Why is Ethereum important for NFTs?

Non-fungible tokens were launched in the crypto market in 2017 by introducing Cryptokitties and Cryptopunks which have immediately caught the public’s attention. Since their debut, the sector has exploded and sparked even more buzz around the Ethereum blockchain, making it easier to create them.

Why is Ethereum at the forefront of the NFT movement? Is it the only blockchain that allows the development of non-fungible tokens?

Several other blockchains host NFTs, and many other cryptocurrencies can be used to purchase non-fungible tokens, so why is everyone turning to Ethereum when interested in NFTs?

Smart contracts and the ERC-721 token

Ethereum is the first blockchain to offer smart contracts that make it easier for users to transfer and own non-fungible tokens. The network developed a token standard, ERC-721, specifically for minting non-fungible tokens. It can be said that the blockchain laid the foundation for NFT development and paved the way for the cryptocurrency revolution. And since most NFT projects are based on Ethereum, wallets were developed to make it easier for users to buy Ethereum online and invest in NFT development. Additionally, you can also use software like the Delta app to track your investments if you have a diversified portfolio.

Are non-fungible tokens based on Ethereum?

Non-fungible tokens are compatible with all Ethereum-based projects that enable users to trade different types of NFTs.

While Ether is the original cryptocurrency of the network, Ethereum is the blockchain that enables the development of several types of crypto projects, non-fungible tokens being one of them. The network stores information about the transfer of non-fungible tokens so that they can function in the digital space.

NFTs have a unique potential, and the Ethereum network created the ERC-721 protocol to meet their special needs. Considering its newness to the market, the ERC-721 standard is different from other crypto projects and has a different value than other tokens.

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However, just because Ethereum is the most popular network for creating and transferring NFTs does not mean that users are limited to it for creating non-fungible tokens. Other networks such as Tron, BNB Chain, Tezos, Cardano and Solana are also used to mine and create NFTs.

Why is Ethereum the most popular blockchain among NFT enthusiasts?

Ethereum is the second largest cryptocurrency by market capitalization and the first network to enable the development of non-fungible tokens. Therefore, they sell for a significantly higher price on this blockchain than on other platforms. If you want to stay up to date with Ether’s price development, use a crypto tracker that will provide you with relevant information in real time.

Ethereum leads the decentralized finance market due to its data architecture and highly secure network, so it is no surprise that most NFT developers prefer to base their projects using the ERC-721 protocol. Also, thanks to its popularity in the crypto sector, Ethereum gives NFT projects exposure to a larger audience.

However, some NFT enthusiasts have also started looking for an alternative since the network increased its transaction fees. Solana blockchain is a worthy contender because it promises to help users overcome difficulties.

Why are NFTs based on Ethereum and not Bitcoin?

Ether aims to make Ethereum DApps and smart contract operations more user-friendly and easier to monetize than transforming the network into a new monetary system. Satoshi Nakamoto created Bitcoin with the intention of being used as a peer-to-peer electronic cash system. Ethereum has developed smart contracts that govern the transferability of digital assets and assign their ownership. Bitcoin lacks the necessary protocols to facilitate the creation of non-fungible tokens. NFTs are fungible, so they are not fungible. Each Bitcoin has the same value, but each NFT is a unique asset and therefore has a distinct value.

What are the first NFTs created on Ethereum?

Although non-fungible tokens were developed on Ethereum, the concept first appeared in the Bitcoin network which introduced colored coins (digital watermarks were applied to coins to track assets off-chain). The blockchain even built a platform called Counterparty to enable users to create Bitcoin-based tokens for use in blockchain-based gaming applications. By developing protocols to develop unique assets on top of the blockchain, Bitcoin developers provided the foundation for non-fungible tokens. CryptoPunk’s NFTs were developed on the Ethereum network in June 2017 as a collection of 10,000 unique 24×24 pixel, 8-bit avatars. They are the first and most famous collection of unique digital characters.

Crypto users minted 10,000 Punk NFTs in 8 days for free with CryptoPunk’s smart contracts and introduced the concept of profile picture format for non-fungible tokens (which are pictures that make it easier to identify an online profile). The first NFT collection and the PFP format are conventions for NFT development.

Is Ethereum the best blockchain for NFTs?

If you are a developer looking for a network to create NFTs, check out the robustness of the smart contracts, the platform’s fee structure, transaction speed, security framework, and the forking option.

NFTs are a significant niche in cryptocurrency because they expand people’s exposure to digital tokens. Internet users who may not have considered buying cryptocurrencies are entering the market because of NFTs. Also, non-fungible tokens contribute to the use of blockchain technology because they are linked to both games and art.

When evaluating the blockchains that enable NFT creation, the resilience of smart contracts is an important factor to consider because it affects the overall security of the network. Blockchain’s smart contracts should go through extensive testing to ensure efficiency and reliability, exposing users to a minimal risk of hacks, breaches and downtime.

NFT developers should also consider the costs associated with NFT transactions because the blockchain must provide cost-effective solutions for developing and using non-fungible assets to attract the public.

Ethereum has been the natural choice for developers and has over 95% of the NFT market in its ecosystem. However, Solana has also emerged and gained popularity in recent years because it provides users with several benefits. Solana has lower transaction costs, and proof-of-stake consensus reduces the number of errors in the system. Solana promises a cheaper and faster minting of non-fungible tokens, with higher royalties and increased throughput.

At the end of the day, the choice is up to the developer.

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