Ethereum: The most popular blockchain for NFTs, accounting for around 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 bitcoin. Different from the Bitcoin blockchain, however, is that Ethereum is more than a platform for sending and receiving digital currency, especially through its ability to support smart contracts and therefore NFTs, DeFi and more.
gas costs: Transaction fees for any function performed on the Ethereum blockchain, such as buying NFTs. The price of gas depends on the level of activity on the network, ranging from a few dollars in times of low activity to several hundred dollars in times of intense congestion. The average gas fee for an Ethereum transaction at the time of writing is $11.14, by Cointelegraph.
Interoperability: The ability for a user to move seamlessly between platforms with their own assets.
MetaversePart gaming ecosystem and part virtual lifestyle platform, the Metaverse is a collection of interoperable digital worlds, where users can create content and interact with others as avatars or digital versions of themselves.
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 the data is incorruptible.
OpenSea: The most popular marketplace for NFTs, accounting for over 60% market share. OpenSea currently supports three chains: Ethereum, Polygon (which is built on top of Ethereum), and Klatyn.
Proof of Presence Protocol (POAP): Contrary to its name, a POAP is not a consensus mechanism but rather an NFT that proves that the holder attended a respective physical or virtual event. POAPs are created through 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, in which computers (called 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 much less energy to create new blocks and coins, and is currently used by less popular but growing chains like Tezos, Solana, and Cardano. Ethereum also plans to move to PoS this summer, after which it will be known as Ethereum 2.0.
Proof of Work (PoW): Proof of work is a mining-based consensus mechanism, in which computers (called miners) compete to solve a cryptographic mathematical puzzle. The first miner to solve the puzzle correctly can add the new block/coins and wins a crypto reward. PoW is used by the two main blockchains, Bitcoin and Ethereum, but despite its level of experience, it is known to be exceptionally energy intensive.
Smart contract: A smart contract is the mechanism by which NFTs are minted and transferred. It is a computer program that, when executed, performs a function without the need for third parties, and is also used in areas outside of NFTs, such as DeFi (decentralized finance).
Virtual goods: Assets that exist on virtual platforms and are owned and used by avatars, usually in the form of NFTs. These goods often reflect real-world assets, such as clothing (called wearables) and furniture. They are considered essential parts of the metaverse economy.
Virtual land: Real estate parcels which are formatted as NFTs and exist on virtual platforms, such as The Sandbox and Decentraland. Landlords can buy or lease their land in the primary and secondary markets and develop it however they wish, from building stores that sell virtual goods to creating music festivals with performances on the platform. Much like real estate, plots are acquired as fixed plots and cost real money (the average for smaller plots is around $11,000), although transactions are made using platform-native cryptocurrencies.
Virtual Reality (VR): Virtual reality is a technology that immerses the viewer in a fully digital experience, as opposed to only partially through augmented reality. An example of a VR tool is Meta’s Oculus headset.
Web3: The vision for the next iteration of the Internet. Unlike 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.