Coinbase (COIN) launched its long-awaited NFT marketplace Wednesday with a focus on trying to create a social community for buyers and sellers.
“This product is more than just buying and selling,” Sanchan Saxena, vice president of product for Coinbase, said. “It’s about building your community. It is about making sure that you can connect and engage with them on the platform.”
Coinbase wants to deepen social engagement in the NFT marketplace and create a community for NFTs in addition to a marketplace to buy and sell 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 holders and sellers. Like 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 Lucréce, an NFT creator on Coinbase’s platform. “When you create a community, they’re your advocates. As a single creator, I don’t have a big team. So the people that share your vision, your long-term goals, those are the people you want to have engaged with you …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 assigned to one-of-a-kind digital music, sports memorabilia and virtual real estate, among other items. 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.
Artists can earn royalties from NFTs that give them a percentage of the sale price when their creation is first sold and each time it’s resold on a marketplace. That is, after the original artist first sells the NFT, the buyer could sell the NFT to another buyer in the secondary market and the original artist would receive royalties on that secondary sale.
Coinbase’s marketplace is designed to be open for all, allowing users to disconnect their digital wallets at any time and take their NFTs with them elsewhere. Users can buy or sell NFTs using a self-custody wallet, that is a digital wallet where owners possess their digital money and assets because only they control the private key.
The authenticity of collections will be verified through verification badges. Coinbase will rely on users and the community to report fake NFTs as well as a team that will look out for scams, duplicates, and fakes to take those down.
As an initial promotion, Coinbase won’t impose a transaction fee for NFT purchases, but over time will begin charging one gradually, which the company says will be a low-single-digit fee. Users can purchase NFTs in cryptocurrency, but also will be able to use a credit card.
The marketplace will debut initially in beta to a select number of invitees before opening up more broadly to the general public. 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 initial users.
In addition to offering the ability to buy and sell NFTs on the secondary market, over the next weeks and months Coinbase plans to partner with artists to drop exclusive NFTs on the Coinbase platform. Coinbase will also help manage payments of royalties for NFT creators so any time an NFT is sold the original creator will be paid on a daily basis.
“We’re making it possible on the platform to own your own smart contract,” Saxena said. “We believe every artist should have their own smart contract, they should not be stuck inside the smart contract, of a platform.”
The marketplace plans to offer a wide range of NFTs from creators and brands, including Doodles, the colorful, line-drawn NFT avatars used as a profile pictures on social media; Boss Beauties, the first NFT artwork collection to be displayed in the halls of The New York Stock Exchange that stands for female empowerment; and actor Bill Murray’s NFT collaboration with The Chive that’s changing the way stories are shared and told. Murray, who has no social media accounts, is using blockchain technology as an alternative to a book or documentary.
Any NFT that’s created on the Ethereum blockchain will be searchable in the NFT Coinbase store. Users can search by price or collection name or surf for new collectors via the “discover” tab to find brand new artists personalized for their tastes. Coinbase will also offer ideas of who to follow on the platform.
“We believe Coinbase’s launch of its NFT marketplace could be a game-changer for both the firm and the NFT space,” says BTIG fintech analyst Mark Palmer. “We believe the marketplace will provide an important source of diversification away from the crypto trading that is the source of the vast majority of its revenue at this point, and it will be an important component in what we view as an evolving, diversified digital asset platform.”