The Nifty Dictionary

The Nifty Dictionary: Diamond Hands

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DEFINITION

Diamond hands is a term for someone who plans to hold onto an NFT long-term, with no concern about market conditions in the short term. The opposite of paper hands.

EXAMPLE

“I don’t mind that the floor price for this collection has gone down recently. I’ve got diamond hands, baby! My NFT will be worth a lot one day.”

“Those flippers are going to regret paper handing that NFT! The diamond hands know what’s coming later. 👀”

CONTEXT

A person is said to have diamond hands if they are a long-term NFT holder. Diamond hands are generally held in high regard in the NFT community, as their faith in artists helps create long-term demand for their creations.

Diamond hands collectors may be motivated by love or money: they may believe that the value of their NFT will increase significantly over the long-term, enabling them to sell for a high return in the future; or they may simply love the NFT so much that they want to keep it forever. In either case, such collectors cannot be convinced to part with their NFTs in the near-term.

The opposite of diamond hands is paper hands.

The Nifty Dictionary: Paper Hands

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DEFINITION

Paper hands is a derogatory term for someone who quickly sells an NFT, or sells in a panic when market prices drop. The opposite of diamond hands.

Consequently, to paper hand an NFT means to sell it for a small profit, a wash, or a loss.

CONTEXT

A person is said to have paper hands if they are a short-term NFT holder. The term has a negative connotation, as it implies that the holder does not have long-term faith in the NFT they bought, or faith in its creator. If they did, they would confidently hold on to the asset in the belief that its value will increase over time.

Flippers and speculators would be said to have paper hands, as their goal is to make a profit by reselling NFTs, not keeping them.

In contrast, buyers with diamond hands are those who are committed to holding their NFTs through good markets and bad. Diamond hands plan to either hold onto their NFTs forever, or to sell them for a very high value in the future (as opposed to the small profit or even the loss that paper hands might take by selling in the near-term).

The Nifty Dictionary: One of One (aka 1/1)

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DEFINITION

A 1/1, 1 of 1, or one of one, is an NFT that has been issued as a single, unique edition. One of ones are seen as more scarce and therefore more valuable, because only one person can own them at a time.

CONTEXT

When an NFT is minted, the creator can choose to issue any number of editions of their work. If the creator elects to make multiple editions, these editions will all appear exactly the same, differing only in their edition number and/or token ID.

Issuing multiple editions of an NFT allows more people to collect that nifty. However, the law of supply and demand dictates that the more editions that exist of an NFT, the less valuable each edition becomes.

1/1s therefore have more value than multi-edition NFTs. (By this same logic, 1/1s are generally more valuable than open editions, since open editions are designed to create many editions of that item.)

On the Ethereum network, 1/1s are typically ERC-721 tokens, since the alternative ERC-1155 token standard was created in order to make minting multiple editions of an NFT cheaper and easier.

VIDEO EXPLANATION

For an explanation of 1/1s and other NFT concepts, follow the Niftyist TikTok account.

The Nifty Dictionary: Open Edition

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DEFINITION

In the world of NFT art, an open edition is an NFT for which any number of editions can be minted. This contrasts with a limited edition NFT: one that is limited to a predefined number of editions.

CONTEXT

Open editions are generally seen as less rare or prestigious than limited editions, since they are structured to satisfy demand for the piece in the primary market. Edition limits, by contrast, imply that fewer editions will be produced than there is demand for – ensuring that prices for the piece stay high due to competition for ownership.

However, open editions can still become quite valuable in circumstances such as the following:

The artist gains popularity after the open edition release, creating stronger demand for their earlier works.

The mechanics of open editions can vary. On some curated NFT art marketplaces, such as Nifty Gateway, open editions are still limited-run productions – they are just not limited by a specific number of editions. On that platform, buyers only have a small window of time in which an open edition piece is available to buy. There will be as many pieces minted as are bought in that window of time. Once the window closes, no more editions of that NFT will be minted.

Open editions can be a type of drop, and therefore a marketing tool. For most NFTs created on non-curated platforms like OpenSea and Rarible, though, it’s not necessary to specify whether an NFT is part of a limited or open edition if the artist is not in high demand.

Open editions may or may not have an edition number, and may or may not advertise the total number of editions created.

EXAMPLE

In early 2021, the artist toomuchlag dropped a collection called “My Journey” on Nifty Gateway that featured both normal (limited) editions and open editions. The four NFTs in the main (limited) collection were sold at auction and limited to 25, 15, 3, and 1 edition, respectively. This means that each of the four pieces would produce only that many editions (as long as there were enough buyers in the auction to fill up that number).

The open edition collection featured a single NFT called Le Anime that had no limit on the number of editions that could be purchased. In the few minutes it was available to buy, 1,572 editions were purchased. Therefore, 1,572 editions of Le Anime were minted.

The Nifty Dictionary: Drop

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Dropping is a slang term that means to debut or to become available for purchase.

A drop is the release of one or more NFTs for purchase at a particular time and place.

The phrase drop implies that there will be strong demand for the release – therefore, it’s often used by in marketing or promotional materials to make a release sound more exciting.

Curated NFT platforms like Nifty Gateway, MakersPlace, and KnownOrigin have regular drops several times a week (or even several times a day!), in which one or more artists release a new NFT collection for purchase. Releasing these at a regular, advertised time helps drive excitement and demand for the work and for the platforms themselves. To add to the excitement, some NFTs are only available for purchase at the time of the drop – so if you miss the drop, you’ve lost your chance to buy directly from the creator!

The term drop comes from hip-hop culture, where it’s used to hype the release of new albums. The phrase has since been appropriated by the mainstream music industry (and other industries) to refer to the release of any album, song, artistic, or commercial release.

The Nifty Dictionary: Gas

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On the Ethereum network, gas is a fee that must be paid to the network in order to make a transaction.

Gas is paid directly to miners to compensate them for their computational effort used to run the network. It’s called “gas” because of the easy analogy to driving: to go anywhere in a car, you must make sure you have enough gas in the tank to cover the distance. Similarly, to complete the transaction you want to make, you must make sure you pay enough gas to cover the cost.

I prefer to think of gas fees as automated taxes. Both are required fees paid by beneficiaries of the network (citizens) to cover the costs incurred by running the network.

Gas fees will arise when interacting with the network in a number of ways, including minting an NFT, purchasing an NFT, and sending an NFT from one wallet to another.

While gas fees may seem inconvenient, annoying, and at times expensive, gas is a critical part of the Ethereum network. Gas fees incentivize miners to run the network, disincentivize spam by giving every transaction a cost, and prevent infinite loops, since a transaction will fail once gas is depleted.

Nevertheless, paying fees on a per-transaction basis is not always ideal, especially for low value transactions, when gas fees can approach or exceed the value of the payload.

Ultimately, high gas fees can even disincentivize people from joining or using the Ethereum network.

For this and other reasons, developers are focused on building technologies that minimize or eliminate gas fees for many interactions with the Ethereum network. One such scheme in the NFT world is “lazy minting,” in which an NFT is not actually created on the network until it is purchased, in order to save the seller upfront cost. Other solutions include “layer two” dapps and marketplaces which allow users to conduct most transactions within a network built on top of Ethereum. This can save users from having to make frequent or one-off calls to the Ethereum blockchain by batching transactions.

The Nifty Dictionary: Mint

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DEFINITION

Minting means creating a new NFT. Recall that NFT stands for non-fungible token. Just as a metal coin must be minted in the real world, a non-fungible token must be minted digitally. The token is minted on a blockchain such as Ethereum, a public database where it can be stored, traced, and traded. To mint a token is to create a new entry in that database.

In most cases, the true NFT – the piece stored on the blockchain – is just a few lines of code, and does not actually contain the content that is of value, such as a picture, video, or song. That’s because storing content on a blockchain is usually quite expensive. In most cases, content is stored elsewhere, and the proper NFT just contains a reference to this content.

Therefore, minting an NFT is often a dual process in which the creator uploads the file for hosting while simultaneously creating a token referencing it on the blockchain. Minting services try to make this process simple for users and may not make the distinction clear. Depending on the service, they may host the NFT on their own servers for convenience.

This disconnect is one huge issue in current NFT technology. When minting an NFT, it is important to know where the content will be hosted, so you can consider how safe and trustworthy that source is. URLs are considered risky addresses, because whoever owns the URL can change what it points to.

For this reason, many people prefer to see NFTs stored using a process called content-addressing on a network such as IPFS or Swarm, which ensures that the link can only ever point to that unique piece of content. Even this approach has issues though, as items stored on such networks must still be hosted and maintained to exist in the future.

When minting (or purchasing) an NFT, make sure you know where the content will live, and that you trust that it will live there for a long time. Otherwise, the buyer may get stuck with owning a permanently broken link.

The Nifty Dictionary: NFT

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DEFINITION

NFT stands for Non-Fungible Token, which is crypto jargon for a unique digital item. Non-fungible simply means that two items are not exactly interchangable, the way that two tickets to the same concert may not be interchangable (perhaps one ticket is for the front row and one is for the nosebleed section) even though the money that you paid for them is interchangable (it doesn’t matter which dollar bills, coins, or credit you pay to the ticketing service – they’re happy to take any and every coin in an accepted currency). Token just means a tradeable digital good. NFTs are also called “nifties,” due to their similar pronunciation.

Why do we need a specific term for this fairly obvious concept? Well, since the advent of the web, a lot of online content such as images, videos, and audio has been made infinitely reproducible – anyone can create one copy exactly like another. Blockchain technology introduces a new paradigm for digital assets which allows us to declare some copies as legitimate and publicly track their provenance and current ownership. In other words, it introduces the fundamental economic concept of scarcity into the digital world. Note that this doesn’t mean that any item that has been turned into an NFT can’t be exactly copied – in fact it usually can – but that there are now a class of legitimate copies, and those versions will be the ones that hold value.

Why should the NFT-based copies hold value? For the same reason that a print sold by an artist of her own work would be more than an identical print sold by a street merchant. The print coming from the artist is legitimate and verifiable. It probably comes with an autograph or a certificate of authenticity to prove this to future buyers. You can feel comfortable buying it from the artist, knowing you are supporting them on the terms they have set, and that your copy will retain this legitimacy and value going forward. The print you bought from a street merchant? You may have a hard time convincing someone to pay you for it when you try to sell it, due to its dubious origin and your lack of proof of its legitimacy.

Almost anything can be turned into an NFT (a process called “minting“). This is done by creating a record on a blockchain such as Ethereum that can be viewed, bought, and sold. Who holds the contract, owns the NFT.

Today, NFTs most often take the form of digital art and in-game items, and “NFT” (or “nifty”) has already become shorthand for digital art. In the future, we are likely to see use of NFTs expand to many, many domains, including legal contracts, and yes, concert tickets.