Integrity
Write
Loading...
Sea Launch

Sea Launch

4 years ago

đź“– Guide to NFT terms: an NFT glossary.

NFT lingo can be overwhelming. As the NFT market matures and expands so does its own jargon, slang, colloquialisms or acronyms.

This ever-growing NFT glossary goal is to unpack key NFT terms to help you better understand the NFT market or at least not feel like a total n00b in a conversation about NFTs on Reddit, Discord or Twitter.


#

1:1 Art

Art where each piece is one of a kind (1 of 1). Unlike 10K projects, PFP or Generative Art collections have a cap of NFTs released that can range from a few hundreds to 10K.

1/1 of X

Contrary to 1:1 Art, 1/1 of X means each NFT is unique, but part of a large and cohesive collection. E.g: Fidenzas by Tyler Hobbs or Crypto Punks (each Punk is 1/1 of 10,000).

10K Project

A type of NFT collection that consists of approximately 10,000 NFTs (but not strictly).


A

AB

ArtBlocks, the most important platform for generative art currently.

AFAIK

As Far As I Know.

Airdrop

Distribution of an NFT token directly into a crypto wallet for free. Can be used as a marketing campaign or as scam by airdropping fake tokens to empty someone’s wallet.

Alpha

The first or very primitive release of a project. Or Investment term to track how a certain investment outdoes the market. E.g: Alpha of 1.0 = 1% improvement or Alpha of 20.0 = 20% improvement.

Altcoin

Any other crypto that is not Bitcoin. Bitcoin Maximalists can also refer to them as shitcoins.

AMA

Ask Me Anything. NFT creators or artists do sessions where anyone can ask questions about the NFT project, team, vision, etc. Usually hosted on Discord, but also on Reddit or even Youtube.

Ape

Someone can be aping, ape in or aped on an NFT meaning someone is taking a large position relative to its own portfolio size. Some argue that when someone apes can mean that they're following the hype, out of FOMO or without due diligence. Not related directly to the Bored Ape Yatch Club.

ATH

All-Time High. When a NFT project or token reaches the highest price to date.

Avatar project

An NFT collection that consists of avatars that people can use as their profile picture (see PFP) in social media to show they are part of an NFT community like Crypto Punks.

Axie Infinity

ETH blockchain-based game where players battle and trade Axies (digital pets). The main ERC-20 tokens used are Axie Infinity Shards (AXS) and Smooth Love Potions (formerly Small Love Potion) (SLP).

Axie Infinity Shards

AXS is an Eth token that powers the Axie Infinity game.


B

Bag Holder

Someone who holds its position in a crypto or keeps an NFT until it's worthless.

BAYC

Bored Ape Yacht Club. A very successful PFP 1/1 of 10,000 individual ape characters collection. People use BAYC as a Twitter profile picture to brag about being part of this NFT community.

Bearish

Borrowed finance slang meaning someone is doubtful about the current market and that it will crash.

Bear Market

When the Crypto or NFT market is going down in value.

Bitcoin (BTC)

First and original cryptocurrency as outlined in a whitepaper by the anonymous creator(s) Satoshi Nakamoto.

Bitcoin Maximalist

Believer that Bitcoin is the only cryptocurrency needed. All other cryptocurrencies are altcoins or shitcoins.

Blockchain

Distributed, decentralized, immutable database that is the basis of trust in Web 3.0 technology.

Bluechip

When an NFT project has a long track record of success and its value is sustained over time, therefore considered a solid investment.

BTD

Buy The Dip. A bear market can be an opportunity for crypto investors to buy a crypto or NFT at a lower price.

Bullish

Borrowed finance slang meaning someone is optimistic that a market will increase in value aka moon.

Bull market

When the Crypto or NFT market is going up and up in value.

Burn

Common crypto strategy to destroy or delete tokens from the circulation supply intentionally and permanently in order to limit supply and increase the value.

Buying on secondary

Whenever you don’t mint an NFT directly from the project, you can always buy it in secondary NFT marketplaces like OpenSea. Most NFT sales are secondary market sales.


C

Cappin or Capping

Slang for lying or faking. Opposed to no cap which means “no lie”.

Coinbase

Nasdaq listed US cryptocurrency exchange. Coinbase Wallet is one of Coinbase’s products where users can use a Chrome extension or app hot wallet to store crypto and NFTs.

Cold wallet

Otherwise called hardware wallet or cold storage. It’s a physical device to store your cryptocurrencies and/or NFTs offline. They are not connected to the Internet so are at less risk of being compromised.

Collection

A set of NFTs under a common theme as part of a NFT drop or an auction sale in marketplaces like OpenSea or Rarible.

Collectible

A collectible is an NFT that is a part of a wider NFT collection, usually part of a 10k project, PFP project or NFT Game.

Collector

Someone who buys NFTs to build an NFT collection, be part of a NFT community or for speculative purposes to make a profit.

Cope

The opposite of FOMO. When someone doesn’t buy an NFT because one is still dealing with a previous mistake of not FOMOing at a fraction of the price. So choosing to stay out.

Consensus mechanism

Method of authenticating and validating a transaction on a blockchain without the need to trust or rely on a central authority. Examples of consensus mechanisms are Proof of Work (PoW) or Proof of Stake (PoS).

Cozomo de’ Medici

Twitter alias used by Snoop Dogg for crypto and NFT chat.

Creator

An NFT creator is a person that creates the asset for the NFT idea, vision and in many cases the art (e.g. a jpeg, audio file, video file).

Crowsale

Where a crowdsale is the sale of a token that will be used in the business, an Initial Coin Offering (ICO) is the sale of a token that’s linked to the value of the business. Buying an ICO token is akin to buying stock in the company because it entitles you a share of the earnings and profits. Also, some tokens give you voting rights similar to holding stock in the business. The US Securities and Exchange Commission recently ruled that ICOs, but not crowdselling, will be treated as the sale of a security. This basically means that all ICOs must be registered like IPOs and offered only to accredited investors. This dramatically increases the costs and limits the pool of potential buyers.

Crypto Bags/Bags

Refers to how much cryptocurrencies someone holds, as in their bag of coins.

Cryptocurrency

The native coin of a blockchain (or protocol coin), secured by cryptography to be exchanged within a Peer 2 Peer economic system. E.g: Bitcoin (BTC) for the Bitcoin blockchain, Ether (ETH) for the Ethereum blockchain, etc.

Crypto community

The community of a specific crypto or NFT project. NFT communities use Twitter and Discord as their primary social media to hang out.

Crypto exchange

Where someone can buy, sell or trade cryptocurrencies and tokens.

Cryptography

The foundation of blockchain technology. The use of mathematical theory and computer science to encrypt or decrypt information.

CryptoKitties

One of the first and most popular NFT based blockchain games. In 2017, the NFT project almost broke the Ethereum blockchain and increased the gas prices dramatically.

CryptoPunk

Currently one of the most valuable blue chip NFT projects. It was created by Larva Labs. Crypto Punk holders flex their NFT as their profile picture on Twitter.

CT

Crypto Twitter, the crypto-community on Twitter.

Cypherpunks

Movement in the 1980s, advocating for the use of strong cryptography and privacy-enhancing technologies as a route to social and political change. The movement contributed and shaped blockchain tech as we know today.


D

DAO

Stands for Decentralized Autonomous Organization. When a NFT project is structured like a DAO, it grants all the NFT holders voting rights, control over future actions and the NFT’s project direction and vision. Many NFT projects are also organized as DAO to be a community-driven project.

Dapp

Mobile or web based decentralized application that interacts on a blockchain via smart contracts. E.g: Dapp is the frontend and the smart contract is the backend.

DCA

Acronym for Dollar Cost Averaging. An investment strategy to reduce the impact of crypto market volatility. E.g: buying into a crypto asset on a regular monthly basis rather than a big one time purchase.

Ded

Abbreviation for dead like "I sold my Punk for 90 ETH. I am ded."

DeFi

Short for Decentralized Finance. Blockchain alternative for traditional finance, where intermediaries like banks or brokerages are replaced by smart contracts to offer financial services like trading, lending, earning interest, insure, etc.

Degen

Short for degenerate, a gambler who buys into unaudited or unknown NFT or DeFi projects, without proper research hoping to chase high profits.

Delist

No longer offer an NFT for sale on a secondary market like Opensea. NFT Marketplaces can delist an NFT that infringes their rules. Or NFT owners can choose to delist their NFTs (has long as they have sufficient funds for the gas fees) due to price surges to avoid their NFT being bought or sold for a higher price.

Derivative

Projects derived from the original project that reinforces the value and importance of the original NFT. E.g: "alternative" punks.

Dev

A skilled professional who can build NFT projects using smart contracts and blockchain technology.

Dex

Decentralised Exchange that allows for peer-to-peer trustless transactions that don’t rely on a centralized authority to take place. E.g: Uniswap, PancakeSwap, dYdX, Curve Finance, SushiSwap, 1inch, etc.

Diamond Hands

Someone who believes and holds a cryptocurrency or NFT regardless of the crypto or NFT market fluctuations.

Discord

Chat app heavily used by crypto and NFT communities for knowledge sharing and shilling.

DLT

Acronym for Distributed Ledger Technology. It’s a protocol that allows the secure functioning of a decentralized database, through cryptography. This technological infrastructure scraps the need for a central authority to keep in check manipulation or exploitation of the network.

Dog coin

It’s a memecoin based on the Japanese dog breed, Shiba Inu, first popularised by Dogecoin. Other notable coins are Shiba Inu or Floki Inu. These dog coins are frequently subjected to pump and dumps and are extremely volatile. The original dog coin DOGE was created as a joke in 2013. Elon Musk is one of Dogecoin's most famous supporters.

Doxxed/Doxed

When the identity of an NFT team member, dev or creator is public, known or verifiable. In the NFT market, when a NFT team is doxed it’s a usually sign of confidence and transparency for NFT collectors to ensure they will not be scammed for an anonymous creator.

Drop

The release of an NFT (single or collection) into the NFT market.

DYOR

Acronym for Do Your Own Research. A common expression used in the crypto or NFT community to disclaim responsibility for the financial/strategy advice someone is providing the community and to avoid being called out by others in theNFT or crypto community.


E

EIP-1559 EIP

Referring to Ethereum Improvement Proposal 1559, commonly known as the London Fork. It’s an upgrade to the Ethereum protocol code to improve the blockchain security and scalability. The major change consists in shifting from a proof-of-work consensus mechanism (PoW) to a low energy and lower gas fees proof-of-stake system (PoS).

ERC-1155

Stands for Ethereum Request for Comment-1155. A multi-token standard that can represent any number of fungible (ERC-20) and non-fungible tokens (ERC-721).

ERC-20

Ethereum Request for Comment-20 is a standard defining a fungible token like a cryptocurrency.

ERC-721

Ethereum Request for Comment-721 is a standard defining a non-fungible token (NFT).

ETH

Aka Ether, the currency symbol for the native cryptocurrency of the Ethereum blockchain.

ETH2.0

Also known as the London Fork or EIP-1559 EIP. It’s an upgrade to the Ethereum network to improve the network’s security and scalability. The most dramatic change is the shift from the proof-of-work consensus mechanism (PoW) to proof-of-stake system (PoS).

Ether

Or ETH, the native cryptocurrency of the Ethereum blockchain.

Ethereum

Network protocol that allows users to create and run smart contracts over a decentralized network.


F

FCFS

Acronym for First Come First Served. Commonly used strategy in a NFT collection drop when the demand surpasses the supply.

Few

Short for "few understand". Similar to the irony behind the "probably nothing" expression. Like X person bought into a popular NFT, because it understands its long term value.

Fiat Currencies or Money

National government-issued currencies like the US Dollar (USD), Euro (EUR) or Great British Pound (GBP) that are not backed by a commodity like silver or gold. FIAT means an authoritative or arbitrary order like a government decree.

Flex

Slang for showing off. In the crypto community, it’s a Lamborghini or a gold Rolex. In the NFT world, it’s a CryptoPunk or BAYC PFP on Twitter.

Flip

Quickly buying and selling crypto or NFTs to make a profit.

Flippening

Colloquial expression coined in 2017 for when Ethereum’s market capitalisation surpasses Bitcoin’s.

Floor Price

It means the lowest asking price for an NFT collection or subset of a collection on a secondary market like OpenSea.

Floor Sweep

Refers when a NFT collector or investor buys all the lowest listed NFTs on a secondary NFT marketplace.

FOMO

Acronym for Fear Of Missing Out. Buying a crypto or NFT out of fear of missing out on the next big thing.

FOMO-in

Buying a crypto or NFT regardless if it's at the top of the market for FOMO.

Fractionalize

Turning one NFT like a Crypto Punk into X number of fractions ERC-20 tokens that prove ownership of that Punk. This allows for i) collective ownership of an NFT, ii) making an expensive NFT affordable for the common NFT collector and iii) adds more liquidity to a very illiquid NFT market.

FR

Abbreviation for For Real?

Fren

Means Friend and what people in the NFT community call each other in an endearing and positive way.

Foundation

An exclusive, by invitation only, NFT marketplace that specializes in NFT art.

Fungible

Means X can be traded for another X and still hold the same value. E.g: My dollars = your dollars. My 1 ether = your 1 ether. My casino chip = your casino chip. On Ethereum, fungible tokens are defined by the ERC-20 standard.

FUD

Acronym for Fear Uncertainty Doubt. It can be a) when someone spreads negative and sometimes false news to discredit a certain crypto or NFT project. Or b) the overall negative feeling regarding the future of the NFT/Crypto project or market, especially when going through a bear market.

Fudder

Someone who has FUD or engages in FUD about a NFT project.

Fudding your own bags

When an NFT collector or crypto investor speaks negatively about an NFT or crypto project he/she has invested in or has a stake in. Usually negative comments about the team or vision.


G

G

Means Gangster. A term of endearment used amongst the NFT Community.

Gas/Gas fees/Gas prices

The fee charged to complete a transaction in a blockchain. These gas prices vary tremendously between the blockchains, the consensus mechanism used to validate transactions or the number of transactions being made at a specific time.

Gas war

When a lot of NFT collectors (or bots) are trying to mint an NFT at once and therefore resulting in gas price surge.

Generative art

Artwork that is algorithmically created by code with unique traits and rarity.

Genesis drop

It refers to the first NFT drop a creator makes on an NFT auction platform.

GG

Interjection for Good Game.

GM

Interjection for Good Morning.

GMI

Acronym for Going to Make It. Opposite of NGMI (NOT Going to Make It).

GOAT

Acronym for Greatest Of All Time.

GTD

Acronym for Going To Dust. When a token or NFT project turns out to be a bad investment.

GTFO

Get The F*ck Out, as in “gtfo with that fud dude” if someone is talking bull.

GWEI

One billionth of an Ether (ETH) also known as a Shannon / Nanoether / Nano — unit of account used to price Ethereum gas transactions.


H

HEN (Hic Et Nunc)

A popular NFT art marketplace for art built on the Tezos blockchain. Big NFT marketplace for inexpensive NFTs but not a very user-friendly UI/website.

HODL

Misspelling of HOLD coined in an old Reddit post. Synonym with “Hold On for Dear Life” meaning hold your coin or NFT until the end, whether that they’ll moon or dust.

Hot wallet

Wallets connected to the Internet, less secure than cold wallet because they’re more susceptible to hacks.

Hype

Term used to show excitement or anticipation about an upcoming crypto project or NFT.


I

ICO

Acronym for Initial Coin Offering. It’s the crypto equivalent to a stocks’ IPO (Initial Public Offering) but with far less scrutiny or regulation (leading to a lot of scams). ICO’s are a popular way for crypto projects to raise funds.

IDO

Acronym for Initial Dex Offering. To put it simply it means to launch NFTs or tokens via a decentralized liquidity exchange. It’s a common fundraising method used by upcoming crypto or NFT projects. Many consider IDOs a far better fundraising alternative to ICOs.

IDK

Acronym for I Don’t Know.

IDEK

Acronym for I Don’t Even Know.

Imma

Short for I’m going to be.

IRL

Acronym for In Real Life. Refers to the physical world outside of the online/virtual world of crypto, NFTs, gaming or social media.

IPFS

Acronym for Interplanetary File System. A peer-to-peer file storage system using hashes to recall and preserve the integrity of the file, commonly used to store NFTs outside of the blockchain.

It’s Money Laundering

Someone can use this expression to suggest that NFT prices aren’t real and that actually people are using NFTs to launder money, without providing much proof or explanation on how it works.

IYKYK

Stands for If You Know, You Know This. Similar to the expression "few", used when someone buys into a popular crypto or NFT project, slightly because of FOMO but also because it believes in its long term value.


J

JPEG/JPG

File format typically used to encode NFT art. Some people also use Jpeg to mock people buying NFTs as in “All that money for a jpeg”.


K

KMS

Short for Kill MySelf.


L

Larva Labs/ LL

NFT Creators behind the popular NFT projects like Cryptopunks,Meebits or Autoglyphs.

Laser eyes

Bitcoin meme signalling support for BTC and/or it will break the $100k per coin valuation.

LFG

Acronym for Let’s F*cking Go! A common rallying call used in the crypto or NFT community to lead people into buying an NFT or a crypto.

Liquidity

Term that means that a token or NFT has a high volume activity in the crypto/NFT market. It’s easily sold and resold. But usually the NFT market it’s illiquid when compared to the general crypto market, due to the non-fungibility nature of an NFT (there are less buyers for every NFTs out there).

LMFAO

Stands for Laughing My F*cking Ass Off.

Looks Rare

Ironic expression commonly used in the NFT Community. Rarity is a driver of an NFT’s value.

London Hard Fork

Known as EIP-1559, was an Ethereum code upgrade proposal designed to improve the blockchain security and scalability. It’s major change is to shift from PoW to PoS consensus mechanism.

Long run

Means someone is committed to the NFT market or an NFT project in the long term.


M

Maximalist

Typically refers to Bitcoin Maximalists. People who only believe that Bitcoin is the most secure and resilient blockchain. For Maximalists, all other cryptocurrencies are shitcoins therefore a waste of time, development and money.

McDonald's

Common and ironic expression amongst the crypto community. It means that Mcdonald’s is always a valid backup plan or career in the case all cryptocurrencies crash and disappear.

Meatspace

Synonymous with IRL - In Real Life.

Memecoin

Cryptocurrency like Dogecoin that is based on an internet joke or meme.

Metamask

Popular crypto hot wallet platform to store crypto and NFTs.

Metaverse

Term was coined by writer Neal Stephenson in the 1992 dystopian novel “Snow Crash”. It’s an immersive and digital place where people interact via their avatars. Big tech players like Meta (formerly known as Facebook) and other independent players have been designing their own version of a metaverse. NFTs can have utility for users like buying, trading, winning, accessing, experiencing or interacting with things inside a metaverse.

Mfer

Short for “mother fker”.

Miners

Single person or company that mines one or more cryptocurrencies like Bitcoin or Ethereum. Both blockchains need computing power for their Proof of Work consensus mechanism. Miners provide the computing power and receive coins/tokens in return as payment.

Mining

Mining is the process by which new tokens enter in circulation as for example in the Bitcoin blockchain. Also, mining ensures the validity of new transactions happening in a given blockchain that uses the PoW consensus mechanism. Therefore, the ones who mine are rewarded by ensuring the validity of a blockchain.

Mint/Minting

Mint an NFT is the act of publishing your unique instance to a specific blockchain like Ethereum or Tezos blockchain. In simpler terms, a creator is adding a one-of-kind token (NFT) into circulation in a specific blockchain.

Once the NFT is minted - aka created - NFT collectors can i) direct mint, therefore purchase the NFT by paying the specified amount directly into the project’s wallet. Or ii) buy it via an intermediary like an NFT marketplace (e.g: OpenSea, Foundation, Rarible, etc.). Later, the NFT owner can choose to resell the NFT, most NFT creators set up a royalty for every time their NFT is resold.

Minting interval

How often an NFT creator can mint or create tokens.

MOAR

A misspelling that means “more”.

Moon/Mooning

When a coin (e.g. ETH), or token, like an NFT goes exponential in price and the price graph sees a vertical climb. Crypto or NFT users then use the expression that “X token is going to the moon!”.

Moon boys

Slang for crypto or NFT holders who are looking to pump the price dramatically - taking a token to the moon - for short term gains and with no real long term vision or commitment.


N

Never trust, always verify

Treat everyone or every project like something potentially malicious.

New coiner

Crypto slang for someone new to the cryptocurrency space. Usually newcomers can be more susceptible to FUD or scammers.

NFA

Acronym for Not Financial Advice.

NFT

Acronym for Non-Fungible Token. The type of token that can be created, bought, sold, resold and viewed in different dapps. The ERC-721 smart contract standard (Ethereum blockchain) is the most popular amongst NFTs.

NFT Marketplace / NFT Auction platform

Platforms where people can sell and buy NFTs, either via an auction or pay the seller’s price. The largest NFT marketplace is OpenSea. But there are other popular NFT marketplace examples like Foundation, SuperRare, Nifty Gateway, Rarible, Hic et Nunc (HeN), etc.

NFT Whale

A NFT collector or investor who buys a large amount of NFTs.

NGMI

Acronym for Not Going to Make It. For example, something said to someone who has paper hands.

NMP

Acronym for Not My Problem.

Nocoiner

It can be someone who simply doesn’t hold cryptocurrencies, mistrust the crypto market or believes that crypto is either a scam or a ponzi scheme.

Noob/N00b/Newbie

Slang for someone new or not experienced in cryptocurrency or NFTs. These people are more susceptible to scams, drawn into pump and dumps or getting rekt on bad coins.

Normie/Normy

Similar expression for a nocoiner.

NSFW

Acronym for Not Suitable For Work. Referring to online content inappropriate for viewing in public or at work. It began as mostly a tag for sexual content, nudity, or violence, but it has envolved to range a number of other topics that might be delicate or trigger viewers.

Nuclear NFTs

An NFT or collectible with more than 1,000 owners. For the NFT to be sold or resold, every co-owners must give their permission beforehand. Otherwise, the NFT transaction can’t be made.


O

OG

Acronym for Original Gangster and it popularized by 90s Hip Hop culture. It means the first, the original or the person who has been around since the very start and earned respect in the community. In NFT terms, Cryptopunks are the OG of NFTs.

On-chain vs Off-chain

An on-chain NFT is when the artwork (like a jpeg, video or music file) is stored directly into the blockchain making it more secure and less susceptible to being stolen. But, note that most blockchains can only store small amounts of data.

Off-chain NFTs means that the high quality image, music or video file is not stored in the blockchain. But, the NFT data is stored on an external party like a) a centralized server, highly vulnerable to the server being shut down/exploited. Or b) an InterPlanetary File System (IPFS), also an external party but more secure way of finding data because it utilizes a distributed, decentralized system.

OpenSea

By far the largest NFT marketplace in the world, currently.


P

Paper Hands

A crypto or NFT holder who is permeable to negative market sentiment or FUD. And does not hold their crypto or NFT for long. Expression used to describe someone who sells as soon as NFTs enter a bear market.

PFP

Stands for Picture For Profile. Twitter users who hold popular NFTs like Crypto Punk or BAYC use their punk or monkey avatar as their profile picture.

POAP NFT

Stands for Proof of Attendance Protocol. These types of NFTs are awarded to attendees of events, regardless if they’re physical or virtual, as proof you attended.

PoS

Stands for Proof of Stake. A consensus mechanism used by blockchains like Bitcoin or Ethereum to achieve agreement, trust and security in every transaction and keep the integrity of the blockchain intact. PoS mechanisms are considered more environmentally friendly than PoW as they’re lower energy and in emissions.

PoW

Stands for Proof of Work. A consensus mechanism used by blockchains like Bitcoin to achieve agreement, trust and security and keep the transactional integrity of the blockchain intact. PoW mechanism requires a lot of computational power, therefore uses more energy resources and higher CO2 emissions than the PoS mechanism.

Private Key

It can be similar to a password. It’s a secret number that allows users to access their cold or hot wallet funds, prove ownership of a certain address and sign transactions on the blockchain.

It’s not advisable to share a private key with anyone as it makes a person vulnerable to thefts. In case someone loses or forgets its private key, it can use a recovery phrase to restore access to a crypto or NFT wallet.

Pre-mine

A term used in crypto to refer to the act of creating a set amount of tokens before their public launch. It can also be known as a Genesis Sale and is usually associated with Initial Coin Offerings (ICOs) in order to compensate founders, developers or early investors.

Probably nothing

It’s an ironic expression used by NFT enthusiasts to refer to an important or soon to be big news, project or person in the NFT space. Meaning when someone says probably nothing it actually means that it is probably something.

Protocol Coin

Stands for the native coin of a blockchain. As in Ether for the Ethereum blockchain or BTC on the Bitcoin blockchain.

Pump & Dump

The term pump means when a person or a group of people buy or convince others to buy large quantities of a crypto or an NFT with the single goal to drive the price to a peak. When the price peaks, these people sell their position high and for a hefty profit, therefore dumping the price and leaving other slower investors or newbies rekt or at a loss.


R

Rarity

Rarity in NFT terms refers to how rare an NFT is. The rarity can be defined by the number of traits, scarcity or properties of an NFT.

Reaching

Slang for an exaggeration over something to make it sound worse than what it actually is or to take a point/scenario too far.

Recovery phrase

A 12-word phrase that acts like backup for your crypto private keys. A person can recover all of the crypto wallet accounts’ private keys from the recovery phrase. Is not advisable to share the recovery phrase with anyone.

Rekt

Slang for wrecked. When a crypto or NFT project goes wrong or down in value sharply. Or more broadly, when something goes wrong like a person is price out by the gas surge or an NFT floor price goes down.

Right Click Save As

An Ironic expression used by people who don’t understand the value or potential unlocked by NFTs. Person who makes fun that she/he can easily get a digital artwork by Right Click Save As and mock the NFT space and its hype.

Roadmap

The strategy outlined by an NFT project. A way to explain to the NFT community or a potential NFT investor, the different stages, value and the long term vision of the NFT project.

Royalties

NFT creators can set up their NFT so each time their NFT is resold, the creator gets paid a percentage of the sale price.

RN

Acronym for Right Now.

Rug Pull/Rugged

Slang for a scam when the founders, team or developers suddenly leave a crypto project and run away with all the investors’ funds leaving them with nothing.


S

Satoshi Nakamoto

The anonymous creator of the Bitcoin whitepaper and whose identity has never been verified.

Scammer

Someone actively trying to steal other people’s crypto or NFTs.

Secondary

Secondary refers to secondary NFT marketplaces, where NFT collectors or investors can resell NFTs after they’ve been minted. The price of an NFT or NFT collection is determined by those who list them.

Seed phrase

Another name for recovery phrase is the 12-word phrase that allows you to recover all of the crypto wallet accounts’ private keys and regain control of the wallet. Is not advisable to share the seed phrase with anyone.

Seems legit

When an NFT project or a person in the NFT community looks promising and the real deal, meaning seems legitimate. Depending on the context can also be used ironically.

Seems rare

An ironic expression or dismissive comment used by the NFT community. For example, It can be used sarcastically when someone asks for feedback on an NFT they own or created.

Ser

Slang for sir and a polite way of addressing others in an NFT community.

Shill

Expression when someone wants to promote or get exposure to an NFT they own or created.

Shill Thread

It’s a common Twitter strategy to gain traction by encouraging NFT creators to share a link to their NFT project in the hopes of getting bought or noticed by the NFT Community and potential buyers.

Simp/Simping

A NFT holder or creator who comes off as trying to hard impress an NFT whale or investor.

Sh*tposter

A person who mostly posts meme content on Twitter for fun.

SLP

Acronym for Smooth Love Potion. It’s a token players can earn as a reward in the NFT game Axie Infinity.

Smart Contract

A self-executing contract where the terms of the agreement between buyer and seller are directly written into the code and without third party or human intervention. Ethereum is a blockchain that can execute smart contracts, on the contrary to Bitcoin which does not have that capability.

SMFH

Acronym for Shaking My F*cking Head. Common reply to a person showing unbelievable idiocy.

Sock Puppet

Scam account used to lure noob investors into fake investment services.

Snag

It means to buy an NFT quickly and for a very low price. Can also be known as sniping.

Sotheby’s

Very famous auction house that has recently auctioned Beeple’s NFTs or Bored Ape Yacht Club and Crypto Punks’ NFT collections.

Stake

Crypto term for locking up a certain amount of crypto tokens for a set period of time to earn interest. In the NFT space, there are popping up a lot of projects or services that allow NFT holders to earn interest for holding a certain NFT.

Szn

Stands for season referring to crypto or NFT market cycles.


T

TINA

Acronym for There Is No Alternative. Example: someone asks “why are you investing in BTC?”, to which the reply is “TINA”.

TINA RIF

Acronym for There Is No Alternative Resistance Is Futile.

This is the way

A commendation for positive behavior by someone in the NFT Community.

Tokenomics

Referring to the economics of cryptocurrencies, DeFi or NFT projects.


V

Valhalla

Ironic use of the Viking “heaven”. Meaning someone’s NFT collection is either going to be a profitable and blue chip project, therefore they can ascend to Valhalla or is going to tank and that person will have to work at a Mcdonald’s.

Vibe

Term used to express a positive emotional state.

Volatile/Volatility

Term used to describe rapid market fluctuations and crypto or NFT prices go up and down quickly in a short period.


W

WAGMI

Acronym for We Are Going to Make It. Rally cry to build momentum for a crypto or NFT project and lead even more people into buying, shilling or supporting a specific project.

Wallet

There can be a hot or cold wallet, but both are a place where someone can store their cryptocurrency and tokens. Hot wallets are always connected to the Internet like MetaMask, Trust wallet or Phantom. On the contrary cold wallets are hardware wallets to store crypto or NFTs offline like Nano Ledger.

Weak Hands

Synonymous with Paper Hands. Someone who immediately sells their crypto or NFT because of a bear market, FUD or any other negative sentiment.

Web 1.0

Refers to the beginning of the Web. A period from around 1990 to 2005, also known as the read-only web.

Web 2.0

Refers to an iteration of Web 1.0. From 2005 to the present moment, where social media platforms like Facebook, Instagram, TikTok, Google, Twitter, etc reshaped the web, therefore becoming the read-write web.

Web 3.0

A term coined by Ethereum co-founder Gavin Wood and it’s an idea of what the future of the web could look like. Most peoples’ data, info or content would no longer be centralized in Web 2.0 giants - the Big Tech - but decentralized, mostly thanks to blockchain technology. Web 3.0 could be known as read-write-trust web.

Wen

As in When.

Wen Moon

Popular expression from crypto Twitter not so much in the NFT space. Refers to the still distant future when a token will moon.

Whitepaper

Document released by a crypto or NFT project where it lays the technical information behind the concept, vision, roadmap and plans to grow a certain project.

Whale

Someone who owns a large position on a specific or many cryptos or NFTs.


Y

Yodo

Acronym for You Only Die Once. The opposite of Yolo.

Yolo

Acronym for You Only Live Once. A person can use this when they just realized they bought a shitcoin or crap NFT and they’re getting rekt.


Original post

More on NFTs & Art

xuanling11

xuanling11

3 years ago

Reddit NFT Achievement

https://reddit.zendesk.com/hc/article_attachments/7582537085332/1._What_are_Collectible_Avatars_.png

Reddit's NFT market is alive and well.

NFT owners outnumber OpenSea on Reddit.

Reddit NFTs flip in OpenSea in days:

Fast-selling.

NFT sales will make Reddit's current communities more engaged.

I don't think NFTs will affect existing groups, but they will build hype for people to acquire them.

The first season of Collectibles is unique, but many missed the first season.

Second-season NFTs are less likely to be sold for a higher price than first-season ones.

If you use Reddit, it's fun to own NFTs.

Jake Prins

Jake Prins

3 years ago

What are NFTs 2.0 and what issues are they meant to address?

New standards help NFTs reach their full potential.

NFTs 2.0

NFTs lack interoperability and functionality. They have great potential but are mostly speculative. To maximize NFTs, we need flexible smart contracts.

Current requirements are too restrictive.

Most NFTs are based on ERC-721, which makes exchanging them easy. CryptoKitties, a popular online game, used the 2017 standard to demonstrate NFTs' potential.

This simple standard includes a base URI and incremental IDs for tokens. Add the tokenID to the base URI to get the token's metadata.

This let creators collect NFTs. Many NFT projects store metadata on IPFS, a distributed storage network, but others use Google Drive. NFT buyers often don't realize that if the creators delete or move the files, their NFT is just a pointer.

This isn't the standard's biggest issue. There's no way to validate NFT projects.

Creators are one of the most important aspects of art, but nothing is stored on-chain.

ERC-721 contracts only have a name and symbol.

Most of the data on OpenSea's collection pages isn't from the NFT's smart contract. It was added through a platform input field, so it's in the marketplace's database. Other websites may have different NFT information.

In five years, your NFT will be just a name, symbol, and ID.

Your NFT doesn't mention its creators. Although the smart contract has a public key, it doesn't reveal who created it.

The NFT's creators and their reputation are crucial to its value. Think digital fashion and big brands working with well-known designers when more professionals use NFTs. Don't you want them in your NFT?

Would paintings be as valuable if their artists were unknown? Would you believe it's real?

Buying directly from an on-chain artist would reduce scams. Current standards don't allow this data.

Most creator profiles live on centralized marketplaces and could disappear. Current platforms have outpaced underlying standards. The industry's standards are lagging.

For NFTs to grow beyond pointers to a monkey picture file, we may need to use new Web3-based standards.

Introducing NFTs 2.0

Fabian Vogelsteller, creator of ERC-20, developed new web3 standards. He proposed LSP7 Digital Asset and LSP8 Identifiable Digital Asset, also called NFT 2.0.

NFT and token metadata inputs are extendable. Changes to on-chain metadata inputs allow NFTs to evolve. Instead of public keys, the contract can have Universal Profile addresses attached. These profiles show creators' faces and reputations. NFTs can notify asset receivers, automating smart contracts.

LSP7 and LSP8 use ERC725Y. Using a generic data key-value store gives contracts much-needed features:

  • The asset can be customized and made to stand out more by allowing for unlimited data attachment.

  • Recognizing changes to the metadata

  • using a hash reference for metadata rather than a URL reference

This base will allow more metadata customization and upgradeability. These guidelines are:

  • Genuine and Verifiable Now, the creation of an NFT by a specific Universal Profile can be confirmed by smart contracts.

  • Dynamic NFTs can update Flexible & Updatable Metadata, allowing certain things to evolve over time.

  • Protected metadata Now, secure metadata that is readable by smart contracts can be added indefinitely.

  • Better NFTS prevent the locking of NFTs by only being sent to Universal Profiles or a smart contract that can interact with them.

Summary

NFTS standards lack standardization and powering features, limiting the industry.

ERC-721 is the most popular NFT standard, but it only represents incremental tokenIDs without metadata or asset representation. No standard sender-receiver interaction or security measures ensure safe asset transfers.

NFT 2.0 refers to the new LSP7-DigitalAsset and LSP8-IdentifiableDigitalAsset standards.

They have new standards for flexible metadata, secure transfers, asset representation, and interactive transfer.

With NFTs 2.0 and Universal Profiles, creators could build on-chain reputations.

NFTs 2.0 could bring the industry's needed innovation if it wants to move beyond trading profile pictures for speculation.

Anton Franzen

Anton Franzen

3 years ago

This is the driving force for my use of NFTs, which will completely transform the world.

Its not a fuc*ing fad.

Photo by kyung on unsplash

It's not about boring monkeys or photos as nfts; that's just what's been pushed up and made a lot of money. The technology underlying those ridiculous nft photos will one day prove your house and automobile ownership and tell you where your banana came from. Are you ready for web3? Soar!

People don't realize that absolutely anything can and will be part of the blockchain and smart contracts, making them even better. I'll tell you a secret: it will and is happening.

Why?

Why is something blockchain-based a good idea? So let’s speak about cars!

So a new Tesla car is manufactured, and when you buy it, it is bound to an NFT on the blockchain that proves current ownership. The NFT in the smart contract can contain some data about the current owner of the car and some data about the car's status, such as the number of miles driven, the car's overall quality, and so on, as well as a reference to a digital document bound to the NFT that has more information.

Now, 40 years from now, if you want to buy a used automobile, you can scan the car's serial number to view its NFT and see all of its history, each owner, how long they owned it, if it had damages, and more. Since it's on the blockchain, it can't be tampered with.

When you're ready to buy it, the owner posts it for sale, you buy it, and it's sent to your wallet. 5 seconds to change owner, 100% safe and verifiable.

Incorporate insurance logic into the car contract. If you crashed, your car's smart contract would take money from your insurance contract and deposit it in an insurance company wallet.

It's limitless. Your funds may be used by investors to provide insurance as they profit from everyone's investments.

Or suppose all car owners in a country deposit a fixed amount of money into an insurance smart contract that promises if something happens, we'll take care of it. It could be as little as $100-$500 per year, and in a country with 10 million people, maybe 3 million would do that, which would be $500 000 000 in that smart contract and it would be used by the insurance company to invest in assets or take a cut, literally endless possibilities.

Instead of $300 per month, you may pay $300 per year to be covered if something goes wrong, and that may include multiple insurances.

What about your grocery store banana, though?

Yes that too.

You can scan a banana to learn its complete history. You'll be able to see where it was cultivated, every middleman in the supply chain, and hopefully the banana's quality, farm, and ingredients used.

If you want locally decent bananas, you can only buy them, offering you transparency and options. I believe it will be an online marketplace where farmers publish their farms and products for trust and transparency. You might also buy bananas from the farmer.

And? Food security to finish the article. If an order of bananas included a toxin, you could easily track down every banana from the same origin and supply chain and uncover the root cause. This is a tremendous thing that will save lives and have a big impact; did you realize that 1 in 6 Americans gets poisoned by food every year? This could lower the number.

To summarize:

Smart contracts can issue nfts as proof of ownership and include functionality.

You might also like

Scrum Ventures

Scrum Ventures

3 years ago

Trends from the Winter 2022 Demo Day at Y Combinators

Y Combinators Winter 2022 Demo Day continues the trend of more startups engaging in accelerator Demo Days. Our team evaluated almost 400 projects in Y Combinator's ninth year.

After Winter 2021 Demo Day, we noticed a hurry pushing shorter rounds, inflated valuations, and larger batches.

Despite the batch size, this event's behavior showed a return to normalcy. Our observations show that investors evaluate and fund businesses more carefully. Unlike previous years, more YC businesses gave investors with data rooms and thorough pitch decks in addition to valuation data before Demo Day.

Demo Day pitches were virtual and fast-paced, limiting unplanned meetings. Investors had more time and information to do their due research before meeting founders. Our staff has more time to study diverse areas and engage with interesting entrepreneurs and founders.

This was one of the most regionally diversified YC cohorts to date. This year's Winter Demo Day startups showed some interesting tendencies.

Trends and Industries to Watch Before Demo Day

Demo day events at any accelerator show how investment competition is influencing startups. As startups swiftly become scale-ups and big success stories in fintech, e-commerce, healthcare, and other competitive industries, entrepreneurs and early-stage investors feel pressure to scale quickly and turn a notion into actual innovation.

Too much eagerness can lead founders to focus on market growth and team experience instead of solid concepts, technical expertise, and market validation. Last year, YC Winter Demo Day funding cycles ended too quickly and valuations were unrealistically high.

Scrum Ventures observed a longer funding cycle this year compared to last year's Demo Day. While that seems promising, many factors could be contributing to change, including:

  • Market patterns are changing and the economy is becoming worse.

  • the industries that investors are thinking about.

  • Individual differences between each event batch and the particular businesses and entrepreneurs taking part

The Winter 2022 Batch's Trends

Each year, we also wish to examine trends among early-stage firms and YC event participants. More international startups than ever were anticipated to present at Demo Day.

Less than 50% of demo day startups were from the U.S. For the S21 batch, firms from outside the US were most likely in Latin America or Europe, however this year's batch saw a large surge in startups situated in Asia and Africa.

YC Startup Directory

163 out of 399 startups were B2B software and services companies. Financial, healthcare, and consumer startups were common.

Our team doesn't plan to attend every pitch or speak with every startup's founders or team members. Let's look at cleantech, Web3, and health and wellness startup trends.

Our Opinions Following Conversations with 87 Startups at Demo Day

In the lead-up to Demo Day, we spoke with 87 of the 125 startups going. Compared to B2C enterprises, B2B startups had higher average valuations. A few outliers with high valuations pushed B2B and B2C means above the YC-wide mean and median.

Many of these startups develop business and technology solutions we've previously covered. We've seen API, EdTech, creative platforms, and cybersecurity remain strong and increase each year.

While these persistent tendencies influenced the startups Scrum Ventures looked at and the founders we interacted with on Demo Day, new trends required more research and preparation. Let's examine cleantech, Web3, and health and wellness startups.

Hardware and software that is green

Cleantech enterprises demand varying amounts of funding for hardware and software. Although the same overarching trend is fueling the growth of firms in this category, each subgroup has its own strategy and technique for investigation and identifying successful investments.

Many cleantech startups we spoke to during the YC event are focused on helping industrial operations decrease or recycle carbon emissions.

  • Carbon Crusher: Creating carbon negative roads

  • Phase Biolabs: Turning carbon emissions into carbon negative products and carbon neutral e-fuels

  • Seabound: Capturing carbon dioxide emissions from ships

  • Fleetzero: Creating electric cargo ships

  • Impossible Mining: Sustainable seabed mining

  • Beyond Aero: Creating zero-emission private aircraft

  • Verdn: Helping businesses automatically embed environmental pledges for product and service offerings, boost customer engagement

  • AeonCharge: Allowing electric vehicle (EV) drivers to more easily locate and pay for EV charging stations

  • Phoenix Hydrogen: Offering a hydrogen marketplace and a connected hydrogen hub platform to connect supply and demand for hydrogen fuel and simplify hub planning and partner program expansion

  • Aklimate: Allowing businesses to measure and reduce their supply chain’s environmental impact

  • Pina Earth: Certifying and tracking the progress of businesses’ forestry projects

  • AirMyne: Developing machines that can reverse emissions by removing carbon dioxide from the air

  • Unravel Carbon: Software for enterprises to track and reduce their carbon emissions

Web3: NFTs, the metaverse, and cryptocurrency

Web3 technologies handle a wide range of business issues. This category includes companies employing blockchain technology to disrupt entertainment, finance, cybersecurity, and software development.

Many of these startups overlap with YC's FinTech trend. Despite this, B2C and B2B enterprises were evenly represented in Web3. We examined:

  • Stablegains: Offering consistent interest on cash balance from the decentralized finance (DeFi) market

  • LiquiFi: Simplifying token management with automated vesting contracts, tax reporting, and scheduling. For companies, investors, and finance & accounting

  • NFTScoring: An NFT trading platform

  • CypherD Wallet: A multichain wallet for crypto and NFTs with a non-custodial crypto debit card that instantly converts coins to USD

  • Remi Labs: Allowing businesses to more easily create NFT collections that serve as access to products, memberships, events, and more

  • Cashmere: A crypto wallet for Web3 startups to collaboratively manage funds

  • Chaingrep: An API that makes blockchain data human-readable and tokens searchable

  • Courtyard: A platform for securely storing physical assets and creating 3D representations as NFTs

  • Arda: “Banking as a Service for DeFi,” an API that FinTech companies can use to embed DeFi products into their platforms

  • earnJARVIS: A premium cryptocurrency management platform, allowing users to create long-term portfolios

  • Mysterious: Creating community-specific experiences for Web3 Discords

  • Winter: An embeddable widget that allows businesses to sell NFTs to users purchasing with a credit card or bank transaction

  • SimpleHash: An API for NFT data that provides compatibility across blockchains, standardized metadata, accurate transaction info, and simple integration

  • Lifecast: Tools that address motion sickness issues for 3D VR video

  • Gym Class: Virtual reality (VR) multiplayer basketball video game

  • WorldQL: An asset API that allows NFT creators to specify multiple in-game interpretations of their assets, increasing their value

  • Bonsai Desk: A software development kit (SDK) for 3D analytics

  • Campfire: Supporting virtual social experiences for remote teams

  • Unai: A virtual headset and Visual World experience

  • Vimmerse: Allowing creators to more easily create immersive 3D experiences

Fitness and health

Scrum Ventures encountered fewer health and wellness startup founders than Web3 and Cleantech. The types of challenges these organizations solve are still diverse. Several of these companies are part of a push toward customization in healthcare, an area of biotech set for growth for companies with strong portfolios and experienced leadership.

Here are several startups we considered:

  • Syrona Health: Personalized healthcare for women in the workplace

  • Anja Health: Personalized umbilical cord blood banking and stem cell preservation

  • Alfie: A weight loss program focused on men’s health that coordinates medical care, coaching, and “community-based competition” to help users lose an average of 15% body weight

  • Ankr Health: An artificial intelligence (AI)-enabled telehealth platform that provides personalized side effect education for cancer patients and data collection for their care teams

  • Koko — A personalized sleep program to improve at-home sleep analysis and training

  • Condition-specific telehealth platforms and programs:

  • Reviving Mind: Chronic care management covered by insurance and supporting holistic, community-oriented health care

  • Equipt Health: At-home delivery of prescription medical equipment to help manage chronic conditions like obstructive sleep apnea

  • LunaJoy: Holistic women’s healthcare management for mental health therapy, counseling, and medication

12 Startups from YC's Winter 2022 Demo Day to Watch

Bobidi: 10x faster AI model improvement

Artificial intelligence (AI) models have become a significant tool for firms to improve how well and rapidly they process data. Bobidi helps AI-reliant firms evaluate their models, boosting data insights in less time and reducing data analysis expenditures. The business has created a gamified community that offers a bug bounty for AI, incentivizing community members to test and find weaknesses in clients' AI models.

Magna: DeFi investment management and token vesting

Magna delivers rapid, secure token vesting so consumers may turn DeFi investments into primitives. Carta for Web3 allows enterprises to effortlessly distribute tokens to staff or investors. The Magna team hopes to allow corporations use locked tokens as collateral for loans, facilitate secondary liquidity so investors can sell shares on a public exchange, and power additional DeFi applications.

Perl Street: Funding for infrastructure

This Fintech firm intends to help hardware entrepreneurs get financing by [democratizing] structured finance, unleashing billions for sustainable infrastructure and next-generation hardware solutions. This network has helped hardware entrepreneurs achieve more than $140 million in finance, helping companies working on energy storage devices, EVs, and creating power infrastructure.

CypherD: Multichain cryptocurrency wallet

CypherD seeks to provide a multichain crypto wallet so general customers can explore Web3 products without knowledge hurdles. The startup's beta app lets consumers access crypto from EVM blockchains. The founders have crypto, financial, and startup experience.

Unravel Carbon: Enterprise carbon tracking and offsetting

Unravel Carbon's AI-powered decarbonization technology tracks companies' carbon emissions. Singapore-based startup focuses on Asia. The software can use any company's financial data to trace the supply chain and calculate carbon tracking, which is used to make regulatory disclosures and suggest carbon offsets.

LunaJoy: Precision mental health for women

LunaJoy helped women obtain mental health support throughout life. The platform combines data science to create a tailored experience, allowing women to access psychotherapy, medication management, genetic testing, and health coaching.

Posh: Automated EV battery recycling

Posh attempts to solve one of the EV industry's largest logistical difficulties. Millions of EV batteries will need to be decommissioned in the next decade, and their precious metals and residual capacity will go unused for some time. Posh offers automated, scalable lithium battery disassembly, making EV battery recycling more viable.

Unai: VR headset with 5x higher resolution

Unai stands apart from metaverse companies. Its VR headgear has five times the resolution of existing options and emphasizes human expression and interaction in a remote world. Maxim Perumal's method of latency reduction powers current VR headsets.

Palitronica: Physical infrastructure cybersecurity

Palitronica blends cutting-edge hardware and software to produce networked electronic systems that support crucial physical and supply chain infrastructure. The startup's objective is to build solutions that defend national security and key infrastructure from cybersecurity threats.

Reality Defender: Deepfake detection

Reality Defender alerts firms to bogus users and changed audio, video, and image files. Reality Deference's API and web app score material in real time to prevent fraud, improve content moderation, and detect deception.

Micro Meat: Infrastructure for the manufacture of cell-cultured meat

MicroMeat promotes sustainable meat production. The company has created technologies to scale up bioreactor-grown meat muscle tissue from animal cells. Their goal is to scale up cultured meat manufacturing so cultivated meat products can be brought to market feasibly and swiftly, boosting worldwide meat consumption.

Fleetzero: Electric cargo ships

This startup's battery technology will make cargo ships more sustainable and profitable. Fleetzero's electric cargo ships have five times larger profit margins than fossil fuel ships. Fleetzeros' founder has marine engineering, ship operations, and enterprise sales and business experience.

Sad NoCoiner

Sad NoCoiner

3 years ago

Two Key Money Principles You Should Understand But Were Never Taught

Prudence is advised. Be debt-free. Be frugal. Spend less.

This advice sounds nice, but it rarely works.

Most people never learn these two money rules. Both approaches will impact how you see personal finance.

It may safeguard you from inflation or the inability to preserve money.

Let’s dive in.

#1: Making long-term debt your ally

High-interest debt hurts consumers. Many credit cards carry 25% yearly interest (or more), so always pay on time. Otherwise, you’re losing money.

Some low-interest debt is good. Especially when buying an appreciating asset with borrowed money.

Inflation helps you.

If you borrow $800,000 at 3% interest and invest it at 7%, you'll make $32,000 (4%).

As money loses value, fixed payments get cheaper. Your assets' value and cash flow rise.

The never-in-debt crowd doesn't know this. They lose money paying off mortgages and low-interest loans early when they could have bought assets instead.

#2: How To Buy Or Build Assets To Make Inflation Irrelevant

Dozens of studies demonstrate actual wage growth is static; $2.50 in 1964 was equivalent to $22.65 now.

These reports never give solutions unless they're selling gold.

But there is one.

Assets beat inflation.

$100 invested into the S&P 500 would have an inflation-adjusted return of 17,739.30%.

Likewise, you can build assets from nothing.  Doing is easy and quick. The returns can boost your income by 10% or more.

The people who obsess over inflation inadvertently make the problem worse for themselves.  They wait for The Big Crash to buy assets. Or they moan about debt clocks and spending bills instead of seeking a solution.

Conclusion

Being ultra-prudent is like playing golf with a putter to avoid hitting the ball into the water. Sure, you might not slice a drive into the pond. But, you aren’t going to play well either. Or have very much fun.

Money has rules.

Avoiding debt or investment risks will limit your rewards. Long-term, being too cautious hurts your finances.

Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.

Theresa W. Carey

Theresa W. Carey

4 years ago

How Payment for Order Flow (PFOF) Works

What is PFOF?

PFOF is a brokerage firm's compensation for directing orders to different parties for trade execution. The brokerage firm receives fractions of a penny per share for directing the order to a market maker.

Each optionable stock could have thousands of contracts, so market makers dominate options trades. Order flow payments average less than $0.50 per option contract.

Order Flow Payments (PFOF) Explained

The proliferation of exchanges and electronic communication networks has complicated equity and options trading (ECNs) Ironically, Bernard Madoff, the Ponzi schemer, pioneered pay-for-order-flow.

In a December 2000 study on PFOF, the SEC said, "Payment for order flow is a method of transferring trading profits from market making to brokers who route customer orders to specialists for execution."

Given the complexity of trading thousands of stocks on multiple exchanges, market making has grown. Market makers are large firms that specialize in a set of stocks and options, maintaining an inventory of shares and contracts for buyers and sellers. Market makers are paid the bid-ask spread. Spreads have narrowed since 2001, when exchanges switched to decimals. A market maker's ability to play both sides of trades is key to profitability.

Benefits, requirements

A broker receives fees from a third party for order flow, sometimes without a client's knowledge. This invites conflicts of interest and criticism. Regulation NMS from 2005 requires brokers to disclose their policies and financial relationships with market makers.

Your broker must tell you if it's paid to send your orders to specific parties. This must be done at account opening and annually. The firm must disclose whether it participates in payment-for-order-flow and, upon request, every paid order. Brokerage clients can request payment data on specific transactions, but the response takes weeks.

Order flow payments save money. Smaller brokerage firms can benefit from routing orders through market makers and getting paid. This allows brokerage firms to send their orders to another firm to be executed with other orders, reducing costs. The market maker or exchange benefits from additional share volume, so it pays brokerage firms to direct traffic.

Retail investors, who lack bargaining power, may benefit from order-filling competition. Arrangements to steer the business in one direction invite wrongdoing, which can erode investor confidence in financial markets and their players.

Pay-for-order-flow criticism

It has always been controversial. Several firms offering zero-commission trades in the late 1990s routed orders to untrustworthy market makers. During the end of fractional pricing, the smallest stock spread was $0.125. Options spreads widened. Traders found that some of their "free" trades cost them a lot because they weren't getting the best price.

The SEC then studied the issue, focusing on options trades, and nearly decided to ban PFOF. The proliferation of options exchanges narrowed spreads because there was more competition for executing orders. Options market makers said their services provided liquidity. In its conclusion, the report said, "While increased multiple-listing produced immediate economic benefits to investors in the form of narrower quotes and effective spreads, these improvements have been muted with the spread of payment for order flow and internalization." 

The SEC allowed payment for order flow to continue to prevent exchanges from gaining monopoly power. What would happen to trades if the practice was outlawed was also unclear. SEC requires brokers to disclose financial arrangements with market makers. Since then, the SEC has watched closely.

2020 Order Flow Payment

Rule 605 and Rule 606 show execution quality and order flow payment statistics on a broker's website. Despite being required by the SEC, these reports can be hard to find. The SEC mandated these reports in 2005, but the format and reporting requirements have changed over the years, most recently in 2018.

Brokers and market makers formed a working group with the Financial Information Forum (FIF) to standardize order execution quality reporting. Only one retail brokerage (Fidelity) and one market maker remain (Two Sigma Securities). FIF notes that the 605/606 reports "do not provide the level of information that allows a retail investor to gauge how well a broker-dealer fills a retail order compared to the NBBO (national best bid or offer’) at the time the order was received by the executing broker-dealer."

In the first quarter of 2020, Rule 606 reporting changed to require brokers to report net payments from market makers for S&P 500 and non-S&P 500 equity trades and options trades. Brokers must disclose payment rates per 100 shares by order type (market orders, marketable limit orders, non-marketable limit orders, and other orders).

Richard Repetto, Managing Director of New York-based Piper Sandler & Co., publishes a report on Rule 606 broker reports. Repetto focused on Charles Schwab, TD Ameritrade, E-TRADE, and Robinhood in Q2 2020. Repetto reported that payment for order flow was higher in the second quarter than the first due to increased trading activity, and that options paid more than equities.

Repetto says PFOF contributions rose overall. Schwab has the lowest options rates, while TD Ameritrade and Robinhood have the highest. Robinhood had the highest equity rating. Repetto assumes Robinhood's ability to charge higher PFOF reflects their order flow profitability and that they receive a fixed rate per spread (vs. a fixed rate per share by the other brokers).

Robinhood's PFOF in equities and options grew the most quarter-over-quarter of the four brokers Piper Sandler analyzed, as did their implied volumes. All four brokers saw higher PFOF rates.

TD Ameritrade took the biggest income hit when cutting trading commissions in fall 2019, and this report shows they're trying to make up the shortfall by routing orders for additional PFOF. Robinhood refuses to disclose trading statistics using the same metrics as the rest of the industry, offering only a vague explanation on their website.

Summary

Payment for order flow has become a major source of revenue as brokers offer no-commission equity (stock and ETF) orders. For retail investors, payment for order flow poses a problem because the brokerage may route orders to a market maker for its own benefit, not the investor's.

Infrequent or small-volume traders may not notice their broker's PFOF practices. Frequent traders and those who trade larger quantities should learn about their broker's order routing system to ensure they're not losing out on price improvement due to a broker prioritizing payment for order flow.


This post is a summary. Read full article here