One of the most popular use cases of blockchain technology, non-fungible tokens (NFTs) are widely used to display and trade ownership of physical and digital objects and intellectual property. But how do NFTs work?
What distinguishes an NFT from a digital image is the use of metadata, which allows NFTs to uniquely represent themselves. Unlike digital images, metadata in NFTs helps confer properties and unique identifiers that can be used to represent ownership, rarity, and other attributes relevant to current digital or physical art and property.
The process of creating NFTs involves uploading that metadata (or a data string associated with that metadata) to an active blockchain in the form of a unique cryptographic token – also known as minting. This article walks us through the various blockchains that support the underlying infrastructure of the NFT ecosystem.
NFT blockchains vs. NFT marketplaces
Without blockchains, NFTs lose their inherent quality as unique, verifiable, and immutable identifiers.
As a result, the NFT has found use cases as a tool to determine and validate the legitimacy of ownership in a variety of industries, including artworks, intellectual property, real estate, and a variety of collectibles.
NFT markets are publicly accessible markets that allow users to mint (create), buy, and sell NFTs. While most NFT blockchains host their marketplaces, third-party marketplaces are also an option for users looking to target a broader audience.
We will talk about some of the key blockchains powering the exciting world of NFTs in the following paragraphs.
Ethereum blockchain for NFTs
The Ethereum blockchain pioneered the concept of NFTs in 2014. However, with the advent of the ERC-721 standard, NFTs have evolved into a smart contract-based tool that has found financial use cases in games, art, physical assets, and music, to name a few.
When the NFT ecosystem took off in 2017, Ethereum launched ERC-1155 as the official smart contract standard to support large-scale adoption of NFT.
Older token standards like ERC-20 and ERC-721 required creating a new smart contract for each token type. This meant that for each NFT to be transmitted, the network would require the creation of a smart contract that matched each NFT.
ERC-1155 is a multi-token standard that introduced a smart contract interface specifically designed to transfer multiple token types simultaneously, thereby saving transaction costs.
The Ethereum blockchain holds more than 90% of the market share for hosting NFTs. However, as a direct result of hosting most NFTs, the Ethereum network has reached its saturation point and requires high gas fees to mint and trade NFTs.
Numerous other blockchains have been introduced as alternative NFT ecosystems, slowly reducing congestion on the Ethereum network in the process.
Additionally, the next iteration of the Ethereum blockchain, Ethereum 2.0, aims to improve network performance and reduce costs by introducing elements such as staking and merging the BNB Beacon chain with the mainnet, among others.
READ MORE: NFTs For Beginners: How Is The True Value Of An NFT Determined?
Solana blockchain for NFTs
The Solana ecosystem (SOL) has emerged as one of the most promising blockchains for hosting and trading NFTs. Compared to the market leader NFT Ethereum, the Solana blockchain brings high returns and low fees to the table.
The Solana blockchain leverages its internal Metaplex brand-umbrella to offer various tools, smart contracts, and services related to NFT development. Unlike the Ethereum blockchain, Solano introduces stateless smart contracts while implementing provisions for faster and cheaper transactions. The Solana blockchain uses a combination of Proof-of-Stake (PoS) and Proof-of-History consensus mechanisms.
One of the key differentiators of the Solana blockchain is the platform’s promise of censorship resistance and near-nonexistent transaction fees, attracting NFT artists and traders to the Solana marketplace.
All NFT smart contracts on Solana are stateless, allowing nodes to assert their validity without having to store local validations. The Solana blockchain also allows third-party accounts to access newly deployed smart contracts and store information. By bypassing this need for internal storage, Solana enables lower transaction costs for NFTs.
Polygon blockchain for NFTs
Formerly known as Matic, the Polygon blockchain acts as a secondary (L2) layer that sits on top of the Ethereum mainnet. As a result, the ecosystem allows users and developers to connect portals and transfer assets from the main network to Polygon.
The Polygon blockchain serves as a scaling solution that – like other blockchain alternatives to Ethereum – aims to significantly reduce transaction costs and time. Compared to Ethereum’s transaction completion speed of up to six transactions in a minute (10 seconds per transaction), Polygon’s L2 solution has a transaction completion rate of 26.08 transactions per minute (2.3 seconds per transaction).
One of the main reasons users prefer Polygon over other popular blockchains is that it requires no upfront cost to mint new NFTs. However, the network charges a predetermined amount (typically 2.5%) as a service fee for selling the newly minted NFTs.
Cardano blockchain for NFTs
The Cardano blockchain (ADA) is a third-generation PoS blockchain platform that aims to solve the problems of the first or Bitcoin (BTC) and second or Ethereum (ETH) generation platforms.
Minting NFTs in Cardano can be done through one of the native third-party services or through the Cardano node, which gives the user full control over the minted token.
Every transaction on Cardano — including minting, buying, and selling NFTs — requires a fee, which is currently determined by the size of the transaction file. Therefore, smaller size files incur lower fees compared to larger files.
The ecosystem also offers internal markets for minting and trading NFTs and wallets for storing NFTs and DeFi assets.
READ MORE: How to Spend NFTs in the Metaverse
BNB Smart Chain (BSC) blockchain for NFTs
BNB Chain consists of two blockchains – BNB Beacon Chain (formerly Binance Chain), which supports staking, voting, and other governance initiatives, and BNB Smart Chain (BSC) (formerly Binance Smart Chain), which powers NFT projects and has other functions .
NFTs on the BNB Smart Chain (BSC) are created considering their compatibility with other blockchains. Furthermore, NFT developers choose BNB as a platform to build an NFT marketplace not only because it is cheaper and faster than the competition, but also because of the advantages including cross-chain and Ethereum Virtual Machine (EVM) compatibility.
BSC uses Ethereum’s ERC-721 standard to authenticate token ownership. Within a BSC-NFT market, investors can trade digital collectibles using BNB coins and BEP-20 tokens. Also, BNB smart contracts are usually written in the Solidity programming language.
Tezos blockchain for NFTs
Tezos (XZT) is a PoS blockchain that uses the TZIP-012 standard to store NFTs in smart contracts, often referred to as FA2 contracts. FA2 is an internal token standard that serves as a unified token contract interface. The Tezos blockchain is positioning itself as a green alternative to the other leading blockchains in the NFT space.
The FA2 standard on Tezos allows users to create single-token and multi-token smart contracts while maintaining compatibility with wallet integrators and third-party developers. In the future, the TZIP-012 standard may be updated to include backward-compatible support for chain views or tunneling. Additionally, all FA2-compliant contracts must provide contract-level metadata via the Tezos TZIP-016 standard.
Tron blockchain for NFTs
The Tron (TRX) network implements the TRC-721 standard interface set for issuing NFTs, supported by the TRC-721 and TRC-165 interfaces.
Tron’s implementation of NFT standards aims to improve overall network performance through better traffic management. In addition, Tron-based NFTs maintain full compatibility with Ethereum’s ERC-721 standard.
However, if you create an NFT through Tron, you must also implement a wallet interface so that it accepts secure transfers. To issue TRC-721 tokens, you need to create a Tronlink account with at least 350 TRX as a minimum balance.
Once the NFT is created, users can compile and deploy smart contracts via Tronscan.
The difference between different NFT blockchains
The difference between different blockchains for NFTs is summarized in the table below.
|COIN||NATIVE TOKEN||PROGRAMMING LANGUAGES||AVG. TRANSACTION SPEED||AVG. MINTING COST|
|Ethereum||Ether (ETH)||Solidity||15 TPS||0.03 ETH|
|Solana||Solana (SOL)||Rust, C, C++||65,000 TPS||0.00001 SOL|
|Cardano||ADA||Haskel||250 TPS||1.5 ADA|
|BNB Smart Chain||Binance Coin (BNB)||Solidity (Remix IDE)||160 TPS||0.000001 BNB|
|Tron||Tron (TRX)||Solidity||2,000 TPS||1,000 TRX + Energy|
A checklist for determining the best NFT blockchain
Choosing between the many different blockchains that support NFTs can be difficult. Luckily, there are many alternative blockchains to choose from, each with its own attractive characteristics.
However, when it comes to deciding on an NFT project, it comes down to choosing an ecosystem that will comfortably meet most needs, including:
- Fast transactions
- Cheap gas and transaction costs
- Thriving secondary marketplace for reselling NFTs
- Legitimate partnerships
- Intellectual property (IP) governance
- Legitimate partnerships
- Cross-platform compatibilities
Finding a blockchain that meets the above seven requirements is critical to the success of any NFT project. The more you miss on the checklist, the less likely the long-term success of the project is.
Take the leap and check out Coinscreed’s in-depth guide to creating NFTs.
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