Why Is Ethereum So Popular For Nft Projects?

Non-Fungible Tokens (NFTs) made their debut in 2017, with Cryptopunks and Cryptokitties quickly capturing the attention of buyers. Since then, the NFT market has exploded, with Ethereum being one of the main contributing factors.

But why was Ethereum at the forefront of the NFT boom? And why are most of the NFT projects based on the Ethereum blockchain? Is it the only way to do an NFT?

Not really. Other blockchains like Solana, Cardano, and BNB Chain also host NFTs. Also, there is no need to buy NFTs with just Ether; you can also buy, sell and trade digital assets with SOL, ADA, BNB and other tokens.

This brings us back to our original question, why Ethereum?

The ERC-721 token and smart contracts

Ethereum was the first network enabled for smart contracts. Smart contracts made it much easier to own and control the transferability of NFTs. Furthermore, Ethereum also created a standard token called ERC-721 especially for NFT minting. Thus, Ethereum laid the foundation for NFTs and paved the way for the digital asset revolution.

Also, since most of the projects were based on Ethereum, wallets like Metamask were created in a way that NFTs had to be compatible with the Ethereum Virtual Machine (EVM). Only then could they support Ethereum-based NFTs.

The EVM acts as a decentralized computer, a virtual machine, that handles the millions of projects created on the Ethereum network. It is the basis of the operational structure of Ethereum. Therefore, the creators of NFTs had to ensure that their projects were compatible with EVM; another reason why they had to build on top of Ethereum.

Therefore, when NFTs started to gain traction, Ethereum was one of the only blockchains that could support these digital assets. Spotting the huge number of Ethereum-based NFT marketplaces, including Rarible, OpenSea, and Nifty Gateway, began to spring up, and customers began arriving in droves.

So while Ethereum is not a prerequisite for minting and trading digital tokens, it is certainly a leader. It also has an extensive network of buyers, thanks to its exposure over the years. Naturally, the creators would prefer Ethereum over others.

Popularity comes with its share of problems.

The popularity of Ethereum also caused a lot of problems. A large number of projects leads to an influx of network traffic. This traffic eventually causes an increase in transaction fees. The increased traffic also slowed down the network. Transactions began to take a long time and users were forced to pay higher fees to prioritize their transactions.

Then there are the environmental issues. According to studies, the annual energy consumed by Ethereum is comparable to the energy use of various countries.

Therefore, many other blockchains began to emerge to address these issues. For example, you do not have to pay any gas fees on the Polygon blockchain. A gas fee is the amount that users must pay in addition to the transaction fee to prioritize their transactions. Also, to convert ETH to Polygon, you only have to pay a minimal fee. The Polkadot network has also become known for its ‘green NFTs’ that solve environmental and sustainability issues associated with Ethereum.

The Solana blockchain also emerged as an alternative to Ethereum. It could process up to 60,000 transactions per second, as opposed to 13 for Ethereum. The transaction fees at Solana are also minimal, as is its impact on the environment. Thanks to these features, the Solana blockchain surpassed Ethereum in terms of daily NFT sales on May 24, 2022 for the first time.

However, NFTs created on such platforms should still be EVM compatible if creators want to access them through wallets like Metamask.