Discord: A social chat room platform that serves a popular homebase for Web3 communities, such as members of an NFT collection or a DAO. The platform has roughly 6.7 million different groups, called servers, at the time of writing.
Drop: Another word for releasing an NFT or NFT collection on a marketplace.
Ethereum: The most popular blockchain for NFTs, accounting for roughly 80% of the market share, per a JPMorgan study cited by CoinDesk. Ether is the platform’s cryptocurrency, which is the second-most popular crypto behind only bitcoin. Different from the Bitcoin blockchain, however, is that Ethereum is more than a platform for sending and receiving digital currency, namely via its ability to support smart contracts and thus NFTs, DeFi and more.
FOMO: An acronym for “fear of missing out,” FOMO has been co-opted by the crypto community to describe the pressure one feels toward investing in an asset (i.e. coin, NFT, etc.) that could accrue value over time.
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FUD: An acronym for “Fear, uncertainty and doubt,” FUD is a term that encapsulates negative sentiment or pessimism toward an activity. In crypto, the word is typically used in a dismissive manner to characterize non-believers or such feelings toward a project. For example, a member of a specific NFT community may accuse someone of showing FUD if they don’t believe in that NFT collection’s potential to accrue value.
Gas fees: Transaction fees for any function that is carried out on the Ethereum blockchain, such as buying NFTs. The price of gas depends on the level of activity on the network, ranging anywhere from a few dollars during times of low activity to as much as several hundred dollars during times of intense congestion. The average gas fee of an Ethereum transaction at the time of writing is $11.14, per Cointelegraph.
Gas war: A situation on the Ethereum blockchain in which heightened demand for transactions congests the network, creating a bottleneck effect where users struggle to get their transactions authorized. Gas fees will also surge immensely, hence the term “gas war.”
Generative art: Art that is created via code that randomly combines a set of parameters to output unique pieces. This is how many NFT PFP (profile picture) collections work. For example, during the Bored Ape minting process, when a buyer minted an NFT, the code would generate a unique ape based on traits like facial expression, background color, headwear and other accessories. Early examples of generative art are Larva Labs’ “CryptoPunks” NFT collection in 2017 and Art Blocks’ “Chromie Squiggles” NFT collection in 2020.
Related: Behind VaynerSports' botched NFT sale
Interoperability: The capacity for a user to seamlessly move between platforms with their owned assets.
Metaverse: Part gaming ecosystem, part virtual lifestyle platform, the metaverse is a collection of digital worlds that are interoperable, in which users can create content and interact with others as avatars, or digital versions of themselves.
Watch: Industry leaders discuss the metaverse
Mint: To publish an NFT on a blockchain.
Non-fungible token (NFT): A non-fungible token is a certificate proving the authenticity and uniqueness of a digital asset. It is not the asset itself, but rather a unit of data that proves ownership of the asset and is ideally stored on a blockchain to ensure that data is incorruptible.
Read more: How brands are using NFTs
OpenSea: The most popular marketplace for NFTs, accounting for over 60% of the market share. OpenSea currently supports three chains: Ethereum, Polygon (which is built on top of Ethereum) and Klatyn.
Open source: When software is available to the public for the purposes of collaboration and transparency. Blockchain-based platforms often make their code open source in order to build trust with users, while also inviting them to help strengthen the code through debugging.
Phygital: A portmanteau of “digital” and “physical,” meaning a type of marketing that blends both channels. It is not exclusively a metaverse term, but it is finding more applications by brands through metaverse and Web3 tools.
Private key: A file that is used to access crypto transactions associated with a public key. It is a mechanism that proves a person’s ownership of that crypto, thus allowing them to spend it. Private keys must never be shared with anyone.
Proof of attendance protocol (POAP): Contrary to the name, a POAP is not a consensus mechanism but rather an NFT that proves the holder attended a respective physical or virtual event. POAPs are created via a special smart contract (the protocol), and are typically collected to preserve memories of experiences. They must include an image, description, date and time of the event in question.
Proof of stake (PoS): Proof of stake is a consensus mechanism that relies on staking, wherein computers (known as validators) set aside an amount of crypto as collateral in order to receive a chance to add blocks/coins to the ecosystem, after which they are also rewarded. This method requires far less energy to create new blocks and new coins, and is currently used by less popular but growing chains like Tezos, Solana and Cardano. Ethereum is also planning to switch to PoS sometime this summer, after which it will be known as Ethereum 2.0.
Read more: Why Kanye's stance on NFTs struck a chord
Proof of work (PoW): Proof of work is a consensus mechanism that relies on mining, wherein computers (known as miners) compete to solve a cryptographic math puzzle. The first miner to correctly solve the puzzle gets to add the new block/coins and earns a crypto reward. PoW is used by the top two blockchains, Bitcoin and Ethereum, but despite its level of experience, is known for being exceptionally energy-intensive.
Public key: An address that is used to receive crypto and other digital asset transactions. It is a string of cryptographic code that acts like a secure box, whose contents can only be opened by a corresponding private key. Public keys are mostly safe to share with others because they do not allow for the funds in question.
Seed phrase: Essentially a password that allows a user to access their wallet. It is formatted as a series of 12 to 24 words that are randomly generated (i.e. “witch,” “bull,” “star,” etc.). Because seed phrases offer access to private keys, they must never be shared with anyone.
Smart contract: A smart contract is the mechanism by which NFTs are minted and transferred. It is a computer program that when run, executes a function without the need for third parties, and has use in areas outside of NFTs as well, such as DeFi (decentralized finance).
Soulbound token (SBT): A non-transferable digital certificate that verifies a credential. The credential can basically denote any kind of information, such as an achievement, a recommendation or a medical record. It is intended to solve the shortcomings of digital trust (i.e. verifying, with 100% certainty, that someone’s credentials are truly theirs, short of calling up each and every party that issued those credentials).
Token-gating: A process requiring an individual to prove they own a specific NFT in order to receive access or a reward. It is often used to provide utility for an NFT collection.
Tokenization: A phygital marketing practice, wherein physical items are re-formatted into NFTs and placed on a blockchain.
Twinning: Another phygital marketing practice that involves crafting a digital model that reflects a physical one, or vice versa. For example, Prada recently started twinning apparel from its Timecapsule drops into NFT wearables that come with the physical product. The main difference between twinning and tokenization is that tokenization is typically used on a case-by-case basis for assets that accrue value over time and have active trading markets, such as baseball cards and vintage sneakers. Twinning, on the other hand, is often used less discriminately.
Utility: Benefits that are offered through holding an NFT, such as exclusive access to events, special merchandise and discounts. Utility often works through a process called token-gating, wherein an individual must prove they own a specific NFT in order to participate in rewards.
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Virtual goods: Assets that exist in virtual platforms and are owned and used by avatars, typically in the form of NFTs. These goods often mirror real-world assets, such as clothes (known as wearables) and furniture. They are considered essential pieces of the metaverse economy.
Virtual land: Parcels of real estate that are formatted as NFTs and exist in virtual platforms, such as The Sandbox and Decentraland. Owners can buy or rent their land on primary and secondary marketplaces and develop it however they want, from building stores that sell virtual goods to creating music festivals with performances on the platform. Just like actual real estate, the parcels are acquired as fixed plots and cost real money (average for smallest plots is roughly $11,000), though transactions are made using platform-native cryptocurrencies.
Read more: What brands need to know about buying virtual land
Virtual reality (VR): Virtual reality is a technology that immerses the viewer in a completely digital experience, as opposed to only partially through AR. An example of a VR tool is Meta’s Oculus headset.
Wallet: Also known as a crypto wallet. It is a tool for securely storing private and public keys, which are used to access an individual’s owned cryptocurrencies and digital assets. Wallets can be “hot,” meaning connected to the internet (e.g. apps like MetaMask and Coinbase Wallet), or “cold,” meaning disconnected from the internet (e.g. external hard drives).
Web3: The vision for the next iteration of the internet. As opposed to the current system (Web2), which is controlled by walled gardens like Google and Facebook, Web3 emphasizes user ownership—of data, content and assets—through the interoperability of metaverse platforms and the decentralized nature of blockchain technology.
