In a move that could lead to even more inflated prices in the burgeoning NFT market, Coinbase, the publicly-traded crypto exchange, is planning to launch its own marketplace for the popular digital tokens that represent images traded on the blockchain.
The company said it hopes to launch the marketplace - which will allow users to create, buy and sell NFTs - by the end of the year. It will compete with sites like OpenSea, which facilitated nearly $3 billion in NFT transactions last month.
Coinbase said its decision to break into the NFT market was motivated by wanting to "allow everyone to benefit from their creative spark". But a more practical motivation is probably the oodles of money being made by the platforms currently dominating the NFT market. OpenSea takes a 2.5% cut of every sale made on its platform. That's a pretty big take (roughly $75MM) when you're handling billions of dollars in turnover every month. Dapper Labs, another NFT platform, recently partnered with the NFL.
Coinbase refused to comment to the FT about its plans for monetizing the platform, but it said users wouldn't need to pay any additional fees to list NFTs beyond the "gas" fees needed to register an NFT on a blockchain.
Initially, Coinbase's platform will only support NFTs on the ethereum blockchain, although it plans to add other blockchains, including Level 2 chains, next year.
NFTs have endured their share of controversy, as critics have dismissed them as a bubble, even while some high-profile supporters - most notably Facebook's Mark Zuckerberg - have insisted NFTs could be an important part of "the metaverse".
But last month, an OpenSea exec admitted to using insider knowledge to trade on the marketplace. Coinbase says it has strong anti-insider trading policies especially for executives, according to CEO Brian Armstrong.
Coinbase is already allowing users to sign up for its NFT marketplace "wait list", and has published an FAQ on its site.
While Coinbase has plenty of resources at its disposal to help in building the platform, one Twitter user joked that the company should focus on righting its disastrous customer service before expanding into new markets.
They should sort their disastrous customer service first— Seb Carmichael-Brown (@sebcbrown4) October 12, 2021