Fairest Of Them All: Comparing Layer-1 Protocols for NFT Minting

NFTs are one of the biggest and most exciting tech revolutions to come along in a while. Short for non-fungible tokens, NFTs are tokens on the blockchain that store information that could take the form of music, video, images, tweets, or virtually any other file type. NFTs are an attempt to create digital scarcity online because, while digital files can be infinitely reproduced, attaching these to the blockchain makes it possible to mark a particular NFT as unique. Think of it a bit like having an autograph on a photographic print. While the photo could be copied multiple times, only one of them will have a genuine autograph.

If you’ve been following NFTs in any detail, you may well know this. But what should you know about the multiple blockchain platforms that can be used for “minting” (i.e. turning a piece of digital art into a part of the blockchain as a public ledger)?

As the world witnesses the evolution of blockchain technology, more and more platforms are opening up — with NFTs representing just one more way in which the blockchain is reaching maturity. With NFTs still emerging as a force to be reckoned with, it’s too early to predict which blockchain will become the optimal platform for this job.

However, there are several significant factors everyone should be aware of as they assess Layer 1 platforms.

Battle Of the Layer 1 Platforms

There are multiple ways in which NFTs can be implemented onto the blockchain. Layer 1 blockchains — referring to the immutable, cryptographically secured core blockchain protocols, which exist on top of the chain — have several options which are capable of supporting NFTs.

Right now, the primary mover-and-shaker is Ethereum, an open-source, decentralized blockchain platform that offers smart contract functionality. At present, Ethereum’s ERC-721 is the most commonly used standard for NFT tokens. Ethereum currently controls the majority of the market share, being the most commonly used blockchain for issuing NFTs. (Although, as we shall discuss, that may be changing.)

A newer blockchain platform is Flow. Developed by the Canadian company, Dapper Laps, which brought the world CryptoKitties, one of the first-ever collectible NFTs, Flow is an alternative platform that lets developers build blockchain applications, many of them involving digital collectibles and games.

Concordium is the newest entrant into this market. Concordium is a blockchain with unique features that make it ideally suited to hosting NFTs. Concordium is a Layer 1 Blockchain-based around the Proof of Stake (PoS) concept, with an ID layer at the protocol level. Concordium functions as the primary chain for the SpaceSeven multi-blockchain NFT marketplace.

From scalability to trustworthiness to regulatory considerations, here are some of the most important comparisons between these platforms.

Scaling Up

The NFT market is growing at an impressive rate. Google Trends, which tracks Google searches over time, shows how interest exploded at the start of 2021. The growing interest in NFTs means more are being issued all the time. That means that any NFT minting platforms absolutely have to be capable of supporting the increased traffic that accompanies this boom.

Ethereum loses out here. Launched on Ethereum in late 2017, the aforementioned CryptoKitties resulted in significant latency on the Ethereum network. People’s rush to spend money on cartoon cats took up a surprising amount of the available transaction space on the Ethereum platform, which is able to support an average of just 13–15 transactions per second. While the Ethereum community is trying to crack this problem, the poor scalability is a definite negative in Ethereum’s proverbial ledger.

The Flow blockchain, on the other hand, fares a whole lot better. It was built specifically for NFTs and is able to support approximately 1,000 transactions per second without suffering impaired performance.

Perhaps the best scalability of all, however, comes from Concordium. Not only has the network been tested to achieve hundreds of transactions per second, but it supports “sharding,” a process that gets rid of the need for each blockchain node to process every blockchain transaction. Long story short: The Concordium blockchain has theoretically infinite scalability.

It’s All About Cost

Unlike cryptocurrencies, NFTs aren’t just about cold, hard cash. It’s about digital art, as much as it is about commerce. But that doesn’t mean there aren’t financial costs to consider. Blockchains typically have a transaction fee, paid to the nodes that build blocks and make the blockchain network work. If you’re minting a fancy new NFT, these fees have to be paid as part of the creation of a token that is then transferred to a new owner.

Once again, Ethereum loses out here. Ethereum transactions typically cost at least a couple of dollars, although transaction fees have peaked at over $70 in the past. This limits the use of ETH to wealthier users.

Flow works a bit differently, with two prices NFT minters must pay: account creation (0.001 FLOW) and transaction fees (0.000001 FLOW). Because FLOW typically costs around $20, this is much more affordable than Ethereum.

Concordium’s transaction fees are predictable since they’re not linked to the value of an asset. Transaction fees are fixed and baked into the protocol.

A Matter of Security

Security is a challenging issue when it comes to the blockchain. There are multiple factors to consider, from platform maturity to decentralization, and identity confirmation to protect against fraud. As far as maturity goes, Ethereum has been around for at least half a decade longer than Flow and Concordium, launching back in 2015 to Flow’s 2020 and Concordium’s 2021. In theory, a platform that’s been around longer has had more opportunities for vulnerabilities and design issues to be found and fixed. But in theory only.

Decentralization matters because centralized blockchains are more vulnerable to disruption or abuse by their creators. Ethereum is largely decentralized, while Flow accepted more centralization of power in some nodes as a way to increase scalability. Concordium is also shifting steadily toward decentralization and actually has the potential to achieve a higher level of decentralization than either Ethereum or Flow.

Identity is also a very important part of security. To protect against fraud, it’s vital that NFT buyers and sellers can have their identity proven. Ethereum and Flow both use pseudonymous protocols, making this impossible. Concordium, on the other hand, provides the ability to prove users’ identities. While it does provide anonymous transactions, it also has the ability for this anonymity to be revoked if needed. This is something unmatched by both Ethereum and Flow. With Concordium, every transaction is trackable, and users are identifiable in a way that creates an environment of trust.

The Importance of Regulation

A blockchain’s relationship with regulators can be affected by a range of factors, such as size (big blockchains will be more likely to be scrutinized by regulators), value (more valuable blockchains are more likely to be scrutinized), centralization, and identity. Like security, different blockchain platforms have differing advantages here. For example, Ethereum is a significantly larger and more established blockchain than Flow or Concordium. This makes it more likely to be scrutinized, but also gives it greater leverage to defend itself.

Similarly, Ethereum has a higher market cap than any blockchain except for Bitcoin, thereby making it more valuable. When it comes to centralization and identity, as mentioned above, Concordium has big advantages.

And tomorrow?

Right now, Ethereum remains the standard for NFTs — but that could be changing. NFTs are developing so quickly that predicting what happens next is tough. Nonetheless, there are good reasons to believe that some of its new rivals may be able to unseat the established giant. For the good of users everywhere, that may just turn out to be the best thing possible.