A Guide to Understanding NFTs
Updated: Feb 23
There has been so much hype surround NFTs in the past year. However, it is important to remember that there are still so many people out there who have no idea what an NFT actually is. We are going to break down all of the facts and information you need to know to understand this new craze. We will highlight some major key terms you may have heard and even define them for you.
To start, NFT stands for Non-fungible token. An NFT is a unique token that is typically linked to digital and sometimes even physical content. This content can range anywhere from songs, videos, and images. Have you ever bought a piece of art and were unsure if it was original? NFTs are changing the way we authentic content. Each piece of digital content comes with proof of ownership. NFTs are logged and authenticated. Once the content becomes verified on the blockchain, users can see everything from transactions to transfers. This means you can see the history or full picture of where the content originated from.
NFTs have many different uses. They are typically bought and sold on different NFT marketplaces. One popular NFT marketplace you may have heard of is, Opensea. There are so many different pieces when it comes to understanding NFTs. Here are some of the essential terms defined.
Project: You may have heard the term project being thrown around. An NFT project simply is just a collection of art or digital assets. Usually, they are launched as part of a story or road map. Many people study an NFT project, by looking at the road map to see if they are interested in it.
DYOR: DYOR stands for "Do your own research". This term is pretty self explanatory, but super important when it comes to investing in a project.
Gas: You may be thinking "is this the gas that cars use"? It is simply the tax you pay to mint, purchase, or sell, your digital assets on a blockchain network. You can think of it as a reward that is given to miners for their hard work. Gas fees typically change based on the volume of a network.
Flip: You may have heard this term many times in other industries. It has a very similar meaning. It usually applies to people who are looking to make a quick profit. Some users tend to hold on to their assets and hope the value goes up over time. Someone who is looking to flip will take action very quickly.
Discord: You may have seen a post that says "join our discord group". You can think of it as a platform for people to discuss NFTs. Typically each project has their own discord group to help build a strong community.
Mods: In each discord channel you will typically see moderators. Their role is to make sure the community is healthy, free of spam, informative, and growing.
Floor Price: This may have been something you have seen on open sea. When you see floor price it refers to the cheapest NFT in a specific project or collection.
Minting: Minting is a process where an NFT becomes part of the blockchain. In simpler terms, it means that an NFT is being created for the first time.
Reveal: A lot of times a collection is delayed until the reveal. This means you won't be able to view your NFT until reveal day. Reveal day is an exciting time where users involved get to find out features and rarity.
HODL: HOLD stands for "hold on for dear life". This means to hold on to your assets no matter what price it is at.
Floor Sweeping: Floor sweeping is a term you may have seen in a discord group. You may have seen members instruction other users to "sweep the floor". This means they want you to buy NFTs at floor price to help increase the floor price of the collection.
Hopefully some of these defined terms will help you with your NFT journey. There are so many moving pieces, so it's important that you understand the full picture!