Despite the widespread belief that the sector is failing in every way, reports show that the number of NFT users is growing, indicating an influx of new investors, creators, and brands looking to join the NFT train. With thousands of projects, multiple brands, diverse marketplaces, and diverse blockchains, it can be difficult to navigate and decide which side you want to build or trade NFTs on.
Factors to Consider when Choosing NFT Blockchains
Choosing the right blockchain can have a significant impact on the success and sustainability of your NFT projects. Here are some important factors to consider when making your decision.
NFT follows the decentralization and peer-to-peer principles, and as such, other investors must purchase an NFT item before there can be said to be actual profit. Using a blockchain with fewer users can create visibility and, eventually, a sales problem. Adoption is also heavily influenced by the price of the NFT, which is determined by the forces of demand, supply, and network sales volume.
The value of an NFT is inextricably linked to the value of the native token of the blockchain upon which it is built. This means that the value of an NFT will inevitably fall or rise in tandem with the value of the blockchain token. When choosing the right blockchain, it is preferable to look for a blockchain with tokens that have the potential to increase in value.
Hacks and bot attacks are becoming increasingly common in the NFT market. As a result, blockchains with improved security solutions should be prioritized by aspiring projects, investors, and creators. NFT trades are worth millions of dollars, and it would be financially harmful to lose irrecoverable funds due to security flaws or deficiencies.
Blockchains work on a consensus basis, which means that parties agree on the validity of each transaction. The volume and processing speed of this practice can vary from blockchain to blockchain, and many other activities on the network can slow it down, resulting in lagging transactions and higher gas fees. When it comes to mining NFTs from a limited collection, paying higher fees on the secondary market, and other such inconveniences, this factor can have a significant impact on a user's experience.
Smart contracts are the underlying legal principle of all chains that establish transaction terms and conditions and automate processes without the need for a third party. Smart contracts are an essential component of the NFT concept, and their security and functionality are determined by how well they are infrastructured and programmed.
The Ethereum blockchain is the most popular blockchain for NFTs and is credited with bringing the concept to the mainstream. Because of its market dominance in terms of sales and market capitalization, many believe Ethereum was the first chain on which NFTs were built. However, the first NFT was minted in 2014, on the Namecoin blockchain, and Ethereum developers launched the first NFT project in 2015, which resulted in the development of the non-fungible ERC-721 token. This token, unlike ERC-20, can hold visual metadata of the tokens as well as other properties on the smart contract. As a continuation of Ethereum’s NFT development efforts, the network released the ERC-1155 token set, which has properties of both ERC-20 and ERC-721 and is used in gaming NFTs.
Ethereum is a very decentralized and secure blockchain, which is why investors and developers want to build on it. Ethereum also has a massive ecosystem full of dApps, protocols, and standard infrastructure, giving users access to a wide range of options and technology, as well as exposure to a larger network of developers, collections, marketplaces, and investors who are currently active in the space.
The Ethereum Merge, a recent Ethereum update, addressed the carbon usage issue that had been a source of concern by transitioning from an energy-intensive Proof of work model to a more environmentally friendly Proof of stake model. The most notable disadvantage, however, is that the blockchain is still unable to effectively handle high transaction volumes, resulting in rather high gas fees due to increased demand for transactions to be processed.
Solana is currently the second most popular blockchain for NFT endeavors, with projects and elements that have previously outperformed Ethereum. The Solana network employs a hybrid consensus model, allowing it to outperform Ethereum in terms of scalability. The network can handle significantly higher transaction volumes in significantly shorter transaction times for both NFT and DeFi applications. Solana also has a cheaper native cryptocurrency, SOL, and does not have the bank-breaking fees that Ethereum users face.
In terms of adoption, Solana gained traction this year thanks to some of its native NFT projects that broke out and held their own. Projects such as Degen Apes Academy, DeGods, OkayBears, and Solpunks are examples of resounding successes in the Solana NFT space that have boosted the network's popularity and aided in its further adoption.
However, Solana NFTs are not as widely available. Because of its smaller user base, it has far fewer trading volumes, marketplaces, and hype than the Ethereum blockchain. Furthermore, Solana is not as stable and secure as Ethereum. This year has seen a number of reported network outages and slowdowns, which can be harmful to investors and disrupt the flow of processes such as minting, purchases, and sales.
Dapper Labs, the creators of Cryptokitties, developed the Flow blockchain as an alternative to the Ethereum blockchain. The network, which is still in its early stages, uses a purely PoS consensus mechanism and can handle large volumes of transactions at very low fees. Flow blockchain is focused on scalability, sustainability, and the development of NFTs, games, and dApps that outperform their competitors.
The blockchain's prominence in the NFT space stems from its close collaboration with the sports sector and facilitation of sporting integration into the NFT market. The network's most popular product is NBA Top Shot, and it has since added other major sport collections such as NFL All Day and UFC Strike, which have launched native marketplaces on the Flow blockchain to trade NFTs.
Despite the fact that the network's NFTs are traded on popular marketplaces such as Opensea, Rarible, and Foundation, it has a low number of NFT traders, low sales figures, and even lower projects when compared to other blockchains that host NFTs.
***Read Also: Top NFT Influencers In The World***
New NFT-focused blockchains continue to emerge, and existing ones are looking for different means to up their game. The space is still in its early stages, and there is plenty of room for improvement, innovation, and adoption. However, the importance of suitable, inclusive, conducive, and sustainable blockchains in the pursuit of a more progressive NFT community cannot be overstated.
Storing your cryptocurrencies in online wallets, exchanges and software wallets exposes you to risks of being hacked. Consider storing them in a hardware wallet today