Definitions to Understand VinylKey
To explain Vinylkey there are lots of terms that are new to most people. See below for a short explanation and the links at the very bottom for much more reading.
Blockchain : A blockchain is a growing list of blocks of information that are linked using cryptography. It can be thought of as a trusted and public spreadsheet of digital assets where a user has a key to modify his own cell only. There are soooo many blockchains but the originals are Bitcoin and Ethereum.
Cryptocurrency: Native currency of a blockchain like Eth on Ethereum.
Smart Contract: A smart contract is a self-executing contract with the terms of the agreement are directly written into lines of code. The code and the agreements contained therein exist across a trusted, distributed, decentralized blockchain network.
Ethereum : A blockchain that also contains the ability to host smart contracts. If bitcoin is a spreadsheet then Ethereum is a spreadsheet with macros. Many different kinds of tokens ( fungible and non-fungible) are managed by smart contracts stored on Ethereum.
Wallet: The name wallet is misleading. It does not contain your actual Bitcoin or Ethereum. The wallet actually has the users key that gives him permission to their information on the blockchain. A wallet can be hosted by a third party or user controlled. Hosted wallets like coinbase.com are an easy on ramp for users without the need to learn everything about crypto. A user controlled wallet gives the user full control AND responsibility. This responsibility is large because there is no longer a trusted third party and if you lose the key then your crypto is gone forever.
Ethereum Standards: Ethereum Improvement Proposals (EIPs) describe standards for the Ethereum platform, including core protocol specifications, client APIs, and contract standards. Ethereum Request for Comments ( ERC ) are technical documents used by smart contract developers at Ethereum. Before becoming an standard, an ERC must be revised, commented and accepted by the community through an EIP (Ethereum Improvement Proposal)
Fungible: something that cannot be distinguished from another thing, it is interchangeable, substitutable or uniform.
Fungible Tokens: defined on Ethereum as ERC-20 smart contract. ERC-20 has emerged as the technical standard; it is used for all smart contracts on the Ethereum blockchain for token implementation and provides a list of rules that all Ethereum-based tokens must follow. ERC-20 tokens are blockchain-based assets that have value and can be sent and received. Examples are USDC, DAI, BAT, UNI, and ENS. Wallets know how to work and exchange different ERC-20 tokens.
Non Fungible Token ( NFT or Nifty ) : defined on Ethereum as ERC-721 smart contract. NFT is a unit of data stored on a blockchain which can represent a unique digital item like art. An NFT is a cryptographic token that is not mutually interchangeable. Very little data is stored directly inside an NFT. NFTs include links pointing to where the art and any details about it are stored. Wallets and marketplaces know how to transfer ERC-721 tokens.
Interplanetary File System (IPFS) : IPFS is decentralized service which makes it possible to download a file from many locations that are not managed by one organization. It is also immutable which means that once a file is uploaded it cannot be modified. In the case of NFTs, this allows the NFT to use IPFS to store the data files that will always be the same.
NFC : Near Field Communication. A set of communication protocols for communication between two electronic devices over a very short distance. NFC devices can act as electronic identity documents and keycards. One use of this is in mobile phones for contactless payment systems. Most modern phones are NFC capable. NFC Tags are non powered and provide to the reader of the tag a globally unique ID but currently can be cloned.
A16Z’s NFT reading list