Your ultimate guide to web3 jargon: NFTs
In this ultimate guide to web3 jargon, we discuss the world of NFTs.
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Citizens of the Unixverse. Following on from last week’s deep dive into Web3 gaming terms, we’re back this week to continue our exploration of the confusing world of Web3 jargon. In today’s guide, love them or hate them, we tackle the mystical world of NFTs. They’re here to stay after all, so it’s worth understanding what exactly they are.
Non-fungible tokens (NFTs) have been gaining a lot of attention recently due to their application in Web3 gaming, metaverses, and the mindblowing prices sought-after NFTs go for. So, what are they?
NFTs are effectively crypto tokens with digital assets (music, images, videos, etc.) attached. The cool thing about being a crypto token means each NFT is uniquely identifiable through its contract address. That means even among thousands of copies of the same image, the original would be identifiable through the unique identifier given to it when it was first “uploaded” to the blockchain.
Of course, the argument is that even as an NFT nothing stops anyone from downloading the image used in an NFT and using it themselves, but it’s not the image alone that gives it value. There are millions of copies of the Mona Lisa, but good luck flogging any but the original for anywhere close to the value of the original. NFT collectors see the value in knowing they have the original, the best possible version.
Beyond the value of authenticity, NFTs can represent anything from digital artworks to music, in-game items, and more. They provide a new way to monetize digital assets, enable them to be traded, and create new economic models for creators. Furthermore, they open up possibilities for creating virtual worlds where users can own unique assets that have real value in the real world.
Additionally, NFTs have potential future utility beyond just gaming and collectibles – they could be used to tokenize real estate or even create digital galleries where people can support their favourite creators from anywhere in the world. With their security and utility, NFTs have the potential to revolutionize how we interact with digital content in the future.
Personalized Profile Pictures (PFPs) started when Web3 platforms allowed users to use their NFTs as profile pics but have quickly extended to more mainstream platforms like Instagram and Twitter. This provides a unique way to curate your online presence, stand out from the crowd, or express your enthusiasm for a particular project.
Due to the rarity of some NFTs, some PFPs are viewed as highly valuable collectibles, and being able to showcase them is all about bragging rights. Some notable projects include Cryptopunks, BAYC, and MAYC, all of which command astounding prices.
Minting is a process of creating and issuing digital assets on the blockchain. It is an integral part of the decentralized Web3 ecosystem. When an NFT is minted, assets are effectively uploaded to the blockchain, each one receiving a permanent, unchangeable (immutable) identification address.
Minting an NFT means that you are creating a unique asset on the blockchain which can be verified by anyone who knows its contract address.
With the advent of Web3 technology, trading in digital assets has become much more accessible. The term 'marketplace' in the Web3 space refers to a decentralized platform that enables secure and convenient trading of digital assets (tokens or NFTs).
Marketplaces have also been used for gaming, allowing players to trade their digital assets with others. Players can also easily buy and sell virtual items such as cosmetics or characters in these marketplaces without needing third-party services.
Even the world’s largest PC gaming platform Steam, a platform that famously banned Web3 games, offers a form of marketplace. Every year, millions of users trade in-game items on Steam’s marketplace, albeit without using the blockchain. It’s why we believe true Web3 gaming isn’t that different from current popular titles. And, it’s why we’re building OWNED.gg.
Overall, marketplaces are becoming an integral part of our lives as they provide us convenient ways to buy and sell goods and services from all over the world. They are also helping us explore new ways of using Web3 technology for trading digital assets.
Whitelisting is a process of creating an exclusive list of people or entities that have access to an event. It can be used to grant access to a Web3 project, NFTs, or other exclusive benefits. In the world of NFTs, whitelisting often refers to the use of gating to control who can and can’t purchase an NFT at launch.
Whitelisting is becoming increasingly popular in the digital world and Web3 space as it allows companies and projects to limit access and ensure that only those who meet certain criteria can participate in their programmes. This helps them create an exclusive experience for their customers or rewarding those users they believe most deserving.
NFT raids are a new concept in the world of crypto and social media. It’s a way of promoting new projects and products through the use of NFTs. NFT Raids are used to create hype around a project or product, as well as drive more traffic to it. They involve creating an NFT that can be bought or sold on the blockchain, and then using social media platforms such as Twitter, Reddit, and Discord to promote it en masse – like a viral campaign.
Royalties are payments made to an author or creator for the use of their work. They’re typically based on a percentage of the sale price of a product or service and used to reward authors and creators for their hard work.
NFT royalties are no different. Smart contracts allow authors, creators and even the original minter of an NFT to receive payment when an NFT is traded between two individuals. Royalty percentages are determined by the author or creator and commonly range from 5% to 10%. This allows creators to have more control over how much they get paid for their work after the initial sale, and continue to get paid in transactions long after the initial sale.
Artwork generated by Artificial Intelligence (AI), commonly referred to as generative art, involves the use of algorithms to generate unique and creative pieces of art. Generative art can be used to create digital artwork, sculptures, paintings, and even music.
Generative art platforms like Dream and Midjourney have become increasingly popular in recent years due to their ability to create unique pieces from user prompts. As you might imagine, generative art has become quite a controversial topic. On one hand, it allows anyone to produce unique works with relative ease. On the other hand, generative art has been criticized for its lack of originality and potential for copyright infringement.
Traits are unique attributes used to identify or differentiate NFTs from the same collection. The rarity and uniqueness of these traits make them highly sought after by collectors and investors alike. NFT traits can range from artistic/design differences to the sort of music or video an NFT might host. By understanding how traits work, creators can create more engaging experiences with their NFTs while also increasing their value in the market.
Utility is an important concept for the future of Web3, and describes the functions (or features) of an application or asset – in this case NFTs. For example, an NFT’s utility might be its ability to act as an event ticket, generate rewards, unlock content in a Web3 game, and much more.
One of the more interesting utilities of an NFT allows value and ownership rights to be conferred to the holder. This could completely reform how we think about digital content and ownership. With the help of NFTs, users are able to own unique digital items that can be traded on the blockchain. This has already started to lead to new business models that are based on tokenized assets and decentralized exchanges.
The future of Web3 is closely linked with utility; therefore it is important that we understand a token or NFTs application in order for us to make informed decisions about how we use them in our daily lives.
Initial NFT Offerings (INO), like IGOs (Initial Game Offerings), are an innovative way to finance a Web3 project. It is a form of crowdfunding that allows investors and Web3 enthusiasts to purchase NFTs at the early stage of a project – often at a discount. This allows projects to quickly raise funds while also providing their early adopters with a stake in the project's future success.
INOs offer users the opportunity to become part of the project's community and help shape its development by providing feedback on features and product direction. Additionally, they provide Web3 projects with an alternative source of financing that can speed up development and launch without having to rely on venture capital or traditional sources of funding.
An airdrop in the world of Web3 isn’t that dissimilar from the Apple Wi-Fi service of the same name, but instead of sharing files with users across a wireless network, you distribute digital assets (tokens or NFTs) to users through the blockchain network. The distribution (or airdrop) can either be completely random or targeted at users with wallets holding a particular token or NFT outlined by the distributor.
Airdrops are a great way to reward users or spread the word about a new blockchain project or product, engage users, and incentivize them to get involved with the project. The concept is a bit like Amazon’s Prime Gaming where distributing free in-game items to players encourages them to play said game to use those items. In fact, we are building a similar set of functionality into our own gaming platform, OWNED.gg.
Because of the highly connected nature of blockchain, airdrops have become an important part of the Web3 economy and blockchain projects. By leveraging the power of airdrop, companies can distribute their tokens and NFTs quickly, efficiently, and securely while also creating more awareness around their project. Airdrops are also used as rewards for early adopters who help promote or test new technologies or products related to blockchain technology.
We hope you found our NFT Jargon Guide to be a helpful resource in understanding the terms and concepts associated with Non-Fungible Tokens. We appreciate your time and interest in learning more about this exciting new technology.
If you’re interested in learning more, follow us on our socials for updates and resources on the world of Web3. And be sure to share this guide with your friends and colleagues who might find it useful.
Tune in to see what unix gaming has in store for 2023, including the launch of our gaming platform OWNED.gg!