Top U.S.-based cryptocurrency exchange, Coinbase Global, Inc. (NASDAQ: COIN), recently announced its plan to launch a full-scale non-fungible token (NFT) marketplace. Coinbase NFT will be a peer-to-peer marketplace that allows users to mint, purchase, and showcase their NFT collections.
Coinbase’s announcement comes as the sales of NFTs have surged to $10.67 billion during the third quarter of 2021, which represents a massive 704% increase from just the second quarter of 2021. Overall NFT volume averages over $3 billion per month in 2021. However, for October 2021, the NFT market has already generated over $1.36 billion through the first twelve days of the month.
The current NFT marketplace leader, OpenSea, is estimated to have a 97% hold on the market, according to Dune Analytics. However, Coinbase’s existing user base and plans for ease-of-use could take a significant chunk out of OpenSea’s “first-mover advantage.”
OpenSea is NFT Volume Leader But Competition Could Dampen Future Expectations
The influence OpenSea has brought to the NFT movement is undeniable. OpenSea prides itself on being the “first and largest marketplace for NFTs.” Founded in 2017, OpenSea has over 300,000 users with over 1 million different collections, containing more than 34 million NFTs. According to TheStreet.com, the platform sees more than 100,000 users log in each week.
OpenSea has capitalized on its rising influence through venture capital funding rounds. In March 2021, the NFT startup announced it had raised $23 million in a Series A funding round. Around four months later, OpenSea had officially reached “unicorn” status after raising $100 million in a Series B funding round, at a valuation of $1.5 billion.
Interestingly enough, Coinbase’s venture capital arm was a participant in an OpenSea funding round. Life comes at you fast in the NFT world.
However, NFT marketplace competition has been equally as aggressive. Just before the Coinbase announcement, newcomer FTX unveiled its Solana-based (SOL) NFT marketplace. While an overwhelming majority of the NFT market relies on the Ethereum blockchain, the FTX announcement was a significant example of how the market is already shifting around to different blockchains, styles, etc.
Coinbase NFT Sees Advantage with the Exchange’s 8.8 Million Monthly Active Users
For Coinbase, the move into the NFT space is welcoming news as the company looks for ways to diversify revenue sources. Coinbase’s crypto exchange has seen a surge in users and volume as its platform has matured.
The exchange has seen its total transaction volume surge from $130 billion in 2019 to $797 billion through just the first half of 2021. During the same time, Coinbase saw its monthly active user count surge from 1 million in 2019 to 8.8 million so far in 2021.
This means that once Coinbase NFT goes live, millions of users will have immediate and convenient access to the NFT market. Rather than transferring crypto from one wallet to another, as is the case with OpenSea, Coinbase aims to streamline the entire process.
“Creating an NFT should be as simple as tapping a few buttons. Anything more complicated is a barrier to creativity. Coinbase NFT will be a peer-to-peer marketplace that empowers the imagination,” the company said in a statement.
Over 24 hours since the company made its NFT announcement, Coinbase NFT has amassed a waitlist of over 800,000 users. There is no definitive date for the NFT marketplace’s launch, other than sometime this year.
Overall, Coinbase’s move into NFTs is very bullish for the overall NFT market. OpenSea has done an incredible job at driving adoption within the marketplace, but rising competition appears to be threatening its early advantages.
Coinbase’s plans for ease-of-use combined with its millions of active followers gives the crypto exchange almost an immediate opportunity to be a major player in the industry. While the crypto exchange will initially focus on Ethereum-based NFTs, the company did signal interest in expanding to other chains over time.
2021 has been a breakout year for NFTs. OpenSea was a major early beneficiary of the market growth, but Coinbase hopes its plans could help take over the top spot in the NFT marketplace race.