Non-fungible tokens (NFTs) exploded in 2021 and brought cryptocurrency and blockchain technology into the public consciousness. NFTs are basically tokens on a blockchain like Ethereum (ETH 5.48% ) Where Solana ( GROUND 3.26% ) that represent ownership of a single asset. These assets can be anything from a work of art to a character in a play-to-earn (P2E) game or even a digital plot of land in the metaverse.
People often ask why NFTs have value or endurance. My answer is that just as the lines between our digital lives and our physical lives continue to blur, the lines between physical and digital works of art and memories will likewise blur. In my opinion, NFTs can also be considered a “status symbol” in that they have cachet and can convey prestige or status to the owner. This is something humans have been doing since ancient times. This is not to say that all NFTs are worth investing in – like any type of collectible or piece of art, some projects and pieces will have more resistance than others. Prominent artists like Dmitri Cherniak and Tyler Hobbs have created projects like Ringers and Fidenza as NFTs, indicating that the worlds of traditional art and NFTs are increasingly blending together.
Blockchains enabled NFTs because they made it easier to trade them almost instantly and because they gave owners instant provenance; there is a public record of the authenticity of the NFT, its owner, and details of all transactions involving it. Investors interested in NFTs can start researching and buying them on exchanges like OpenSea and Magic Eden. Here are my top three blockchains for buying and selling NFTs.
Ethereum is the most established blockchain for NFTs. This is how they rose to prominence and public awareness last year. Whether it’s Bored Apes Yacht Club or Cryptopunks, there are huge NFT projects on Ethereum, and no other blockchain can yet compete with it in terms of sales in the range of one hundred thousand or even one million dollars. Bored Apes regularly sell for over a million dollars. The aforementioned Ringers and Fidenza projects were created on Ethereum. Last year, Beeple’s Everydays: The First 5,000 Days NFT sold for $69,400,000 at Christie’s.
OpenSea, worth $13 billion, is the premier marketplace for Ethereum NFTs, and in some ways the flagship exchange for the NFT space as a whole. Interested investors can browse and buy Ethereum NFTs and use a MetaMask wallet to connect to OpenSea. MetaMask is a popular and easy to use Ethereum wallet that is used by 21 million people worldwide.
In February, there were $2.4 billion in sales on Ethereum with an average price of around $2,260 per transaction. While those numbers are down from January, overall they’re up from last February’s $136 million, representing a 1,700% year-over-year increase. There were also nearly 240,000 unique buyers in February, compared to just 9,000 in February 2021, showing that Ethereum NFTs are gaining momentum and becoming mainstream.
Solana has established itself as the second most prominent blockchain for NFTs, and it is gaining momentum. While these might not be priced as high as the top projects on Ethereum, there is a lot of activity going on. Magic Eden is currently the predominant market for Solana’s NFTs, in terms of sales and volume.
Buying Solana NFTs is a simple process. You will need a Solana wallet such as the most prominent Phantom. You can then go to Magic Eden or another exchange and browse the collections. If you see one you are interested in, you can click to connect your wallet, ensure that you have the required amount of Solana in that wallet, and then you can click Buy Now to complete your purchase. The NFT will appear in your wallet shortly after in the “Collections” section.
In February, Solana recorded a total volume of $149 million with an average price of $469 per transaction. The total number of sales has actually been declining since last fall when Solana NFTs burst onto the scene, in part because Solana’s price has fallen since then. However, the number of unique buyers and sellers, as well as transactions, tend to increase.
If you are looking for a promising blockchain in the NFT space, this is avalanche ( AVAX 5.42% ). While AVAX has become one of the top 10 blockchains by market capitalization in 2021, it has only started to see serious activity for NFTs in the past few months. The volume grew rapidly, from $12.6 million in December 2021 to $57 million in January and nearly $70 million in February.
The main driver of NFT sales on the Avalanche blockchain is play-to-win (P2E) Crabada, which has gained momentum and recorded a volume of $63 million in the last 30 days. Other P2E games with their own NFTs like DeFi Realmswhich was popular on the Harmony (CRYPTO: ONE) blockchain, are also in the early stages of launching on Avalanche.
To buy NFTs on Avalanche, users can use a MetaMask wallet, which also works with many other cryptos like Ethereum, or they can create a wallet directly with Avalanche through the foundation’s website.
While there was less total volume here than on Solana, with 36,938 trades, the average sale price was much higher at $1,904. There were nearly 6,900 unique buyers and nearly 2,700 unique sellers in February.
Non-P2E NFTs on Avalanche have not yet reached the same profile as NFTs on Ethereum or Solana, but users can browse and buy them on marketplaces like AVAX NFTs. The process is the same as buying on Ethereum or Solana. Users simply connect their wallets to buy the NFT they want. Avalanche’s total NFT volume seems to be dominated by Crabada at the moment, but I anticipate that other Avalanche NFT projects will grow in importance over time as the Avalanche blockchain continues to grow.
In conclusion, these are the top three blockchains with NFT that I believe harbor valuable projects. As with any form of artwork or collectibles, there are many collections that will fail, but also some that will appreciate over time. Investors can learn by getting their feet wet with a low-priced NFT that interests them. I like NFTs on Avalanche, Ethereum, and Solana because of the volume and average sale prices – they all look like growing ecosystems with a decent amount of liquidity and activity.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.