Many people nowadays are aware of what an NFT is. But they know everything on the surface level and lack basic knowledge about important NFT terms that they may have to use regularly if they are planning to invest in NFTs. You have to be aware of terms like crypto wallet, bitcoin buyer, decentraland and many others to make an informed decision while dealing with NFTs. Here is a personalized glossary for all important terms that you need to know regarding NFTs.
Flip transactions occur when a trader quickly buys and sells an NFT. “Quickly” doesn’t always mean within hours; it might be a few days after purchasing.
Flip is mostly done by people who wish to quickly benefit from an NFT they anticipate will remain in demand. Buying and selling a promising stock for profit in a matter of days when its value is increasing is similar to this in share market transactions. You can use bitcoin buyer, an AI algorithm, to quickly do the market evaluation for you and help you make the right decision at the right time.
Gas is essentially the cost associated with trading on NFT platforms. At every level, from minting to NFT sales, some systems require payment for gas. Gas purchases may be made with cryptocurrency. Ether is the virtual currency of choice for gas since the majority of NFTs operate on the Ethereum blockchain network.
Anyone who deals in NFTs needs to be aware of the gas charge. Since it must be paid at each stage of the transaction, from minting to selling and buying, its cost is gradually increased. Thus, the gas costs must be taken into account while determining the NFT’s retail price. If not, the seller can suffer a loss, particularly if they are unfamiliar with NFTs. Likewise, every transaction involves a gas fee that the buyer must also pay. Even changing an order involves paying for petrol.
The volume of transactions on the blockchain and the size of the NFT both have an impact on gas pricing. A clogged network will result in high gas prices. Larger files also demand more expensive gas prices. Depending on the NFT platforms where it is traded, gas prices can change. By using strategies like setting gas limitations and time trading, experts know how to maintain gas costs as low as feasible.
3. NFT Projects
Basically, an NFT project is a collection of NFTs from the same family. For instance, BAYC and the well-known CryptoPunks.
NFT initiatives start with a concept and can branch out into other smaller projects. A project’s developers are also free to establish a related project in the same way. After creating the high-value NFT project BAYC, the creators went on to create the Mutant Ape Yacht Club (MAYC), in which apes were portrayed as mutants.
Nearly all project tokens share the same characteristic. In the instance of BAYC, each token has a unique set of qualities despite the fact that they are all essentially apes. However, there are different face templates for CryptoPunks, each with a unique feature.
One of the most significant NFT concepts is staking, which refers to the process by which owners of an NFT temporarily “lock up” their collection in order to maximize their return on investment.
This is comparable to the fixed deposits offered by banks. In this case, assets are locked in decentralized finance (DeFi) systems. The number of NFTs staked and the annual percentage yield (APY), which is basically the genuine rate of return on an investment over the course of a year while taking compound interest into account, decide rewards. With this kind of investment, holders can benefit from NFTs without having to sell them.
5. Rug Pull
To put it simply, rug pull is a form of fraud in the NFT community. There have been several instances of unsuspecting fans being convinced to invest in NFTs. When the fraudsters’ timing is perfect, they simply walk away with the gains after driving up the price of NFTs. After then, the NFTs lose all of their value and the investors lose all they invested.
Rug pulls also occur in the bitcoin industry, which is a form of investing. The Squid Game cryptocurrency fraud was one of 2021’s most well-known rug grabs. On October 26, the token first appeared on PancakeSwap.
With the growing popularity of NFTs these days, it’s important to be familiar with basic crypto lingo. Understanding the jargon used around them can help students better comprehend this scary new world. The 5 terms mentioned above are all you need to get a hold of the basics of NFT and they will certainly help you in maneuvering through the NFT world.