryptocurrencies that can be traded or used within a particular ecosystem.
Not every token is an NFT. Some are interchangeable, like individual coins. NFTs are designed to be unique or distinguishable.
Cryptocurrency
Cryptocurrency is digital money that uses blockchain technology.
Bitcoin and Ether are two of the best-known examples.
Unlike traditional currency, cryptocurrencies operate through blockchain networks rather than being issued and managed in the same way as national currencies.
Ethereum
Ethereum is a blockchain network that became particularly important to the NFT movement.
It introduced smart contracts, which allowed developers to build applications and digital assets directly on the blockchain.
A large part of the early NFT world was built on Ethereum.
Smart contract
A smart contract is a programme stored on a blockchain.
It can automatically carry out actions when certain conditions are met.
In the NFT world, smart contracts can handle things such as creating tokens, recording transactions and sometimes distributing royalties.
Despite the name, there is no little robot lawyer hiding inside your computer.
Wallet
A crypto wallet is used to manage your digital assets and interact with blockchain networks.
It doesn't really work like the wallet in your pocket. Your assets remain recorded on the blockchain. The wallet gives you the ability to access and manage them.
It also holds the keys that prove you control those assets.
Public key
A public key is an address that can be shared with other people.
It is a bit like giving someone your bank account details so they can send you money.
Private key
A private key is the secret information that allows you to control your blockchain assets.
This one really is like a key.
Lose it and you may lose access to your assets. Give it to someone else and they may be able to take control of them.
Never share your private key or seed phrase.
Minting
Minting is the process of creating a digital token on a blockchain.
When an artist mints an NFT, the artwork or associated information is connected to a blockchain record.
In the early NFT world, saying an artwork had been “minted” could feel like a fairly significant moment. Sometimes it was. Sometimes it was simply the beginning of a very long afternoon trying to make a transaction work.
Gas
Gas is the fee paid for carrying out transactions on a blockchain such as Ethereum.
The network uses computing power to process transactions, and gas fees help pay for that work.
During the NFT boom, gas became a word that artists and collectors learned very quickly.
Marketplace
A marketplace is a platform where people can discover, buy and sell NFTs.
OpenSea and SuperRare became important names during the development of the NFT art market.
Different marketplaces developed different communities and approaches to curation.
PFP
PFP stands for profile picture.
In NFT culture, it usually refers to collections of characters designed to be used as online profile pictures.
CryptoPunks and Bored Ape Yacht Club helped turn the PFP into much more than a profile image. For many collectors, it became part artwork, part identity and part membership badge.
Generative art
Generative art is artwork created, at least partly, using systems, algorithms or code.
The artist establishes rules and the system produces individual variations.
It isn't simply pressing a button and letting a computer do everything. The interesting part is often the relationship between the artist, the system and the unexpected results.
On-chain
If something is on-chain, the relevant information is recorded directly on the blockchain.
Some NFT artworks have their actual artwork stored on-chain. Others store only certain information on the blockchain while the image or other files are stored elsewhere.
DAO
DAO stands for decentralised autonomous organisation.
It is a way of organising people and decision-making around blockchain-based systems, often using tokens and smart contracts.
The idea sounds wonderfully futuristic. In practice, DAOs can look surprisingly similar to groups of people arguing about what to do next.
Airdrop
An airdrop is when digital tokens or NFTs are distributed to people, usually for free.
They have been used for rewards, promotions, community building and other purposes.
Sometimes an airdrop is genuinely useful. Sometimes it is the digital equivalent of someone throwing flyers from a moving car.
Royalty
An NFT royalty is a payment that may go back to an artist or creator when their work is resold.
This became one of the most interesting ideas in NFT art because it offered the possibility of artists continuing to receive income from secondary sales.
The actual way royalties work depends on the marketplace and the technology being used.
HODL
HODL is crypto slang for holding onto an asset rather than selling it.
It began as a misspelling of “hold” and somehow became part of the vocabulary.
It is now one of those wonderfully strange pieces of internet history that probably makes perfect sense once you've been around the space long enough.
GM / GN
You will see GM and GN everywhere in NFT and crypto communities.
They simply mean good morning and good night.
That's it.
Sometimes Web3 terminology is complicated. Sometimes it is just people saying hello.
