Non-fungible tokens (NFTs) debuted in 2017, and Cryptopunk and CryptoKitties quickly caught the attention of buyers. Since then, the NFT market has exploded and Ethereum has been one of the main factors.
But why was Ethereum at the forefront of the NFT boom? And why are most NFT projects based on the Ethereum blockchain? Is it the only way to create an NFT?
not really. Other blockchains such as Solana, Cardano and BNB chains also host NFTs. In addition, NFTs do not have to be purchased using Ether alone. You can also use SOL, ADA, BNB, and other tokens to buy, sell, and trade digital assets.
This will return you to the original question. Why Ethereum?
ERC-721 tokens and smart contracts
Ethereum was the first smart contract-enabled network. Smart contracts make it much easier to provide ownership and manage NFT transferability. In addition, Ethereum has created a token standard called ERC-721, especially for the creation of NFTs. Therefore, Ethereum laid the foundation for NFTs and paved the way for the digital asset revolution.
In addition, most projects were based on Ethereum, so wallets such as MetaMask were created in a way that NFTs must be compatible with Ethereum virtual machines (EVMs). Only then can we support Ethereum-based NFTs.
EVM acts like a distributed computer (virtual machine) that handles millions of projects built on an Ethereum network. This is the foundation of Ethereum’s operating structure. Therefore, the NFT author had to make sure that the project was compatible with EVM. Another reason they had to build on Ethereum.
Therefore, when NFTs began to gain momentum, Ethereum was one of the only blockchains that could support these digital assets. Large Ethereum-based NFT marketplaces such as Rarible, OpenSea, and Nifty Gateway have begun to grow and flood with customers.
Therefore, Ethereum is not a prerequisite for digital token creation and trading, but it is definitely a leader. Also, thanks to years of exposure, we have an extensive network of buyers. Naturally, creators will prefer Ethereum over other creators.
Popularity comes with problems.
The popularity of Ethereum has also caused many problems. Many projects lead to influx of network traffic. This traffic ultimately causes higher transaction fees. Increased traffic also slowed down the network. Transactions began to take a lot of time, forcing users to pay higher fees to prioritize transactions.
Next, there are environmental issues. Studies show that the annual electricity consumed by Ethereum is comparable to the electricity consumption of some countries.
Therefore, many other blockchains have begun to emerge to address these issues. For example, you don’t have to pay for gas on the Polygon blockchain. Gas charges are the amount that users have to pay in addition to transaction fees to prioritize transactions. In addition, only a minimal fee is required to convert ETH to polygons. The Polkadot network has also become known as the “Green NFT”, which solves the sustainability and environmental problems associated with Ethereum.
The Solana blockchain has also emerged as an alternative to Ethereum. In contrast to Ethereum 13, it can handle up to 60,000 transactions per second. As with the environmental impact, Solana’s transaction fees are minimal. Thanks to these features, the Solana blockchain overtook Ethereum for the first time in its daily NFT sales on May 24, 2022.
However, NFTs created on such platforms must be EVM compatible if they are accessible using a wallet such as Metamask.
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