Glossary: the ABC of NFTs

Learn the definitions of common blockchain terminology

Pablo Laboreo avatar
Written by Pablo Laboreo
Updated over a week ago

🖼️ NFT: A non-fungible token - or NFT - is the digital certificate of ownership of a digital asset, typically purchased and sold using cryptocurrencies on a blockchain. NFTs can represent a variety of different assets such as art, photos, video clips, music, and even more digitally created assets in the future.

🏡 Address: you can think of a public address as a bank account number that you may decide to share with people you trust to receive transactions. One big difference comes from the transparency principle upon which blockchain is built: anyone knowing your public address can also see your transaction history and what assets you own.

🔗 Blockchain: A digital ledger where transactions are recorded in an immutable form. This process creates a permanent archive of transactions that can be used to verify ownership and history of assets like NFTs.

📜 Smart Contract: A smart contract is a piece of code that is stored on and executed by the blockchain. It is often helpful to think of smart contracts as programs, rather than traditional contracts. Smart contracts are often used to create, trade, and sell digital assets. Coins such as USDC, Tether, and Shibe Inu are all examples of ERC-20 coins, which are defined by smart contracts. Similarly, NFTs are created using smart contracts. The smart contract defines what the asset is, and how it can be used.

🧺 NFT Collection: A NFT Collection is a set of NFTs that are all created and defined by the same smart contract. NFTs in a collection usually have theme, and function as a "set". Each NFT in a collection can be identical, or they can all be unique with different assets, artwork, and/or traits.

📊 Floor price: The floor price is the lowest price a user can pay to acquire an NFT from a given collection on the market. Different NFT collections have different floor prices. A high floor price usually indicates that a collection is popular.

🪙 Cryptocurrency: Cryptocurrency is a digital or virtual form of money that uses encryption techniques to secure and verify transactions and to control the creation of new units. In other words, it's a decentralized, digital currency that uses cryptography for security. Examples of popular cryptocurrencies are Bitcoin, Ethereum, LiteCoin, and Dogecoin. Cryptocurrencies are stored in digital wallets, and users of cryptocurrency can send each other cryptocurrency directly without relying on centralized entities like banks or credit card companies.

🔀 Crypto exchange platform: a business that allows users to exchange cryptocurrencies for other currencies - and vice versa. Crypto exchange platforms typically accept credit cards, debit cards, or allow you to link your bank account directly - making it easy to own a variety of currencies and assets. Storing your cryptocurrency in an exchange should be avoided. We recommend buying your crypto on a centralized exchange, but keeping it in a non-custodial wallet like Zelus. Learn more here

🏆 Digital collectible: a collectible item such as an “in-game” skin, digital artwork, or any other virtual item that can be owned. Digital collectibles usually are released in a limited drop and gain value due to their scarcity. Digital collectibles are usually NFTs.

🔁 Dynamic NFT (vs. Static NFT): a static NFT is an NFT with permanent characteristics (traits, data) - put simply, it doesn’t change over time. On the other hand, a dynamic NFT is an NFT with traits and data that can be continually evolving. For example, a static NFT trading card of a basketball player could reflect that player’s stats during a single season, while a dynamic NFT could update its stats to reflect that player’s real-life performance.

⏬ Drop: the release of an NFT, digital collectible, or other virtual items. More expensive digital assets are “dropped” in limited numbers and result in an increased market value. Items are released in “drops” on specific days and exact times to give potential buyers time to schedule their purchase.

🔷 Ethereum: a decentralized blockchain network that enables users to make transactions, use and store nonfungible tokens (NFTs), trade cryptocurrencies, play games, use social media and so much more. To execute these operations users are usually required to pay a ‘Gas’ fee in Ether (ETH), Ethereum’s native cryptocurrency.

🍄 Fungible: an asset is fungible when it can be replaced with another one of the same value. For example, a USD dollar is worth the same as any other USD dollar, and a bitcoin is worth the same as any other bitcoin. On the other hand, non-fungible assets are one of a kind and can only be traded for something else.

⛽ Gas: Sending a blockchain transaction requires that the network process the transaction. Gas is a measure of how much processing a transaction requires. For Ethereum-based blockchain networks, transactions incur a "gas fee" paid in the blockchain's currency proportional to how much gas, or computing power, is required to process the transaction. Some types of transactions, like sending Ethereum, use only a small amount of gas and tend to be cheaper. Other types of transactions such as minting NFTs use more gas, and so are more expensive. Gas fees can also increase when there is a high volume of pending transactions.

⛏️ Miner (or, Validator): In essence, a miner is a computer, or group of computers, that executes and verifies transactions on a given blockchain, such as Ethereum or Bitcoin. Miners receive the gas fees from the transactions that they process.

🍬 Mint: ‘Minting’ is the process of putting a digital asset onto the blockchain as a token so that it can be bought, sold, and owned.

🔑 Private key: A private key is the security solution used in the blockchain to restrict access to your assets. Like a strong password, it generally takes the form of a long, randomly generated set of characters and it is unique for each public address. Because it can’t be changed and it’s almost impossible to remember, crypto wallets include a recovery phrase.

💭 Recovery phrase: A secret recovery phrase is a human-readable version of a private key. Although it is called a ‘recovery phrase’ it is not an actual full sentence but a sequence of words. Zelus Wallet, as many other crypto wallets do, uses a 12-word recovery phrase.

💵 Wallet: A (crypto) wallet stores the cryptographic keys that serve as passcodes to access your cryptocurrency. Crypto wallets differ from physical wallets because they don’t hold any actual currency, only the keys needed to retrieve your cryptocurrency from the blockchain. While a wallet comes with an address, it is not equal to an address. Some wallets allow users to operate multiple addresses.

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