NFTs: A Short And Sweet Introduction For Beginners

by Milica Knezevic on October 13, 2022

Let's explore the world of NFTs together! Travelling through 10 explanation of some terms that may come in handy in order to understand this phenomena!

We encourage you to read carefully, and to ask any questions that pop up in the comments! Have a fun trip through the NFT world!

Each term is explained in the first few lines, everything else is some fun additional information for you! Good luck!

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1.What is an NFT?

At the most basic level, a Non-Fungible Token is a one-of-a-kind, verifiable digital asset that can be exchanged between a creator and a buyer.
The one-of-a-kind characteristic is important in distinguishing NFTs from other digital assets; one NFT is not interchangeable for another, like a dollar bill or a share of stock, but is unique and has its own value.
This particular digital asset has made a revolution in the art world and it is looking like a promising way for artists to put forth their work!
Here you can see one of Chess Universe's lovely NFTs and hopefully become even more interested!

2. What makes an NFT valuable?

The value of an NFT comes from the property it represents, which is generally something that exists in the digital world like an original piece of art or digital memorabilia.
The NFT itself doesn’t necessarily contain the digital property, but points to its location on the blockchain. Like a concert ticket or a deed to a physical property, an NFT reflects the value of the thing it represents.
Additionally, the value of NFTs is determined by the community; the market decides what they're worth, based on factors including what their previous work sold for, their portfolio of previous work, how long they have been creating and who has collected their work.

3. What’s the connection between NFTs and cryptocurrency?

NFTs aren’t cryptocurrencies, but they are built using technology similar to Ethereum and Bitcoin. Also, like cryptocurrencies, NFTs exist on a blockchain, which verifies their unique identity and ownership. The blockchain also keeps a record of all the transactions connected to the NFT and the property it represents.
Many NFTs are held on the Ethereum blockchain.
Cryptocurrency is a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority

4. What is Blockchain?

Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding).

5. What is a Crypto Wallet? Why do you need it?

A cryptocurrency wallet is a device or program that stores your cryptocurrency keys and allows you to access your coins. Wallets contain a public key (the wallet address) and your private keys needed to sign cryptocurrency transactions. You need it if you want to collect and store your coins. Basically, the same as with physical money, a storage space is required for cryptocurrencies as well.

6. What is Metamask?

A popular cryptocurrency wallet known for its ease of use, availability on both desktops and mobile devices, the ability to buy, send, and receive cryptocurrency from within the wallet, and collect non-fungible tokens (NFTs) across two blockchains.
To help you find it easier we provide their logo here. Their popularity stems from them being an independent crypto wallet, which for users is super important due to them continuously being non bias.

7. What does MINT(ing) mean in the NFT world?

Minting an NFT refers to converting digital files into crypto collections or digital assets stored on the blockchain.
The process of uploading a specific item to the blockchain is known as minting, and it is similar to how one mints a real coin.
Converting your digital content to NFT, submitting the file to NFT markets, and advertising it for sale is similar to posting a video to YouTube, uploading a music file to Spotify, or even listing a digital item or product for sale on Amazon, eBay, or Etsy.
Upload the file (PNG, JPG, GIF, MP3, or MP4), give it a title and subtitle, add a description, set up royalties, and sell it.

8. What is Whitelist(ing) in the NFT world?

The process that explicitly allows an identified wallet address to access a certain privilege for a specific NFT project.
Being whitelisted grants you early access and reduced mint prices for a set amount of time. Whitelists also help avoid increased transaction fees (gas wars).

9. What is Gas in the NFT world?

Gas is a fee one needs to pay to a blockchain network to perform all kinds of transactions. This fee is paid to the “miners” of a blockchain network to compensate for the computing energy required to process and validate transactions. Gas fees differ from network to network, and are volatile.
Basically, in the simplest of terms GAS is a FEE.
Gas fees exist as an incentive for blockchain miners to use their computers to solve complicated algorithms which are necessary to complete blockchain transactions. If there are no incentives, then don’t expect miners to expand their computational power to run smart contract operations. No one will do it out of goodwill.
Essentially, gas fees are necessary to keep the blockchain safe and functioning correctly. Without gas fees, there would be zero people willing to execute these complicated transactions.

10. What is Metadata?

Metadata describes the details about a digital asset such as the name of the file, length of the video, and the images that make up its individual frames.
Metadata means "data about data". Although the "meta" prefix means "after" or "beyond", it is used to mean "about" in epistemology. Metadata is defined as the data providing information about one or more aspects of the data; it is used to summarize basic information about data that can make tracking and working with specific data easier.

Tag: chess, cryptocurrencies, metamask, mint, nft, whitelist

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