Coinbase (COIN) launches its long-awaited NFT marketplace on Wednesday with a focus on trying to create a social community for buyers and sellers.
“This product is more than just buying and selling,” said Sanchan Saxena, vice president of product at Coinbase. “It’s about building your community. It’s about making sure you can connect and interact with them on the platform.”
Coinbase aims to deepen social engagement in the NFT marketplace and create a community for NFTs alongside a marketplace for buying and selling NFTs. Besides exploring what’s for sale, users can create a profile and curate it with the NFTs they’ve created, comment on NFTs, or start conversations with other NFT owners and sellers. As with Twitter, users can build followers and discover other collectors and creators.
“The community aspect has become a really important part, almost as important as the art itself,” said Lucrece, an NFT creator on Coinbase’s platform. “When you create a community, they are your advocates. As a single YouTuber, I don’t have a large team. So the people who share your vision, your long-term goals, those are the people you want to connect with… NFTs are inherently a social thing.”
NFTs, or non-fungible tokens, are certificates of authenticity that show proof of ownership for digital collectibles. The tokens are typically associated with unique digital music, sports memorabilia, and virtual real estate, among other things. NFTs have exploded into a more than $40 billion market over the past year, according to Chainalysis. That’s up from an estimated $338 million in 2020, according to Coinbase.
NEW YORK, NY – MAY 15: Coinbase Founder and CEO Brian Armstrong attends Consensus 2019 at Hilton Midtown on May 15, 2019 in New York City. (Photo by Steven Ferdman/Getty Images)
Artists can earn royalties from NFTs, which give them a percentage of the sale price when their creation is first sold and each time it’s resold in a marketplace. That is, after the original artist sold the NFT first, the buyer could sell the NFT to another buyer in the secondary market, and the original artist would receive royalties on that secondary sale.
The story goes on
Coinbase’s marketplace is designed to be open to everyone, allowing users to disconnect their digital wallets and take their NFTs elsewhere at any time. Users can buy or sell NFTs using a self-custodial wallet, i.e. a digital wallet where the owners own their digital money and assets as only they control the private key.
The authenticity of collections is checked by verification badges. Coinbase will rely on users and the community to report fake NFTs, as well as a team on the lookout for scams, duplicates, and fakes to eliminate them.
As an initial action, Coinbase will not charge a transaction fee for NFT purchases, but will gradually charge a fee over time, which the company says will be in the low single digits. Users can buy NFTs in cryptocurrency, but they can also use a credit card.
The marketplace will first debut in beta for a select number of invitees before rolling out to a wider audience. In the coming weeks, Coinbase plans to expand its marketplace to more people and more countries as they refine the product and introduce new features based on input from first-time users.
In addition to being able to buy and sell NFTs on the secondary market, Coinbase plans to partner with artists to drop exclusive NFTs on the Coinbase platform over the next few weeks and months. Coinbase also helps manage royalties for NFT creators, so the original creator gets paid daily every time an NFT is sold.
“We make it possible on the platform to own your own smart contract,” said Saxena. “We believe that every artist should have their own smart contract, they shouldn’t be stuck in a platform’s smart contract.”
The marketplace plans to offer a wide range of NFTs from creators and brands, including Doodles, the colorful, line-drawn NFT avatars used as profile pictures on social media; Boss Beauties, the first NFT art collection to be exhibited on the floors of the New York Stock Exchange, dedicated to empowering women; and actor Bill Murray’s NFT collaboration with The Chive, which is changing the way stories are shared and told. Murray, who has no social media accounts, uses blockchain technology as an alternative to a book or documentary.
Any NFT created on the Ethereum blockchain can be searched in the NFT Coinbase store. Users can search by price or collection name, or search for new collectors via the Discover tab to find brand new artists tailored to their tastes. Coinbase will also offer ideas on who to follow on the platform.
“We believe Coinbase’s launch of its NFT marketplace could be a game changer for both the company and the NFT space,” said BTIG fintech analyst Mark Palmer. “We believe the marketplace will provide an important source of diversification away from crypto trading, which is currently the source of the vast majority of its revenue, and will be an important component in what we see as an evolving, diversified digital asset consider platform.”
Jennifer Schonberger covers cryptocurrencies and policies for Yahoo Finance. Follow her up @Jenniferism.
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