15 Essential NFT Terms Every Normies Should Know

Okay, let's dive into the exciting world of Web3 and NFTs! It might seem complicated at first, but think of this as your friendly guide. We're going on an adventure together to understand this new digital frontier. Forget the confusing jargon for a moment. At its heart, Web3 is about giving power back to you, the user, and NFTs are a huge part of that. Ready to unlock the basics and see what all the buzz is about? Let's go!

Your First Steps: What Exactly Is an NFT?

Before we jump into the deep end, let's start with the absolute basics. You've probably heard the term "NFT" thrown around, maybe seen news about digital art selling for crazy prices. But what does it actually mean?

1. NFT (Non-Fungible Token)

Imagine you have a one-of-a-kind painting. There's only one like it in the world. An NFT is like a digital certificate proving you own a unique digital item. This item could be digital art, music, a video clip, an in-game item, or even a special membership pass. The "non-fungible" part just means it's unique and can't be swapped for an identical item, unlike regular money (one dollar bill is the same as any other dollar bill — that's fungible). NFTs live on a Blockchain, which is like a super secure, shared digital ledger that records who owns what. This makes ownership transparent and verifiable.

2. Minting

So, how does a digital item become an NFT? Through a process called "minting." Think of it like creating a new coin at a mint, but for the digital world. When an artist or creator "mints" an NFT, they are essentially publishing their unique digital item onto the blockchain, creating that verifiable record of ownership and authenticity. If you're the very first person to buy an NFT directly from the creator, you're often buying it during the minting process.

3. Airdrop

Sometimes, NFT projects or creators will send free NFTs directly into people's digital wallets – this is called an "Airdrop". It's often used as a marketing tactic to reward early supporters, build community, or generate excitement for a new collection. Imagine getting a surprise freebie just for being part of a community!

Did You Know? Some of the earliest and most famous NFT projects, like CryptoPunks, were actually given away for free to anyone with an Ethereum wallet back in 2017! Now, some of them sell for millions. Talk about an early bird special!

Let's Go Shopping: Finding and Buying NFTs

Now that you know what NFTs are, where do you actually find and buy them? Welcome to the world of NFT marketplaces and drops!

4. NFT Marketplace

Think of this like an online gallery or auction house specifically for NFTs. Marketplaces are platforms where you can browse, buy, and sell NFTs. Some are huge, offering all sorts of NFTs, while others might specialize in specific types, like art or gaming items. The most well-known marketplace, especially on the Ethereum blockchain, is OpenSea. When you buy an NFT directly from the creator during the initial launch, that's the Primary Market. If you buy an NFT from another collector or investor who bought it previously, you're using the Secondary Market. Marketplaces like OpenSea host both.

5. Drop

A "drop" is the term for the release of a new NFT collection. It's the moment a project makes its NFTs available for minting or purchase for the first time. Getting in on a drop means you might be able to buy the NFT at its initial price, set by the creator, rather than a potentially higher price on the secondary market later. Following projects you like and knowing their drop dates can be key if you want to be among the first buyers.

6. Floor Price

When you browse an NFT collection on a marketplace, you'll often see the "floor price" highlighted. This is simply the lowest current asking price for any NFT within that specific collection on the secondary market. It's a quick way to gauge the minimum cost to "get in" on that project and is often used to track a collection's general popularity and perceived value over time. If people start buying up the cheapest NFTs (sometimes called "sweeping the floor"), the floor price goes up.

7. Gas Fees

Because NFTs run on blockchains (like Ethereum), every transaction (like minting, buying, or selling) requires computing power. "Gas fees" are the transaction fees you pay to the network to process and validate your transaction on the blockchain. Think of it like paying for postage when you mail a package. These fees can vary a lot depending on how busy the network is. Sometimes they're small, other times they can be surprisingly high, so it's always something to factor into the total cost. Gas fees on Ethereum are measured in tiny units of Ether called "Gwei".

What's it Worth?: Understanding Value and Rarity

So, you see an NFT you like. How do you know if it's "valuable" or special?

8. Rarity

Within a large NFT collection (especially Generative Art or PFP projects), not all NFTs are created equal. They usually have different traits or attributes. Some traits appear much less frequently than others, making the NFTs with those rare traits potentially more desirable and valuable. Think of it like collecting trading cards — a holographic card is rarer and usually worth more than a common one.

9. Metadata

Where is all this information about an NFT's traits and uniqueness stored? In its "metadata". This is the underlying data embedded within the NFT on the blockchain that defines its specific properties — what it looks like, its name, its traits, and a link to the actual digital file (like the artwork image). Sometimes, especially right after minting, you might need to "refresh metadata" on a marketplace to see the final image and traits appear.

10. Generative Art / PFP Projects

Many popular NFT collections, especially PFP (Profile Picture) projects like Bored Ape Yacht Club or CryptoPunks, use "generative art" techniques. The artist creates a set of base layers and traits (like different hairstyles, eyes, outfits, backgrounds). Then, an algorithm randomly combines these traits to automatically generate thousands of unique images. PFPs are NFTs specifically designed to be used as social media profile pictures, acting as a digital identity or status symbol.

Did You Know? The actual image file for an NFT often isn't stored directly on the blockchain itself. Instead, the NFT's metadata usually contains a secure link (often using systems like IPFS - InterPlanetary File System) pointing to where the file is stored.

Talking the Talk: NFT Community Slang

11. DYOR (Do Your Own Research)

This is probably the single most important piece of advice in the crypto and NFT space. It means you should always investigate a project thoroughly yourself before investing time or money.

12. Ape In

This slang term means buying into an NFT project quickly, often with significant funds, and sometimes without doing thorough research. It comes from the "Apes Together Strong" meme. While it can sometimes pay off, it's generally considered risky behavior.

13. PFP (Profile Picture)

A PFP project is an NFT collection where the main focus is on avatars or characters designed to be used as profile pictures on social media. Owning a PFP from a popular collection can signal membership in a particular community.

Engaging Question: Have you seen people using cartoon apes, cats, or pixelated characters as their profile pictures on Twitter? Those are often PFPs!

Playing it Smart: Safety and Strategy

14. Burn

Sometimes, an NFT project might decide to "burn" some of its NFTs. This means permanently removing them from circulation. Why do this? It can reduce the total supply of NFTs, potentially making the remaining ones scarcer and more valuable.

15. Rug Pull

A "rug pull" happens when the creators of an NFT project hype it up, sell a lot of NFTs, and then disappear with the money. They offer no ongoing development, community support, or utility, leaving buyers with worthless NFTs. This highlights the importance of DYOR and checking the credibility of a project.

Did You Know? Many legitimate NFT projects have active communities on platforms like Discord and Twitter. Engaging with these communities can be a good way to gauge a project's health and spot red flags early.

Frequently Asked Questions (FAQs)

Q1: Is buying NFTs the same as investing? Should I expect to make money?A: While some NFTs have increased significantly in value, they are highly speculative assets. Think of them more like collecting art or rare items – buy something because you genuinely like it, appreciate the art, or want to be part of the community. Never invest money you can't afford to lose, and always, always DYOR (Do Your Own Research). Treat potential profit as a bonus, not a guarantee. NFA (Not Financial Advice)!

Q2: Do I need a lot of money to get started with NFTs?A: Not necessarily! While headlines focus on multi-million dollar sales, many NFTs, especially from newer artists or less-hyped collections, can be purchased for much lower prices. Floor prices vary wildly between projects. Plus, you need to factor in gas fees. You can start by simply browsing marketplaces, joining communities, and learning without spending anything.

Q3: It feels like everyone is already into NFTs. Is it too late for me to get involved?A: Absolutely not! The NFT space is still very young and constantly changing. New artists, new technologies (like NFTs on different blockchains beyond Ethereum), and new use cases are emerging all the time. It's always a good time to start learning and exploring. Focus on finding projects and communities that genuinely interest you.

Quick Glossary Recap

Just to refresh your memory, here are a few key terms:

• NFT (Non-Fungible Token): A unique digital asset on a blockchain proving ownership.
• Minting: The process of creating an NFT on the blockchain.
• Floor Price: The lowest asking price for an NFT within a collection on the secondary market.
• Gas Fees: Transaction fees required to interact with the blockchain.
• DYOR (Do Your Own Research): The essential practice of researching before buying.

Your Next Steps into the NFT World

Feeling excited and want to dip your toes in further? Here are some easy, low-risk ways to continue your journey:

1. Window Shop
   Browse a major NFT marketplace like OpenSea. Just look around, see what catches your eye, check floor prices, and get a feel for different collections. No need to buy anything!
2. Follow & Learn
   Find some NFT artists or projects you find interesting on Twitter or other social media platforms. See what they're posting and what the community is talking about.
3. Read Up
   Look for beginner-friendly guides and articles about setting up a digital wallet or understanding specific blockchain basics. (Consider suggesting links to reputable sources here.)
4. Set Up a Wallet (Optional)
   If you feel ready, you could set up a non-custodial crypto wallet like MetaMask. This is necessary to interact with most NFT platforms, but you don't need to put money in it just to set it up and learn how it works.

Take it one step at a time. Welcome to the community – WAGMI (We're All Gonna Make It)!

Notes:

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In addition to acquiring digital currencies, you can broaden your understanding of cryptocurrencies and web3 by exploring the array of Blog Normies posts. With new content weekly, these articles are crafted to enhance your knowledge and education in the space, and are not intended to serve as investment guidance. Remember to do your own research (DYOR) 🤘

Reference:

• Sothebys. How to Collect Digital Art: A Glossary of NFT Terms. Accessed on July 26, 2024
• Christies. Digital art: terminology to know. Accessed on July 26, 2024
• Coindesk. Non-Fungible Terms: NFT Lingo Every Collector Should Know. Accessed on July 26, 2024