Ethereum is advanced smart contracting protocols are a powerful force in the blockchain world, and it is no wonder they remain so popular when discussing non-fungible tokens (NFTs).
Solidity is used as an exclusive programming language specifically designed to operate on the Ethereum Virtual Machine (EVM), which functions as its own operating system acting as persistent storage for all accounts and contracts. Without delving into technical details any further, this complexity of their protocol serves as one major reason NFTs continue becoming more well-known across the globe – simply put, each token holds within itself a unique code that works just like a robust contract.
It’s natural to think of Non-Fungible Tokens (NFTs) as digital assets, like artworks, video snippets, or gifs. However, NFTs are actually the blockchain token that makes these transactions possible. The token is linked to the asset you’re buying but doesn’t constitute it. Furthermore, even physical objects can be traded through means such as QR codes due to NFT technology (for a more comprehensive breakdown of how this works, take a look at our guide).
In short, smart contracts bridge the digital and physical worlds through a blockchain network. NFTs enable validator nodes to accurately track any digital asset exchange within the system. As such, validators can validate ownership and guarantee that each trade is authentic by leveraging these specific smart contracts – this is why Ethereum has become so important for both digital assets and Non-Fungible Tokens (NFTs).
Ethereum was the first major NFT project to launch, and due to its cutting-edge functionalities, it quickly became the leader in the industry. Additionally, digital wallets used for transactions were primarily designed with compatibility on Ethereum in mind, as there simply wasn’t another blockchain that could meet these requirements. Thanks to its early entry into the market, Ethereum has been able to maintain a significant lead over any other potential competitors in terms of functionality.
Ethereum and NFTs in 2023
Ethereum is the pioneer of smart contract technology. However, there are many other blockchain platforms that offer similar services and might be better suited to meet your needs. Solana, Tezos, and various others have joined Crypto’s universe with their own set of benefits compared to Ethereum. Even though these blockchains don’t possess the same amount of recognition as Ethereum does within the NFTs space, it doesn’t imply that they lack potential or value. Let’s dive a bit deeper into this comparison by analyzing all pros and cons associated when using one platform over another for digital assets like NFTs.
Pros and Cons of Ethereum
Ethereum continues to be an essential contributor to the NFT sector, and using this Blockchain has some notable advantages:
It’s Popular: Undeniably, Ethereum is one of the most sought-after blockchains thanks to its introduction of smart contracts. Its infrastructure serves as a foundation for many digital assets and continues to be compatible with other Ethereum-related protocols today.
Huge Range of NFTs: Ethereum is the leader in the market for non-fungible tokens (NFTs), providing users access to the widest variety of such assets.
It’s Stable: After a decade of development and growth, Ethereum has emerged as one of the most reliable and advanced blockchains in existence. As the technology continues to improve and advance, more organizations are turning to Ethereum for their blockchain solutions.
It’s Versatile: Ethereum is not only responsible for powering NFTs, but its blockchain can be utilized in a diverse range of applications. It provides the basis for creative dapps, from payment gateways to decentralized banking systems, virtual gaming experiences, and identity protection technology. This incredible flexibility makes it an invaluable asset as we continue to move into the digital age.
It’s Sustainable: Ethereum has drastically reduced its energy costs by 99 percent by transitioning to a proof-of-stake protocol. If you’re looking for an eco-friendly way to transact, then Ethereum and other PoS platforms like Solana and Tezos are ideal places to start! Not only will this help in minimizing your carbon footprint, but it also provides some financial benefits too.
Cons
Ethereum is a popular and functional blockchain. However, it’s not the only one in existence. Other blockchains can offer similar capabilities without the inherent drawbacks associated with such an established platform. Before joining forces with Ethereum, here are some of its downsides to take into account:
It’s Expensive: Ethereum has been on the market longer than other blockchains, and its cryptocurrency (ETH) is priced higher. As a comparison, ETH typically trades above $1.660, while Solana’s currency (SOL) trades at approximately $22. Gwei transactions can be used for smaller purchases; it’s worth about one-billionth of an Ether coin.
It’s Slightly Volatile: Ethereum has a unique approach to controlling inflation: flexible transaction fees. The network’s substructure is powered by “Gas” – an exchange between validators that regulates the cost of transactions based on demand and supply.
It Has a Larger Market Cap: Having a large market cap isn’t necessarily bad, but it often allures more investors. This can lead to an increase in transactions and higher levels of market volatility. Although Ethereum is stable on the blockchain, ETH prices still have the potential for huge swings due to external factors that are out of its control.
It’s Kind of Traditional: This is a familiar challenge when it comes to large organizations. Ethereum processes around one million transactions and generates 7,000 new blocks each day – an incredible amount of data that requires careful consideration if any kind of major change or upgrade should occur in its ecosystem. It’s not as simple as just executing a whim without looking at the whole picture first!
As a trailblazer in the cryptocurrency space, Ethereum has inevitably encountered some of its own hiccups. And yet, this is normal for any technology that remains in existence long enough – and Ethereum is no exception! With so many people relying on it to conduct transactions through Blockchain, users should be prepared to accept whatever drawbacks come along with it.
Top NFT projects
To review, the majority of major NFT projects are hosted on the Ethereum blockchain. Similarly to physical collectibles, these digital assets can be exchanged or given away with no need for a third party due to their decentralized nature. Creators often choose Ethereum because its marketplace is widely used and it revolutionized smart contract technology; however, there are additional explanations for why people opt to mint NFTs using this platform.
Capitalizing on Ethereum’s payment framework, popular NFTs use algorithms to generate one-of-a-kind digital artwork. Automating the creation and minting of these works is a breeze due to this platform. Furthermore, in-game monetary units from applications can coordinate with APIs utilized by Ethereum clients, streamlining user transaction optimization and tracking substantially. Let us dive deeper into the most influential NFT projects currently operating through the Ethereum network today!
Decentraland:
This NFT project is a virtual real estate platform, allowing users to acquire and trade parcels of land that they can then use to build unique 3D scenes. Moreover, it seeks to connect all these distinct experiences in an innovative metaverse. All items are bought and sold on the marketplace as non-fungible tokens (NFTs), which may be used within the game for constructing desired scenarios.
Bored Ape Yacht Club:
In 2021, Bored Ape Yacht Club (BAYC) caused a stir in the NFT industry with its innovative membership card. By owning one of these cards, you gain access to an elite community that comes with several special features and privileges. If you missed out on the initial offering, fear not; there is still a chance for you to join this exclusive club by buying through third-party sales outlets! Although prices can range from $120K up to more than $1 million – it’s worth it if your goal is serious status and exclusivity!
Axie Infinity:
Gather, breed, and mint your own digital creatures in Axie Infinity – an ever-changing online game based on the power of NFTs. Strategize to win battles with turn-based combat, create teams, and take advantage of trading opportunities as you explore this unique world full of possibilities! Players have the opportunity to compete in seasonal tournaments for prizes. Unlike many other Play-to-Earn (P2E) games, when gamers play this game, they can actually make money! They earn digital assets from playing that they can then convert into cryptocurrency and even cash!
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