Unleashing the Potential of NFTs with the Right Blockchain
NFTs have become a worldwide sensation in recent years. From digital art, in-game items, and media, to virtual real estate and a range of other products. They offer unique ownership and incredible opportunities for creators and buyers alike.
But what makes them so special?
For starters, NFTs have revolutionized the way we own and trade digital assets. They've created a market of opportunities for people from different backgrounds to monetize and sell their works without relying on traditional gatekeepers.
Another reason why NFTs are so special is that their ownership is recorded on the blockchain, offering a new level of transparency and making it easier to track ownership and verify authenticity.
However, the blockchain platform on which an NFT is created plays a crucial role in determining its success.
In this blog, we’ll explore the different blockchains for NFTs, and guide you through the process of choosing the right blockchain platform for your NFT. We’ll also discuss the use cases of different blockchains that facilitate the creation and collection of NFTs.
The Different Blockchains for NFTs
Bitcoin is the oldest and most popular blockchain. Although it was initially created for an entirely different purpose, UDAs and other digital assets such as digital artifacts and stamps can and have been encoded on the Bitcoin blockchain. Also, recent developments such as the introduction of the RGB smart contract protocol are making Bitcoin more attractive for NFTs/ UDAs.
Ethereum currently holds the title of the most popular blockchain for NFT creation and trading. It operates on a Proof of Stake (POS) consensus and its decentralized structure and robust smart contract functionality make it an ideal platform for NFTs.
However, this popularity comes with high gas fees and slow transaction speeds. So, while it was a popular option for the big players in the NFT market in 2021, it might not be an ideal option if you’re just starting out.
Binance Smart Chain (BSC) is a newer blockchain created in September 2020 by the world’s largest cryptocurrency exchange, Binance. It has been gaining popularity due to its low barrier to entry.
BSC operates on a Proof of Staked Authority (PoSA) consensus and it is a solid choice for smaller creators and buyers and offers an alternative to Ethereum's high fees. However, it is more centralized, which means it may not be the ideal option if you’re looking for a more decentralized system.
Solana is a highly scalable and fast blockchain that can handle thousands of transactions per second. This makes it an excellent choice for high-volume NFT sales and can potentially drive down gas fees. However, Solana is relatively new and the blockchain is notorious for being offline for hours, this means that it may not have the same level of adoption of older blockchains.
Solana operates on a Proof of Stake (PoS) consensus mechanism and utilizes a novel consensus algorithm called Proof of History (PoH). It supports a wide range of smart contract languages, including Rust, JavaScript, and Python, making it easy for developers to create dApps and NFTs.
Finally, we have Tezos. Tezos is known for its governance model, which allows token holders to participate directly in the decision-making process. This decentralized approach makes it an attractive platform for NFTs, but its obscurity in the wider blockchain community might make it a less popular choice for some.
ALSO READ: Differences Between Curated and Non-curated NFTs
Factors to Consider When Choosing A Blockchain for NFTs
Creating or trading NFTs requires a secure and reliable platform. In this section, we’ll discuss what to consider when choosing a blockchain platform for your NFTs.
Security
Security is critical when dealing with valuable assets like NFTs. Blockchain platforms use various security measures, such as encryption, hashing, and two-factor authentication. It's important to choose a secure blockchain so you can rest assured that your assets are protected from hackers and cyber attacks.
Scalability
Scalability refers to a blockchain's ability to handle a large volume of transactions. This helps in reducing congestion and lowering gas fees, making transactions faster and more cost-effective. Thus, you need to choose a blockchain platform that can handle large volumes of transactions seamlessly.
Gas Fees
Gas fee is the cost of performing transactions on a blockchain network. Different blockchains have varying gas fees, and it's necessary to consider them before choosing a platform for your NFTs. For example, minting your NFT on Ethereum usually comes with high fees.
High gas fees can be a significant barrier, especially for small creators and buyers. DIBA has zero minting fees since the Unique Digital Assets, NFTs on Bitcoin, are attached to the unspent transaction output (UTXOs).
Interoperability
Interoperability refers to the ability of blockchains to communicate with each other. It's crucial for NFTs to have interconnectivity with other blockchain platforms to cater to a broader user base. Lacking interoperability may result in lost NFTs, decreased trading opportunities, and added transaction costs.
Ecosystem
The blockchain ecosystem affects the development and use of NFTs. Consider platforms with a thriving ecosystem that supports NFT. An active developer community, a vibrant user base, and a thriving marketplace are characteristics of a strong ecosystem.
Smart Contract Functionality
Smart contracts are essential for NFTs' creation and maintenance. They enable the storage of information such as ownership history and transfer fees. A strong smart contract system allows for the creation of programmable NFTs with customizable functions.
Environmental Impact
The environmental impacts of blockchain technologies are increasingly becoming a concern as the energy consumption required to maintain the network can contribute to climate change.
Bitcoin vs. Other Blockchains for NFTs
Digital art and NFTs were first introduced on the Bitcoin blockchain in the 2010s. However, Bitcoin has a limited scripting language, making it difficult to support smart contract functionality.
Ethereum was then created in 2015 as an open-source blockchain platform that supports smart contracts and decentralized applications (dApps). It operates on a Proof of Stake (PoS) consensus mechanism and uses the Solidity programming language. Ethereum is well known for its wide range of applications, such as NFTs, DAOs, and DeFi.
Over the years, more blockchain platforms were developed and the majority of them also support the creation and collection of NFTs.
Advantages of Bitcoin Over Other Blockchain
- Security: Bitcoin is highly secure and has never been hacked. This makes it a reliable choice for storing and trading valuable NFTs.
- Scalability: Despite its age, Bitcoin is becoming more scalable with recent developments such as Lightning Network and SegWit. They make it possible to handle a larger number of transactions per second. This is important for creating and trading NFTs, as they often require fast and efficient transactions.
ALSO READ: A Guide to Using Bitcoin’s Lightning Network
- Low transaction fees: Compared to other blockchains, Bitcoin has lower transaction fees, which makes it more affordable for creators and traders of NFTs.
Disadvantages of Bitcoin From Other Blockchain
- Lack of smart contract functionality: Bitcoin was not designed with a focus on smart contracts. This makes it less flexible for creating complex NFTs and DApps. However, the development of RGB smart contract protocol is making Bitcoin more viable for smart contracts.
- Limited interoperability: Bitcoin is not easily interoperable with other blockchains. This can be a disadvantage for creators and traders of NFTs who want to access a wider market.
Use Cases for Each Blockchain for NFTs
Bitcoin
While Bitcoin was not initially designed for NFTs, it can still support unique digital assets. One exciting use case for NFTs on Bitcoin is the DIBA art marketplace.
DIBA enables you to trade and collect Unique Digital Assets (UDAs) on Bitcoin. UDAs are similar to NFTs but they are native to Bitcoin and their programmability is enhanced with RGB smart contract protocol.
Ethereum
Ethereum is known for being the first blockchain built specifically for smart contracts. It currently hosts the majority of NFTs online. Art, gaming items, collectibles, and music provide excellent use cases for NFTs on Ethereum.
Popular games such as Axie Infinity and Gods Unchained are built on the Ethereum blockchain.
Binance Smart Chain (BSC)
Binance Smart Chain is popular due to its low fees, fast transaction speeds, and smart contract capabilities. Gaming, art, and collectibles are perfect use cases for NFTs on BSC. My DeFi Pet and Heroes & Empires are examples of games built on BSC. BinanceNFT and Refinable are some of the art marketplaces on Binance Smart Chain.
Polygon
Polygon is a Layer 2 scaling solution for Ethereum. Its primary aim is to enhance Ethereum's core function by improving its speed, security, and scalability. There are specific use cases on Polygon such as Educoin, a learning management system for decentralized teachers and students, and TixHive for event organizers who want to sell tickets on the blockchain.
ALSO READ: Exploring NFT Photography Marketplaces
Solana
Solana's high throughput makes it good for gaming use cases. Sports and collectibles are also great use cases for NFTs on Solana. ev.io, RACEFI, Age of Sam are some popular games built on the Solana blockchain.
Tezos
Tezos is known for its focus on governance, enabling stakeholders to vote on changes in the blockchain's rules. Tezos' NFT use cases benefit from the platform's focus on transparency, immutability, and fast transaction processing. An example of a use case on Tezos is Cryptograph, which enables the creation of unique digital collectibles and allows users to vote on which charitable organizations are recipients of a portion of the sales.
Conclusion
In conclusion, when choosing the best blockchain for NFTs, there are several factors you should consider. Security, scalability, gas fees, interoperability, the ecosystem, smart contract functionality, and environmental impact are all important aspects to consider.
Bitcoin is the oldest blockchain and it offers unique advantages, such as its high security and low fees. Ethereum is more popular for NFTs due to its flexible smart contract functionalities. Binance Smart Chain (BSC) is also a popular choice due to its low barrier to entry. Other potential options include Polygon (MATIC) for faster transaction speeds and lower fees, Solana for its high scalability, and Tezos for its decentralized governance model.
As the NFT market continues to grow and evolve, blockchain technology will no doubt play a major role in its development. With the increasing adoption of NFTs, the demand for more secure, scalable, and cost-effective blockchain platforms will only increase. Furthermore, as blockchain technology continues to evolve, we can expect to see more innovative use cases and potentially even completely new blockchain platforms developed specifically for NFTs.
The DIBA marketplace is an open marketplace for curated and non-curated NFTs. It is powered by the Bitcoin blockchain and uses the RGB Smart Contract protocol to give users more control in buying, selling, and collecting UDAs (aka Bitcoin NFTs).
On DIBA, you don't need to hold any additional token as you can trade UDAs in BTC or Satoshis and keep your funds in the BitMask wallet that uses Bitcoin taproot technology to secure your assets.