Overview

Blockchains are a kind of decentralised ledger technology (DLT), which increasingly plays a pivotal role in recording global peer-to-peer transactions. And in today’s craze over cryptocurrency and NFTs, blockchain technology is under the limelight. With the introduction of the first use cases of blockchain in 2009, it now forms the foundation for the issuance, ownership and transferring of NFTs – digital representations or receipts of virtual assets, known as non-fungible tokens. As a general rule of thumb, there are no NFTs without blockchains.

While blockchains have surfaced to fuel the journey towards decentralisation and the removal of intermediaries, today’s niche and passionate blockchain community have, over the years, engineered many variations of such vehicles. In this sense, blockchains are unique, with no one blockchain built the same. While some are faster, others have tighter security and are safer for the environment. Trade-offs are truly the name of the game.

Individuals or enterprises must, therefore, rightly identify the varying nature of public blockchains and select one that suits them. While different features seem like irrelevant iterations of the same technology, it is a crucial factor in deciding the success of an NFT strategy or project.

Hence, in our second NFT-related report, we have compiled our analysis of several hand-picked blockchains that support smart contract functionalities (another critical element underlying the use of NFTs). The goal is to help you understand how well each blockchain supports the deployment of NFTs and shed light on critical factors to consider when choosing a blockchain.

What this report covers

The “How to choose the right blockchain” report aims to help enterprises better understand the different blockchains, their role and native capabilities, and how well they can support NFTs. We have looked at a total of six blockchains through a unique perspective based on the scalability trilemma – a well-known concept in the blockchain space. And using that, we researched, analysed and visualised our understanding of the different blockchains according to their performance in scalability, security and decentralisation, a point-of-view that we feel is missing in this knowledge area.

On top of that, we have boiled down technical whitepapers into individual deep dives to give readers concise takeaways on the purpose of each blockchain.

Lastly, a checklist specifically guides enterprises eager to get started with a blockchain and take advantage of such a game-changing opportunity.

Key takeaways

1. The scalability trilemma consists of three elements – scalability, security and decentralisation, whereby one generally needs to be compromised when developing a blockchain. As of now, no existing blockchain has been able to solve this trilemma, but new solutions such as consensus modification, scaling, layer 2s, rollups, and sharding are being experimented with. While searching for a perfect blockchain may never see the end of the day, use case-specific blockchains are on the rise. People ask, “who needs a blockchain that can do everything well when there are imperfect blockchains that excel at one thing?”
2. While Ethereum may dominate the NFT ecosystem with its record of high-value projects, many enterprises are increasingly staying away from this blockchain due to its environmental concerns. And even though Ethereum may be the earliest blockchain to support the mass development of NFTs, its’ inability to scale has proven to be the biggest roadblock to gaining mass adoption. Even as The Merge event takes place, it will be long before the mass enterprise development of NFTs can even consider using Ethereum.
3. Enterprise adoption is taking advantage of the recent hype cycle, but we expect this technology to eventually integrate with more value-adding activities. The use of NFTs in brand-building exercises will shift towards more internal processes and workflows as teams start to see the technological advantages, which will kick-start the revolution of token-based transactions and the adoption of blockchains in enterprises. However, not all companies should rush to adopt NFTs. Treat them as any other new technology. Think of NFTs as a possible (yet flexible) solution to solve a problem or achieve an objective. Companies should avoid building business cases and exploring use cases after deciding to integrate NFTs just because they are ‘cool’.

Please help us, help you!

While we have combed through various studies and reports, we are still explorers and learners in this space. So, do help us serve you better by giving your feedback on how we did in our 2nd attempt. Use this link to let our analysts know what you like most about the report and which areas use some improvements. We will be sure to carefully consider your feedback in the production of our following report.