PYMNTS Cryptocurrency Glossary: NFTs

Cryptocurrencies have a lot of uses as an investment, as a currency for payments, as a store of value, as well as others. Like any investment, it’s vital to know what you’re talking about and more importantly, what the person trying to sell you something is really saying. And like any other field of finance, industry, art or basically every human endeavor, it has its own lingo, acronyms and definitions — and especially in matters of law and finance, definitions matter.

In this series of articles, we’re going to create a number of glossaries for various parts of the crypto industry, which we’ll combine into a larger reference tool. Today, we’re talking about one of the most hyped part of the crypto world: The NFT, or nonfungible token.

The tokens — no two are alike — can hold any type of media, including art, audio, video and documents. That means you can put an album on an NFT, but also a bond or a deed. They also provide proof of ownership and the provenance of the NFT itself.

They have been embraced by marketers even more than the metaverse. That’s because NFTs exist, whereas metaverses are largely in the early stages of construction, at best.

Another thing worth noting is that the media on an NFT is not necessarily — in fact, not generally — stored on the cryptocurrency token itself — meaning the artwork, music, video, whatever hasn’t been written onto the immutable blockchain, as that can be hugely expensive. That means it is stored somewhere else on the internet — which means if the wrong server or cloud goes down, the NFT could be destroyed.

PYMNTS Cryptocurrency Glossary: The Basics

PYMNTS Cryptocurrency Glossary: Regulations, Legal and Crime

PYMNTS Cryptocurrency Glossary: Decentralized Finance or DeFi

PYMNTS Cryptocurrency Glossary: Central Bank Digital Currency

PYMNTS Cryptocurrency Glossary: The Metaverse

Airdrop: To give away cryptocurrency tokens, including NFTs, to a set group by sending them directly to participants’ wallets — which requires a preexisting community like early token buyers or existing NFT owners.

Attribute: Many NFT collectibles are built on a base image — say, of a Bored Ape — with randomly selected features (fur color, accessories like hats, clothing, facial features, etc.) called traits. Generally, some are rarer than others, making them more valuable. For example, nine CryptoPunks have the “alien” trait of blue skin, 115 have a top hat, 261 are frowning, 961 have a cigarette, 2,459 have an earring, and 6,039 are male. The number of traits or attributes can also affect rarity. See Trait.

Avatar: A representation of yourself, this can be a profile picture (PFP) or an animated character that you control, as in a video game. In this context, an NFT avatar is a metaverse or gaming character. It can often be accessorized with other NFTs to add items like clothing or game pieces like a magic sword.

Beeple: Digital artist Mike Winklemann. He put NFTs in the broader public’s eye on March 11, 2021, when a collage of his works, “Everydays: The First 5,000 Days” sold at auction at Christie’s for $69.3 million in ether, making Winklemann the fifth-highest-selling living artist, after Jasper Johns, Damien Hirst, Jeff Koons and David Hockney. Note that the owner did not receive any rights to either the collage or individual artworks it is made of. All he received was ownership of the NFT, the non-exclusive right to display it publicly, and blockchain immutability proving it is the only real, original NFT of that artwork. This is why you can see the full work on Christie’s website.