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What are cross-chain NFTs?
How to move NFTs across blockchains.
You can move your nonfungible tokens, or NFTs, from one blockchain to another. However, the method isn't yet perfected.
Blockchains were originally created to do everything separately from one another. However, with the rise in popularity in NFTs, cryptocurrency and new developers coming into the space, there's a need for interoperability between separate chains — either software that can send NFTs across chains or blockchains with built-in connectivity.
Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific
provider, service or offering. It is not a recommendation to trade.
What are NFTs?
Nonfungible tokens, or NFTs, are digital assets that live on a blockchain, which is a digital public ledger that allows all NFT transactions to be tracked and verified.
These cryptographic assets can represent art, music, in-game items and more and include unique identifiers and metadata that make them one-of-a-kind and provide proof of ownership.
Most NFTs are bought with cryptocurrency. Using smart contracts, the original creators of an NFT can earn royalties each time the NFT is sold.
The problem with the current state of NFTs
NFTs are minted on a specific blockchain, where it can be sent to other users with access to that blockchain. For example, Binance and OpenSea are both built on the Ethereum blockchain, and the Splinterlands' market is built on the Hive blockchain.
So when you're on an NFT marketplace that's built on a blockchain, you need to buy and sell NFTs that are minted on that specific blockchain. On OpenSea, this means only ERC tokens can be listed for sale.
This is where issues arise with millions of NFTs in circulation and the many blockchains out there: Lack of interoperability between blockchains. For example, if you have a Solana NFT, you can't list it for sale on an Ethereum marketplace — not easily, anyway.
Other issues with the current state of NFTs:
- Most NFTs are on Ethereum, which is known for high transaction fees, or gas fees. These fees can be anywhere from $1 to $1,000, depending on the day.
- Using certain blockchains means having the right currency to process transactions, such as ETH for Ethereum, BNB for Binance Smart Chain and so on.
- Smart contracts aren't available on all blockchains, and if it does have the functionality, these contracts can vary from blockchain to blockchain.
So what do you do if, say, you have an ERC token but want to sell it on a marketplace built on Solana? Right now, there's only one method to consider.
How to move NFTs across blockchains
Right now, we're limited to using blockchain bridges to move digital assets to another blockchain.
A blockchain bridge, often called a bridge, is software that allows users to transfer cryptocurrency or tokens from one blockchain to another. These applications are third party and simultaneously monitor the network you're on and the network you want to connect to.
For example, the bi-directional bridge Wormhole allows for connectivity between the Ethereum and Solana blockchains by wrapping your tokens. A wrapped token is a token that's been tokenised to operate on a different blockchain.
Let's say you want to move your Solana NFT to Ethereum to be sold on a specific marketplace that only lists Ethereum NFTs. This software locks your NFT on the Solana blockchain (placing it in a "vault") and mints a wrapped version of the NFT on Ethereum.
If you want to unwrap your NFT and bring it back to its original blockchain, the third party unlocks your original token and burns the wrapped one.
All NFTs are unique one-offs, so only one of its kind can exist at a time. That's why you're required to burn the wrapped one if you want to swap it back and lock the original if you want it one another blockchain.
Some things to watch out for with bridges:
- Bridges are managed by centralised, third-party entities. This third party holds your original token for you, so make sure it's a trusted platform.
- Wrapping and unwrapping tokens both require paying gas fees.
- You need a wallet and cryptocurrency to use a blockchain bridge.
Finder survey: How risky do people think cryptocurrency investments are?
Response | Male | Female |
|---|---|---|
| 5 | 51.63% | 49.13% |
| 4 | 26.02% | 24.27% |
| 3 | 16.67% | 22.33% |
| 2 | 3.05% | 2.14% |
| 1 | 2.64% | 2.14% |
Source: Finder survey by Pure Profile of 1009 Australians, December 2023
Are there NFT marketplaces that support multiple blockchains?
Yes, there are several centralised NFT marketplaces such as OpenSea and Binance NFT which support NFTs from multiple blockchains. On-chain platforms tend to only support NFTs on the same chain the marketplace is hosted on.
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Is there a better solution in the works for transferring NFTs?
Sure is! Many developers are working on cross-chain platforms where you can transfer your NFTs to multiple metaverses, parallel chains, crypto games and marketplaces with ease.
Ideally, this full cross-chain interoperability would mean users can send and receive coins and tokens across multiple blockchain platforms without the help of third-party bridge software.
The tech is in early development, but it's becoming clear that it's the future of NFTs and its applications.
Benefits of cross-chain capabilities include:
- Scalability
- User ease
- Standardisation across multiple applications
- Improved chain efficiency
- Can encourage more blockchain transactions
Cross-chain protocol could allow for financial transactions between two separate blockchains, transaction fees may be reduced, users could transfer NFTs from different decentralised applications (dApps) and much more.
Projects working on cross-chain technology
Cross-chain tech is in development, but we're seeing a few promising projects:
- Enjin – Recently launched Efinity's parachain after winning a Polkadot auction in December 2021. Plans to allow creators, developers and gamers to create metaverse games with full interoperability across Parachains.
- Wanchain — Aims to create cross-chain interoperability by creating decentralised direct bridges that connect multiple blockchains, without the need for a third-party exchange.
- Polkadot — Allows for cross-blockchain transfers of digital assets, the ability to interoperate with many blockchains and provides transactional scalability by spreading transactions across multiple parallel blockchains, according to Polkadot Network.
- Scotty Beam — Developed in Scotland, Scotty Beam offers a teleportation service that transfers NFTs across blockchains by "beaming" them. You can move NFT tokens across blockchains including ETH, BSC, Polygon, SOL, DOT and FLOW.
Future of NFTs: Full interoperability
NFTs have been in circulation since 2014 but only caught fire in the last couple of years. With the explosion of consumer interest, more use-cases being developed and companies crafting their own blockchains, crypto enthusiasts are looking for more connectivity and ease with transferring, selling and handling of their digital assets.
With NFTs, an ideal world would be the ability to send or receive any NFT without needing a third-party entity. In crypto gaming, full interoperability between gaming would mean using your NFTs in multiple metaverses — the ability to transfer your hard-earned items and characters to other games or NFT marketplaces with ease.
We're not quite there yet, but if interest stays high with NFTs and crypto, we could see it sooner than later.
Bottom line
Cross-chain connectivity is still a headache for many users. However, most NFT marketplaces and NFTs are on Ethereum, so the need to sell an NFT on another blockchain may not even come up.
However, Ethereum can present a barrier. It's known for high gas fees, which vary by the second. In some cases, minting on Ethereum with hopes to sell doesn't promise a profit at the end of it — the sell price of an NFT may not be enough to make up for the gas fees.
It's not all doom and gloom, though. We're in the early days of this technology, so more connectivity and streamlining is likely in the near future.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly
volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of
future performance. Consider your own circumstances, and obtain your own advice, before relying on this information.
You should also verify the nature of any product or service (including its legal status and relevant regulatory
requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.
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