NFTs have been making waves recently and rightfully so. You have probably heard of popular names like CryptoPunks and Bored Ape Yacht Club. Like most decentralized applications they are all built on the Ethereum blockchain. But what about bitcoin NFTs?
Don’t worry, in this article, I will be answering that question and much more. So without further ado, let’s jump right in.
Does bitcoin have NFTs?
The short answer is no. Ultimately, the underlying technology doesn’t facilitate the development of decentralized applications. Unlike Ethereum, bitcoin is not very programmable. The coding architecture is simple and the main priority is security over all else. This makes the blockchain limited and conservative.
What’s preventing bitcoin NFTs?
Unlike newer blockchains, bitcoin was never intended to use decentralized applications. The ultimate goal of the protocol is to be sound money. Therefore, security is prioritized over all else. This slows down development as code is rigorously tested.
Additionally, this increase in security leads to much higher transaction costs. Not to mention, the transactions per second (TPS) are limited to just 7 at the moment. When compared to the likes of Solana which has up to 65,000 TPS this is extremely limiting.
Not only that, but the blockchain architecture is relatively simple. It utilizes Turing incomplete language which is hard to adapt. This simple functionality reduces complexity and therefore the risk of additional vulnerabilities. In turn, this makes the development of smart contract platforms notoriously hard.
Although the native layer of bitcoin doesn’t allow the minting of NFTs, it does support them when combined with stacks. What is Stacks? Put simply it’s a layer one that is connected to the bitcoin network. It utilizes a proof of transfer consensus mechanism. NFT applications are developed on this alternative chain while transactions are settled on the bitcoin network.
Ultimately, stacks benefits from the more programmable architecture of this alternate layer 1 while having the additional security for transactions from the native bitcoin chain.
Currently, it has a modest NFT marketplace with less than $100,000 of daily volume. It features various NFT collections from monkey coin to crash punks. Unfortunately, this marketplace does not compete with the likes of OpenSea and Magic Eden and this doesn’t look like it will change in the foreseeable future.
The layer 2 solution
Another solution to add NFT support is by using Layer 2’s. What is a layer 2? Essentially, a layer 2 is a blockchain that settles transactions off-chain. This lessens the load on the main chain. Think of a side road that diverts some of the traffic from the highway.
An example of a popular bitcoin layer 2 solution is Rootstock. This protocol facilitates the development of smart contracts and has a TPS of up to 100. Moreover, like Ethereum Rootstock is Turing complete. This provides additional development flexibility.
The future of bitcoin NFTs
In my opinion, the future of bitcoin NFTs does not look bright. At the end of the day, the blockchain is not heading in that direction. Developers are prioritizing security and decentralization over smart contract developments.
Although it has NFT support from alternate layer 1s, it is so far behind that it might not be able to catch up. At the end of the day, Ethereum and Solana have millions of monthly NFT users and the volume is in the billions. On the other hand, stacks volume is under $1 million.
Ultimately, they have network effects and this is hard to compete with. Think about google at the moment and how much development and resources it would take to overcome those network effects.
So to answer the question, does bitcoin have NFTs? the answer is still no but they can be supported by alternative layer 1s and layer 2s. But as mentioned earlier the future does not look bright. I hope you found this article useful and thanks for reading.
Want to learn the difference between crypto and NFTs? Click here to check out my previous article.