In many ways, non-fungible tokens (NFTs) are the use case that launched cryptocurrency into the popular lexicon for the first time. Suddenly, individuals who were previously uninterested in the decentralized merits of Ethereum (ETH 3.30%) were buying packs of NBA Top Shot NFTs and celebrities ranging from Justin Bieber to Neymar Jr. were proudly showing off their Bored Apes online.
While NFT sales have cooled as crypto prices have declined in 2022, there are plenty of signs that the NFT market is picking back up. For example, Flow, best known as the home of NBA Top Shot, just made waves when Meta Platforms (NASDAQ: META) announced that Instagram will now support Flow NFTs. Here are three of the best cryptos for NFTs during an exciting and fluid time for the asset class.
Image source: Getty Images.
Ethereum: The category creator
Neil Patel (Ethereum): It's probably not a surprise to readers that Ethereum tops the list as the most well-known and popular blockchain network and cryptocurrency for NFTs. Launched in 2015, it is the second-oldest and second-most valuable crypto after Bitcoin. As of the early afternoon on Aug. 10, Ethereum carried a market cap of $224 billion.
Being the first blockchain to introduce smart contracts has been a huge boon for Ethereum, whose native token, Ether, has returned an incredible 56,500% since inception. Smart contracts are computer programs written into the blockchain that run when certain conditions are met between two parties. They introduce functionality, new features, and applications to the blockchain, one of which is NFTs.
OpenSea, the largest NFT marketplace, first launched on the Ethereum network. This means that when buyers wanted to purchase NFTs from OpenSea, they had to first purchase Ether, raising the demand and value of Ethereum. While the numbers are down from their peak in May 2021, OpenSea still generated more than $500 million of NFT trading volume for Ethereum over the last 30 days.
Ethereum's dominance in NFTs can also be demonstrated by looking at the top two collections, CryptoPunks and Bored Ape Yacht Club. Combined, they have a collection value of nearly $3 billion. They are minted and sold on Ethereum's blockchain, supporting demand for Ether. And most recently, luxury jewelry maker Tiffany & Co. released an NFT collection, called NFTiffs, on the Ethereum blockchain to CryptoPunks owners.
Ethereum has the most developers of any crypto working on it to advance the network and build apps for users, a positive sign for its outlook. And the upcoming Merge, which will boost Ethereum's scalability, will make it even more attractive to NFT creators and collectors. As a result, it's hard to see any other crypto overtaking Ethereum as the best one for NFTs.
Solana: The rising star
RJ Fulton (Solana): The stranglehold that Ethereum has had over the NFT market might be changing. Although it still accounts for more than 80% of all NFT sales, other blockchains like Solana (SOL 6.39%) are vying for market share. Compared to Ethereum, Solana offers incredibly fast speeds and lower fees, something NFT artists and collectors increasingly desire.
Thanks to integrations with some of the most popular NFT marketplaces like OpenSea and Rarible, Solana gained more exposure in the last year than all previous years combined. At one point this year, Solana did the unthinkable and passed Ethereum in NFT trading volume over a 24-hour period thanks to the release of the Trippin' Ape Tribe collection back in May. It accomplished another feat this year thanks to arguably the most popular Solana-based NFT project, Okay Bears. This collection of 10,000 uniquely designed profile pictures is the only non-Ethereum-based project that has cracked the top 50 of all NFTs in total volume and was able to generate more trading volume in one day than all other Ethereum NFTs at one point last April.
To add to its success, in early 2022, Meta Platforms announced that its social media platforms Facebook and Instagram would be adding NFTs to the networks and Solana was one of the four blockchains selected. While the integration hasn't rolled out yet, once Meta unveils the NFT features, Solana could further increase its presence with users around the world as a viable alternative to Ethereum.
If current trends hold, Ethereum should continue to lose share of the NFT market. At one point in 2021 Ethereum accounted for 95% of all NFT sales, but now that number has fallen to around 80%. With users looking for other alternatives, blockchains like Solana have an opportunity to build a reputation as a formidable opponent to Ethereum.
Despite a brutal decline in NFT prices this year, the popularity of Solana NFTs has certainly grown, yet thanks to some timely developments and news they could grow even more. If you're not interested in trying to find out what profile picture NFT will be next to explode but still want exposure to the increasingly diversified field of NFT blockchains, a position with Solana is a must.
Polygon: The up-and-coming dark horse
Michael Byrne (Polygon): What do Coca-Cola, Reddit, Walt Disney and Meta Platforms all have in common? All four have recently announced that they have chosen to work with Polygon (MATIC 5.44%) on various NFT projects. While Ethereum is the 800-pound gorilla in the room and Solana is perhaps a top challenger, Polygon is an interesting dark horse that is forging blue chip partnerships and gaining momentum. Thanks to its low fees, ability to scale, fast transaction times, and climate-friendly profile, it is a natural partner for these blue chip companies that want to wade into the crypto space.
Walt Disney selected Polygon for its 2022 Disney Accelerator program, which is "a business development program designed to accelerate the growth of innovative companies from around the world." Disney likely views Polygon and its team as a good way for the company to explore leveraging its massive intellectual property catalog into NFTs. Reddit also chose to create its new Collectibles Avatar NFT marketplace on Polygon. Reddit highlights that it chose Polygon because of its commitment to sustainability and due to its low transaction fees. The NFTs are designed by artists on Reddit and proceeds will support these Reddit users. Owners of the Reddit NFTs will be able to use the NFTs as their profile picture and will have the license to use the NFTs on and off Reddit. Not to be outdone, Meta Platforms' Instagram currently supports NFTs from the Ethereum, Polygon, and Flow blockchains and is enabling users in over 100 countries to display NFTs on the platform.
It's not just media empires and tech companies trying to make a splash in Web3 that are leveraging Polygon -- Coca-Cola just used Polygon to aidrop generative art NFTs of Coca-Cola bottles to existing Coca-Cola NFT holders to celebrate International Friendship Day.
Polygon may not have the marquee collections like Bored Apes or Okay Bears that Ethereum and Solana have, but it is lapping the field when it comes to corporate tie-ups and has a bright future ahead.
While the NFT market has been turbulent in 2022 as crypto prices have declined, this is an exciting emerging asset class that is beginning to make serious inroads within multiple industries, and these cryptos are three of the best ways to get involved.
