It is quite an arduous process to sift through all the noise in the NFT-verse. And what’s even more confusing are the terms that are used collectively to describe various aspects of an NFT. Below you will find some of the common terms that are used across the industry in relation to NFTs.

Non-Fungible Tokens are a blockchain-based, programmable deed of ownership to an asset. This digital deed gives its holder the exclusive ability to use, sell and transfer the asset’s ownership rights, as prescribed by their private key signature.

These rights could pertain to resale, physical redemption, digital functions, financial benefits, or other intangible rights.

NOTE: The NFT does not necessarily “contain” the asset but rather is a programmable record of ownership with an inbuilt and immutable pointer to the asset location.*

• Minting — The process of creating the art/music/video work into an NFT by publishing it on the blockchain (like Ethereum, Polygon, Tezos, Solana, and others).

• Minting price — NFT issuers may choose to mint NFTs themselves or enable users to mint NFTs for a fee. The price paid by an investor at the inception of the NFT’s existence is called the mint price.

• Primary sale — The first time an NFT is sold.

• Secondary sale — Any sale after the primary sale.

• Sales volume — The sum of the primary, secondary, and minting sales.

• Royalties: A percentage cut that is taken on secondary sales and paid to the issuer.

• Floor price — The lowest open sale price of an NFT within a collection. Dutch auctions are not included in floor price calculations.

• Median price — To calculate the median price of all NFT primary sales for a specific collection, the sales’ prices are listed in order from lowest to highest. The median is the sales price exactly in the middle.

• Average price — The average executed sale price of NFTs within a collection, often considered misleading due to skewing from highly-priced outliers.

NOTE: Collectibles are a limited set of NFT art, items, or “cards” with varying attributes and scarcity. They do not necessarily provide owners with a function such as access to a sound clip or control over a special item in a game. Instead, they are valuable because of their rare attributes, traceability, and social desirability.

• NFT Drops — An announced event where investors can purchase the right to new NFTs. Investors are often charged a fee for randomized NFTs whose traits are generated when the tokens are minted. Drops can be separated into different tiers and release times, with more expensive tiers offering rarer traits.

• Generative Art — A form of art that has been created with the use of an autonomous system, generally an algorithm.

• Ownership — NFTs are stored in blockchain wallets (like Metamask, Coinbase Wallet, and others) and can only be used by the owner of the private keys. Blockchain assets are non-custodial and one of the purest forms of property rights and digital ownership.

• Provenance — Blockchain technology allows any NFT to be traced back to its origin through the public ledger. This trait of NFTs helps to prove the authenticity of ownership and prevent fakes. Provenance is a subject of much interest in the traditional collectibles and antique market because of the need to counter forgery.

• Liquidity — The digital nature of NFTs and their integration into major cryptocurrency networks like Ethereum naturally tend toward high liquidity compared to physical goods. However, compared to fungible tokens and currencies, NFTs are significantly less liquid.

• Programmability — NFTs can be integrated into digital networks to provide owners with digital benefits or revenue streams. Accordingly, an NFT can be considered a “smart deed.” Programmability is also what ensures scarcity and enables metadata, these being two critical features of NFTs.

• Standardization — NFT protocols are built on open-source software such as Ethereum and Solana, a trait that introduces industry-wide standardization for these assets and their functionality. Programmability and standardization, in turn, enable ownership of digital assets across platforms and networks.