This year, non-fungible tokens (NFTs) have taken the crypto market by storm. According to DappRadar’s NFT Collectibles October Edition report, the NFT sector generated nearly $11 billion in trading volume in Q3 2021, representing an over 700% surge from Q2.
This hardly comes as a surprise. Non-fungible tokens can represent any digital object, from artwork and collectibles to music, in-game items, and even personal data, and be easily authenticated via the distributed ledger, offering proof of ownership for their holders. This is the reason why the market is blooming with NFT platforms, marketplaces, protocols, and solutions, while retail investors, celebrities, artists, athletes, and businesses have dabbled into the exciting world of NFTs to harness its benefits.
However, in the heart of any decentralized product lies its core technology. It determines its overall stability, capabilities, and the quality of the user experience. In the case of digital assets, this is their underlying blockchain – and today we will compare the best blockchains for non-fungible tokens.
Ethereum: Largest and Highly Decentralized
Ethereum features one of the largest ecosystems and user bases among all DLT networks. It is highly decentralized, with nearly 4,000 full nodes validating the blockchain and an excellent history of resilience against internal and external threats.
With Ethereum, developers get access to numerous tools, artists get a chance to showcase their art to a big market of potential buyers, and investors get plenty of NFTs to choose from. Today, this blockchain hosts most collections, marketplaces, and dApps powered by NFTs.
However, the blockchain has its downsides, which center around limited scalability. Its ability to process only around 15 transactions per second (TPS) combined with massive user activity has led to heavy network congestion. As a result, transaction fees have been rising on Ethereum, with the average transfer costing $14.96 as of October 8, 2021. While Ethereum developers are actively working on upgrading the blockchain’s scalability with ETH 2.0, it will take many months until we see big improvements.
Binance Smart Chain: Going Low-Fee
Even though Ethereum excels in security, decentralization, and ecosystem activity, Binance Smart Chain (BSC) has managed to take advantage of its competitor’s limited scalability to gain traction. As BSC has the scalability of approximately 100 TPS, it features significantly lower transaction fees than Ethereum.
According to BscScan, a standard transfer costs $0.053, but users have to pay $0.137 and $0.423 for BEP-20 and smart contract transactions, respectively. In addition to improved scalability and lower fees, Binance Smart Chain has 3-second block times – compared to 15 seconds on Ethereum –, and features decent security.
On the flip side, decentralization is among Binance Smart Chain’s top weaknesses. In addition to being managed by Binance (which also operates the bridge between BSC and Ethereum), it only has 21 validator nodes, making it a highly centralized chain. Its thriving ecosystem has become a worthy competitor of Ethereum’s – however, what BSC lacks is decent NFT-related activity.
Solana: Young, Scalable & Secure
Solana is a rather new player in the NFT space. This highly scalable and high-speed blockchain – over 65,000 TPS and 0.4-second transaction latency – gained traction only a few months ago, but its non-fungible token industry is developing fast. According to its website, its ecosystem consists of over 120 NFT projects (out of a total of 423).
Due to its excellent scalability, the average transaction costs $0.00025 on Solana, which is by far the lowest among the three chains. It doesn’t have as many validators as Ethereum: over 1,000 nodes are responsible for validating blocks within its network. This allows Solana to maintain a high level of decentralization with limited risks of validators teaming up to gain control over the network.
Solana doesn’t sacrifice security to achieve high scalability and decentralization. Instead, the project has introduced multiple innovative features and functionalities – such as the cryptographic clock Proof of History (PoH), the mempool-less transaction forwarding protocol Gulf Stream, and the Turbine block-propagation protocol.
Summary: What Blockchain Meets Your Goals?
To sum up, all the blockchains we have explored serve as good options for NFT market participants. If you are OK with higher gas fees and limited scalability, you can leverage Ethereum to access the most popular NFT marketplaces and dApps. In case you want to cut your transaction costs and don’t mind increased centralization, Binance Smart Chain can be a good choice.
However, I believe Solana is the clear winner among the three. Even as a relatively new blockchain that only gained traction recently, Solana excels at all three important qualities of blockchains: cutting-edge security, a highly decentralized network, and excellent scalability.