What’s an NFT?

It’s NFT Week in New York City. 

Non-Fungible Tokens are on the clock as we witness a confluence of artists, fans, and financiers.

So today, we provide a handy guide to NFTs and some related terms.

What is an NFT?

A Non-Fungible Token (NFT) is a one of a kind digital asset representing ownership that’s saved on a blockchain.

NFTs can represent ownership of virtually anything. So far, we’ve seen the technology adopted for — 

Real Estate
DAO Memberships
Video Games

It’s early and the use cases will continue to grow fast.  

What Does Non-Fungible Mean?

Non-fungible means that the token is singular and cannot be replicated or replaced. 

The word fungible means replaceable. 

What Does It Mean to Mint and Burn an NFT? 

To mint is to create.

Minting an NFT means to publish the digital contract onto a blockchain, making it “non-fungible.” 

To burn is to destroy. 

The NFT is removed from supply from the blockchain.

What is the Floor Price?

The floor price is the lowest price for an NFT in a given project.

For example — CryptoPunks have a floor of 99 ETH ($445,226). 

This means the lowest priced out of the 10,000 CryptoPunks in the project is offered for sale at $445,226.

Gas Fees

Gas is the fee required to transact on Ethereum.

Buying an NFT, accepting an offer, transferring an NFT, cancelling a listed NFT, or cancelling a bid all require gas. 

Ethereum is the most commonly used blockchain for NFTs, but gas fees have been high.

Solana and Algorand are “gas-free” blockchains while Polygon is an Ethereum Layer-2 solution that might remedy Ethereum’s high gas fees. 

Why Can’t I Just Right Click And Save?

You can. However, that doesn’t mean you own the NFT.

In fact, the owner and artist may love for the art to be shared as much as possible. The more popular, the more valuable the underlying token.

This is the second installment in The Osprey Crypto Made Simple Series where we describe a concept clearly and concisely. If there’s something you would like us to define, please reply to this Newsletter email or, if you are reading this on the web, hit us directly at riley@ospreyfunds.io.