Coinbase is making its presence known as a force to be reckoned with regarding non-fungible tokens. Last week, the team at the largest cryptocurrency exchange in the U.S. announced that it’s launching its own marketplace to create, sell, trade, and display non-fungible tokens or NFTs for short.
NFTs are unique in that they are simultaneously digital assets and de facto certificates of authenticity verifying the asset. NFTs have been around since 2012, and are bits of computer code that can be programmed to represent a wide assortment of digital and physical things. By design, NFTs are immune to counterfeiting or shady shenanigans because they’re programmed on a blockchain – which is a secure, tamperproof, distributed network.
We didn’t hear much about them until 2017 with the launch of the digital trading card collections, CryptoPunks and CryptoKitties – they have since become big business. According to nonfungible.com, in 2018 NFT sales topped $40 million, growing exponentially to more than $338 million in 2020. This year, select NFTs have sold for more than $50 million each.
However, NFTs have much greater potential and utility beyond pricey, novelty jpeg files. More than just collectibles, music, videos, and photos, NFT technology could be the way we settle contracts, manage health records, protect identities, implement immigration policies, facilitate social spending programs, or possibly vote in elections. Coinbase realizes those future use cases and is positioning itself to be the NFT leader.
Make no mistake, Coinbase will be the dominant player within the NFT marketplace. As of this writing there are more than two million individuals on its waitlist to join Coinbase NFT once it goes live. That number is likely to grow as Coinbase has publicly confirmed that it has 8.8 million active monthly users and 68 million verified users. OpenSea is currently the top NFT marketspace and has approximately 261,000 active monthly users according to DappRadar. Given those lopsided numbers, Coinbase will likely do to OpenSea in the NFT space, what Facebook did to MySpace in social media.
On The Flipside
- Coinbase is arguably the 800-pound gorilla within the crypto-sphere. Its entry into the NFT space is a decision that will send shockwaves into how NFTs are created, sold, and displayed once launched.
- The irony of this announcement is that the expected dominance of Coinbase could highly centralize the future of NFTs – centralization runs contrary to crypto’s underlying decentralized philosophy.
Why You Should Care?
NFTs have the potential to touch and infiltrate every aspect of our lives. Crypto diehards will have to be vigilant that no single entity – whether a public company or government – gains too much control over that critically important area.