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The NFT space is exploding. A record $10.7 billion worth of NFTs exchanged hands in the third quarter of 2021, surging more than 700% from the previous quarter.
The space is exciting for collectors and artists who want to enjoy and profit from digital art.
To trade or mint NFTs, you first need to choose the platform. The following article will compare two major NFT networks, Ethereum and Solana.
Even if you don’t want to buy NFTs, you should still know about this if you intend to invest in crypto.
The spectacular rise of the two crypto tokens has much to do with their networks enabling NFT trading. Therefore, the value of the two tokens is based mainly on the size and functionality of the two networks.
NFTs are currently a large part of why people use these networks. Simply put, The more people use Ethereum or Solana to buy NFTs, the higher their price will be.
Consider that the NFT craze picked up steam in 2020. Ethereum was up 2.300% since the start of 2020. Solana’s rise was even more impressive. It was up 17,500% in 2021, which has a lot to do with its growth as an NFT trading platform.
Size – Ethereum Wins
NFT traders will need to consider the size of the networks. That is because the more extensive the platform, the more opportunity there is. Artists want to be on a platform that has the most buyers. Likewise, buyers want to be on a platform that features the most amount of NFTs.
The vast majority of NFTs still trade on the Ethereum network. The primary network accounts for more than 97% of NFT sales.
Ethereum also leads the marketplace by the amount of money exchanged. Notably, an NFT “Every day’s — The First 5,000 Days” sold for a whopping $69.3 million in February 2021.
Compared to Ethereum, Solana’s network seems tiny. But that is not to say that it doesn’t hold potential. For example, Solana’s Monkey Business NFT has recently sold for the equivalent of $2 million. So evidently is far from negligible.
That means that prospective traders and artists can still find what they’re looking for on Solana. This is especially true if they niche down and use the particular technical advantages of the Solana network. More on that below.
Still, Solana has a lot of catching up before it can genuinely rival Ethereum in size.
Growth – Solana Ahead
However, size is not the only factor. An intelligent trader will want to position himself in a network that is increasing.
This is because growing networks are great for early adopters. While the web is relatively small, they enjoy less competition. By the time it grows, early adopters will already establish themselves in it.
Solana’s NFT ecosystem has recently exploded. The key to the rise is the network’s colossal scalability which allows it to process transactions efficiently. As a result, the network soared in popularity in the DeFi space. The total value locked in the network is more than $15 billion, up from just $3.5 in September.
Of course, this includes NFTs. The most extensive collection is Degen Ape Academy, which sold about $227 million worth of ape NFTs.
Compatibility – Ethereum Still In The Lead
The most crucial factor to consider when comparing the networks is their technical specs and user experience. This primarily means the functionality and the costs associated with them.
These factors will ultimately determine the future of the network. Networks can’t live on size alone. No matter how large, an inferior network will, sooner or later, lose users to a smaller but superior one.
It is important to note that the network’s ecosystem is not just the blockchain. For the best user experience, a network needs a series of compatible apps and services to support it.
This includes hot and cold wallets, token and NFT exchanges, and associated services such as Bitcoin’s Lightning Network.
In terms of compatibility and features, Ethereum seems to be ahead. The token is the second-largest cryptocurrency by market cap, and therefore has a massive ecosystem of services supporting it.
On the other hand, Solana’s ecosystem is much younger, but it is overgrowing. Moreover, as the fifth-largest crypto by market cap, it’s not that far behind Ether.
Ethereum users can also use the popular MetaMask wallet, available on most popular browsers and mobile. Solana’s Phantom Wallet has potential but is still trailing behind in terms of features.
For example, Solana’s network is just recently getting a mobile-friendly integration. Namely, the Phantom Wallet is launching a mobile app in January 2022. Developers are rushing towards mobile due to its importance for user engagement.
Blockchain Tech – Solana Way Ahead
However, while most of Solana’s non-blockchain integrations trail behind Ethereum’s, blockchain is where Solana shines.
The most straightforward test is the speed of transactions. Solana can power up to 50,000 transactions per second. Ethereum can only handle about 15.
This is a crucial fact for user experience, as slow network speed also translates into high cost. Any blockchain network calculates fees based on how busy the network is. At only 15 transactions per second, Ethereum gets congested quickly.
Therefore, it’s not surprising that the cost is high. This is especially true since the NFT craze took over the network. Currently, the average transaction fee on Ethereum is about $15. On the other hand, the same payment on Solana is $0.00001.
Fees for selling NFTs are even higher, as they involve more complex operations. According to one estimate, the average Opensea transaction costs $151.93 on each side of the trade. That’s in addition to the $30 to $40 it takes to transfer the money from one wallet to the other. That means that, for the most part, gas fees are prohibitively expensive for many artists and buyers.
That is not to say that lower gas fees are better for everyone. High costs make it harder for aspiring artists to break into the space. Thus, they benefit established artists that already have a large following. Reduced competition and high fees also pump up the perceived value of the NFTs.
Still, for most buyers and artists, lower gas fees are an advantage.
However, lower cost is not the only factor that determines the quality of a network. There’s also the question of what a network can do.
Functionality and Versatility
Currently, artists have much more freedom with their NFT creations on Solana. This is primarily due to the technical limitations of the Ethereum blockchain.
For example, the famous Ethereum CryptoKitties NFTs had a game integration that allows users to breed their own. However, the game quickly ran into issues due to Ethereum’s slow speed. As a result, users trying to bear their CryptoKitties caused a vast congestion issue.
Fast speed and lower costs allow artists to make creations that would be too expensive to mint on Ethereum. That’s why Solana is becoming a hub for 3D NFTs, NFT games.
Another question to consider is that of transferability. Usually, NFTs are network-specific, meaning that they are not transferable from one network to another. Artists typically mint their images on just one web. Most traders consider unlicensed copies fakes, which means that they don’t sell for much.
However, there is somewhat of a workaround in the form of a Wormhole NFT Bridge. A wormhole port allows users to transfer their digital assets from one network to another.
But there’s a catch: the Wormhole does not transfer assets. Instead, it freezes an NFT on one network. At the same time, it mints an identical NFT on the other network. Setting aside the obvious issues with copyright, traders could ask why not stamp the NFT on the other web.
Solana is likely to benefit from this development. That is due to the fact that it is much less costly to mint the NFTs on Solana than on Ethereum. There’s also the aforementioned issue that some NFTs are prohibitively expensive on Ethereum. It is unlikely that many traders would want to transfer their Solana 3D NFTs and NFT games to the Ethereum network.
Verdict – Solana Ahead
Ethereum developers promise that much of these issues will be fixed with Ethereum 2.0. However, that doesn’t change the fact that Solana is ahead in terms of technology.
While Ethereum’s NFT ecosystem is much larger than Solana’s, the latter is still enormous. It is also likely to grow even bigger due to its rapid growth.