The world of non-fungible tokens (NFTs) can seem confusing at first, even for those who are otherwise well-versed in Web3 and blockchain technology. NFTs are more than just collectible digital art – much like how crypto is more than just a few coins a user might choose to invest in – so it's important that people fully understand the technology behind the product they're purchasing.
NFTs are digital assets that are capable of representing a range of unique products, including art, media, in-game items, and other pieces of digital content. It's even possible to tokenise real-world assets like real estate using NFTs.
Proof of ownership of these digital assets – one of the primary benefits of NFTs – is securely recorded on whichever blockchain the developer has chosen to deploy their NFTs on. As a result, deciding which blockchain to buy and sell non-fungible tokens on is one of the first big decisions that a curious collector needs to make.
Below, we're going to talk through a few of the most popular blockchains for NFTs, discuss the pros and cons of each, and break down what makes them the best blockchains for buying and selling NFTs.
Top NFT Blockchains
For many, Ethereum is considered the best chain for NFTs. In fact, while it was not the first chain to host NFTs, the Ethereum blockchain was the first to truly popularise the concept of non-fungible tokens and as of today holds a commanding lead in terms of liquidity.
The launch of the network in 2015 paved the way for non-fungible tokens to enter the mainstream, with the Ethereum protocol introducing the ERC-721 non-fungible token standard. ERC-721 tokens can have different properties and values relative to other tokens on the same smart contract, including visuals of the metadata associated with the tokens.
Additionally, Ethereum was the first to implement the ERC-1155 multi-token standard, which allows tokens to behave similar to both fungible ERC-20 tokens and non-fungible ERC-721s.
Because of its position at the forefront of the NFT market, Ethereum is currently host to tens-of-thousands of NFT collections, including some of the most well-known projects such as Bored Ape Yacht Club and CryptoPunks.
Despite increasing competition, Ethereum is still the most popular of all NFT blockchains, and there are several reasons for its continued success.
First and foremost, Ethereum is home to many of the most historic and influential collections, leading to projects, developers, and investors naturally choosing it as their preferred blockchain for the creation and trading of NFTs. It goes without saying that the greater the adoption of the blockchain, the greater the NFT project's exposure, and Ethereum is home to many projects with celebrities and influential figures onboard. Ethereum has also managed to accrue huge infrastructure and developer tools over the last few years, ensuring NFT developers have considerably more apps and resources at their disposals compared to the network’s competitors.
In the debate about cryptocurrency and Web3, Ethereum always ranks highly when talking about decentralisation and security, two incredibly important factors to consider when investing in NFTs – buyers and sellers can rest assured that their investments are safe.
Unfortunately, the popularity of the Ethereum network is also one of its biggest downsides. Gas or transaction fees on Ethereum are used to compensate miners for the computational power they use when validating a blockchain transaction. The greater the demand for transactions, the higher the gas fees required. Gas fees are also required for secondary sales on platforms like OpenSea.
Due to the high cost of transacting on Ethereum, and the typically higher mint prices of Ethereum NFTs, many new users and casual investors have quickly become priced out of the market for NFTs. Combined with the blockchain's massive carbon usage – Ethereum currently works using an energy-hungry proof of work consensus – there are some major drawbacks to using Ethereum to buy and sell NFTs.
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Solana, which operates with a unique consensus mechanism, has made itself a favorite among NFT projects in part due to a far lower carbon costs than Ethereum, alongside a host of other benefits. Solana is the second largest blockchain for NFTs, although many of its users would perhaps consider it the best. Because of the lower price of native token SOL (compared to ETH), and the lack of expensive gas fees, the Solana network is ideal for those looking to buy their first NFTs.
Although Ethereum still reigns supreme, there are a number of highly successful Solana NFT projects available, including Degen Ape Academy, Okay Bears, and SolPunks.
Solana prides itself on being one of the DeFi’s fastest networks, with the protocol claiming to be capable of processing around 2,700 transactions per second (TPS) on average. Solana's developer documents suggest that the blockchain has the potential to cope with hundreds of thousands of transactions almost simultaneously, which, combined with Solana's hybrid consensus model, allows for lower validation times for transactions and smart contract execution, as well as incredibly cheap transaction fees.
Because Solana doesn't rely on miners to complete transactions, a single transaction on the Solana network will only cost users around $0.000025, making it an excellent option for buying and selling NFTs.
Despite its rapid growth as an NFT market, Solana is still much less widely known than Ethereum, and the network has received far less attention from mainstream media and celebrities. Although it doesn't take a cryptocurrency expert to know that DeFi isn't a popularity contest, the protocol's lower user base has inevitably led to fewer NFT marketplaces and a substantially lower trading volume than its rival. Liquidity is key for both collectors and developers, and in that realm Ethereum remains unmatched.
Additionally, the Solana network has come under heavy criticism in recent months after suffering from occasional slowdowns and several network outages. Solana experienced five outages in approximately the first six months of 2022, including a six-day network shutdown between January 6th - January 12th. For NFT investors and developers, it's essential that their chosen network is reliable in order to avoid interference with potential purchases and sales, so these outages are a worrying concern.
Binance Smart Chain (BSC)
Binance Smart Chain (BSC) is an Ethereum Virtual Machine (EVM)-compatible blockchain that runs alongside – but independently from – the Binance Chain. This is important as it allows throughput on the Binance Chain to continue uninterrupted, while introducing smart contract functionality to the ecosystem. BSC operates using the BEP-721 token standard, which allows for the creation of non-fungible tokens, and many Ethereum-based NFT developers can use similar tooling on BSC with few changes.
Binance Smart Chain operates using a consensus model called proof of staked authority (PoSA) which enables a short block time and low fees. To date, there have been very few notable NFT collections released on BSC, although analytics show that the trading of NFTs on the network did increase considerably towards the end of 2021 and into 2022, and it often ranks as among the highest volume chains for NFT trading.
Binance Smart Chain is compatible with Ethereum Virtual Machine, meaning developers are able to port their projects from Ethereum to BSC, bringing with them a vast array of tools and decentralised applications (DApps), including NFTs and NFT marketplaces.
Thanks to BSC's PoSA consensus, NFT investors can expect relatively low transaction fees, especially when compared to the Ethereum network. The average transaction on Binance Smart Chain costs 0.005 BNB, making the minting, selling, and purchasing of NFTs incredibly affordable for those new to the crypto space.
Finally, Binance Smart Chain enjoys substantial support from Binance itself, including via a variety of sponsored and celebrity-endorsed partner projects.
After Ethereum and Solana, there is a significant drop-off in terms of liquidity. While BSC is at or near the top of the second tier in terms of trading volume, BSC's lack of adoption as an NFT platform is a major flaw in its race to become the best blockchain for buying and selling NFTs. Although there have been several successful collections released on BSC, it commands such a small percentage of the market that projects will always struggle to compete for investment against Ethereum, Solana, and the rest of the market.
Binance Smart Chain is also incredibly centralised, with only around 20 active validators working on the network every day. Binance Chain dictates who validates BSC, and this centralisation is enough to put off a number of potential developers. Because decentralisation is so highly sought after, it's perhaps unlikely that BSC will ever see the same level of NFT adoption as alternative blockchains.
Although Ethereum currently dominates the NFT landscape, multiple competitors are attempting to carve out a slice of marketshare. The gas fees on the Ethereum blockchain make it unfeasible for some retail investors, and its ongoing energy demand is enough to deter many eco-conscious buyers and artists from getting onboard.
That being said, the variety of collections and first mover advantage is going to be difficult for Ethereum's competitors to beat, and the range of tools available to prospective developers will always remain an attractive proposition.
Thankfully, non-fungible tokens are still in a period of relative infancy, so it’s highly likely that Solana and Binance Smart Chain will continue to grow their NFT offerings in the coming years. There are also several other viable options – including layer 2 platforms like Arbitrum and Optimism, as well as alternative layer 1s such as Avalanche, and Tezos – that have the potential to make a considerable dent in the NFT market.