Coinbase’s unexpected reveal of its own native NFT marketplace yesterday sent shockwaves through the space and left the NFT community asking the all-important question – can it actually challenge NFT marketplace giant OpenSea?
It’s well documented that OpenSea reigns supreme in the NFT space – ask anyone you know and they’re more than likely signed up for a wallet and perhaps even purchased an NFT or two.
The marketplace exploded in popularity following the recent fever pitch that swept the crypto industry as recently as August when NFT sales and trading volume spiked to more than $3b across the major NFT marketplaces.
Trading volumes have since eased off following the August frenzy – although the interest, demand and absurd price tags that accompany the NFT space are still as strong as ever.
However, despite the frenzy and furore surrounding it, the NFT space remains in its relative infancy compared to more mature markets within the industry like DeFi – a now $205bn industry – and trading, opening the door for a newcomer with the right tools to swoop in and steal away some market share.
The allure of Coinbase to newcomers
With the NFT space showing no signs of loosening its grip on the crypto industry, Coinbase’s move to launch a native NFT marketplace could tap into the estimated 68m-strong userbase that it boasts – providing them with an easier way to purchase and create their own NFTs.
Coinbase’s main selling attraction is being an easy-to-use portal to the crypto industry, which can facilitate spot and futures trading, DeFi products and the recently announced ‘paycheck deposit’ feature.
Additionally, Coinbase’s strengths and market prowess lie in its enormous 68m userbase – a userbase that may be eager to participate in the newest ‘fad’ in the industry and start collecting their own NFTs via the safety blanket provided by the exchange.
The security aspect that comes with Coinbase is also not to be underestimated – novice users will likely be more incentivised to buy an NFT using the assets on their account rather than going through the arduous process of withdrawing funds and then setting up a Metamask wallet.
Additionally, it provides them with more exposure to the burgeoning NFT space – perhaps opening the floodgates for a wave of new money to enter the space and spur it to even greater heights.
It’s also worth mentioning the mountainous backing that Coinbase has from investors – the most notable being the estimated $9bn stake VC fund Andreessen Horowitz has in Coinbase.
Too big too soon?
The NFT community has been vocal about OpenSea’s market dominance and now hope Coinbase NFT and the backing of the exchange can bring some much-needed competition to the market.
OpenSea, unsurprisingly, remains the dominant force in the market – it contributed to $3.16b of the $3.25b (97%) of the total trading volume on NFTs in August and repeated similar figures in September.
Despite its astonishing volume figures, data shows that only an approximate 535k registered users have made at least one transaction on the platform – an incredible figure considering the sheer amount of money that flows through it.
Regardless of the continued innovation and competition that is surfacing, OpenSea’s market dominance is expected to last until a serious contender with the backing and allure to draw collectors away from the marketplace.
An array of exchanges – including FTX, Binance and the Gemini-owned Nifty Gateway – have recently entered the ring to take on OpenSea head-on, with many also speculating that its rivals’ actions may have forced Coinbase’s hand into launching its own platform out of fear of being left behind.
Now, to re-establish itself as the dominant marketplace and kill off rising competition, OpenSea recently announced future plans for direct FIAT payments for NFTs in a bid to simplify the process of buying – much like its exchange counterparts have been pushing as a key selling point.
It now remains to be seen if Coinbase has the right tools in its arsenal to capture some of OpenSea’s almost unassailable market share.
Interestingly, if Coinbase could just capture an estimated 1% (680k) of OpenSea’s users, it would overtake OpenSea’s userbase almost overnight – a promising sign for the ever-expanding NFT space.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.