How to choose the best blockchain for NFT marketplace development?
Non-Fungible Tokens (NFTs) are taking the blockchain-cryptocurrency domain by storm. In 2021 alone, their market cap has risen by over 1785%, crossing $19 billion. As a result, the so-called NFT marketplaces, where you can buy and sell digital assets, are becoming an excellent means of revenue generation, offering unprecedented ROIs.
NFT marketplace development companies are increasingly jumping on the bandwagon, innovating a flurry of diverse solutions. Blockchain software development companies, as well, are focusing on ways of leveraging NFTs. But amidst such positivity, one mustn't assume a simplistic pose on this matter, especially concerning NFT marketplaces development.
From security to cost to functionality, developing a robust NFT marketplace involves multiple crucial aspects. Each of these demands considerable skill and expertise, lest end-users and project owners are vulnerable and exposed to risks. An NFT development company must build marketplaces on the best-suited blockchain for optimal results, although the search can be daunting. To help in this regard, this article compares and presents the most appropriate blockchain for developing NFT marketplaces.
Choosing the Ideal Blockchain for NFT Marketplace Development
As we search for the top blockchain for NFT marketplace development, we must consider several parameters. This section highlights them so that we can better understand what follows later.
Transaction and Token Development Cost
NFT-based transactions need cost-effective solutions because they won’t always involve trading in million-dollar art pieces. Instead, they include micro-transactions more often, involving in-game digital assets, digital collectibles, card games, and so on. Naturally, no one will be willing to pay exorbitant fees for these transactions; minimizing cost is pivotal for usability and adoption. In turn, there’s a need for optimized blockchain development costs, especially in the context of non fungible token marketplaces. Therefore, the blockchain’s fee structure for NFTs is a significant point for consideration, the best being feeless.
Robust Smart Contracts
The robustness of its smart contracts is a primary contributor to the overall security that blockchain technology provides. Writing secure, clean, and bug-free code is necessary for this purpose. Smart contract must be subject to rigorous and stringent testing, ensuring the highest degree of resilience and efficiency. Only then can NFT marketplace developers and users rest assured about minimal risks of breaches, hacks, and downtime.
Possibility of Forking
NFTs are valuable, primarily because of their rarity and uniqueness. Hard forks can pose severe threats to these aspects, as duplicating NFTs put their sanctity to question. Asset ownership is at stake here, while NFTs on the ‘old’ chain may lose their value completely. Given these matters, it is imperative to build NFTs, more importantly marketplaces, on fork-proof blockchains.
Speed of Transaction
Speed is among the primary determinants of a digital system’s success, especially in domains involving storage and transfer of value. But speed mustn’t come in return for high costs or low security, which it often does for several blockchains. Faster finality means attackers have shorter time windows as blockchains are immutable by definition. Any platform that achieves this while upholding decentralization is ideal for NFT marketplace development.
Blockchains may be vulnerable to several attack vectors, including Fifty-One Percent (51%) and Man-in-the-Middle attacks. Platforms with Proof-of-Work (PoW) consensus mechanisms are especially susceptible to attacks where attackers gain control over a majority of the network’s computational power. Loss of access, money, and data is the inevitable outcome of such attacks; decentralization is compromised. Therefore, for NFT marketplace development, it’s advisable to opt for blockchains with alternative, mining-free consensus mechanisms, such as Proof-of-Stake (PoS).
Best Blockchains for NFT Marketplace Development
Let us now compare some of the existing blockchains that support NFT development, bearing in mind the above-mentioned parameters.
Presently, Ethereum is the most widely used and popular blockchain for NFT marketplace development. Leading NFT marketplaces, including Rarible, OpenSea, SuperRare, Decentraland, leverage the Ethereum network. Now, one might ask, what is driving Ethereum’s popularity concerning NFTs? What makes any of the world's largest digital marketplace decide to choose Ethereum?
For one, creating NFTs on the Ethereum Virtual Machine (EVM) is extremely simple and easy. Sometimes, one simply has to upload a file and fill in some information. Settling ownership disputes is also easy, as the transaction history and metadata are optimally identifiable. Popular token standards—ERC-721 and ERC-1155—foster interoperability as well, easing the development process further.
However, Ethereum blockchain has severe limitations: high costs and low scalability, above all. By now, it is common knowledge that surges in network traffic choke Ethereum, resulting in exorbitant gas fees. Consequently, the platform isn't conducive to micro-transaction and day-to-day usage.
Because of its PoW-based consensus, Ethereum has succumbed to multiple 51% Attacks; there can be more in the future. Additionally, there’s already been one hard fork on Ethereum—creating Ethereum Classic—and yet another is planned for Ethereum 2.0.
Binance Smart Chain
The leading cryptocurrency exchange, Binance, is planning to launch the Binance NFT marketplace in June 2021. Leveraging Binance’s deep liquidity reserves, the platform will enable NFT buyers and sellers to interact at minimal costs.
BinanceNFT features ‘Premium Events’ for renowned artists, offering them upto 90% of profits from sales. Creators on the platform are also entitled to 1% of every subsequent sale as royalties. On the other hand, general users can also trade their NFTs, incurring only 1% of every transaction as processing fees.
Apart from scalability and low costs, the Binance Smart Chain will enable compatibility with Ethereum, therefore, interoperable. Furthermore, multiple NFT marketplaces are already running on the Binance chain, namely BakerySwap, Battle Pets, and PancakeSwap.
The Cardano blockchain is not yet compatible with smart contracts, but it’s already dealing with NFTs. In the platform’s ICO-like model, users have to trust projects before they are formally launched. NFT-DAO is developing the NFT standard for Cardano, while Cardano Kidz has already sold out even without real-world utilities. Similarly, Professor Cardano, LoveAda, and Somint are in the process of developing their NFT marketplace on the Cardano blockchain.
The Tezos blockchain has an NFT marketplace, namely TRUESY, whose particular focus is to reduce the carbon footprint. By optimizing its CPU usage, the platform claims to use 2,000,000x less energy than other NFT platforms. Hic et Nunc is another Tezos-powered NFT marketplace promising to care for the environment by minimizing energy consumption. OneOf is another upcoming platform, marketing itself as an ESG-friendly NFT marketplace and offering affordable NFTs to environmentally-conscious music lovers.
The Worldwide Asset eXchange (WAX) is one of the most popular networks for decentralized games, entertainment, and NFT trading. WAX identifies itself as a ‘Green NFT Blockchain,’ promoting environmental sustainability by being 125,000x more efficient than the Ethereum network. AtomicHub is a popular NFT marketplace on WAX with over 31,300,964 NFTs.
Flow is a developer-friendly blockchain network, especially for building digital assets and marketplaces. The platform strives for scalability, not through sharding but with upgradeable smart contacts written in the Cadence Programming Language. Additionally, Flow has a multi-node architecture for consensus, execution, verification, and collection. VIV3 is an NFT marketplace on this blockchain, enabling users to mint NFTs for free. NFT creators and digital artists get 87.5% from selling their own NFT collection, apart from an additional 10% for every subsequent resale.
Ethereum is the most popular; Tezos and Wax are rallying for the environment; Flow is innovating for scalability; Binance is banking on existing liquidity; Cardano is still setting up. Each has its upsides, for sure, but also a fair share of shortcomings. Finally, let’s look at Algorand and see why it is possibly the leading blockchain for NFT market development.
For a start, Algorand’s transaction costs are as low as $0.011. Being so incredibly cheap, the platform is ideally suited to micro-transactions, like trading card games, for instance. Additionally, transactions on Algorand are peer-to-peer and atomic, with instantaneous block finality, for enhanced security and speed.
The Algorand Standard Assets (ASA) framework assists the development of NFTs and marketplaces, facilitating bug-free, resilient, and tamper-proof smart contracts. A Pure-Proof-of-Stake (PoS) consensus mechanism validates interactions on Algorand, further adding to its security. A globally distributed community of $ALGO token holders participate in the platform’s decentralized decision-making procedure, gaining voting rights in proportion to their ownership. By being mining-free, Algorand eliminates the risk of 51% Attacks.
In addition to the above features, Algorand is a carbon-negative, forkless blockchain. Once an NFT is deployed on this blockchain, there’s no means for replication or duplication. Moreover, one can send restricted version tokens which are extremely useful for virtual real estate and digital registries. Lastly, Algorand’s forkless nature guarantees absolute and consistent upholding of ownership concerning NFTs.
A Final Word
Algorand is one of the best blockchains for NFT marketplace development–we know that as we’ve undergone the whole process and created OpenNFT - a whitelabel NFT marketplace for the community to use freely under open source license. With this solution, you can simply set up your own marketplace and issue your NFTs on Algorand seamlessly, with top security.
Should you need to develop a custom NFT Marketplace, or you’d like to customize OpenNFT and add multiple features to it–don’t hesitate to reach out, so we can start the discussion on your project!