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Coinbase opened its highly anticipated NFT marketplace — which has been in beta mode since April 20 — on May 4, but failed to attract many users in its first few hours. While this led some commentators to say that the NFT market was collapsing, several experts have a more positive view and say that the early fate of the market represents a consolidation of the industry.
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The Coinbase marketplace had a waiting list of more than four million users on April 21, as GOBankingRates previously reported, but the site recorded fewer than 110 transactions in the first few hours of May 4 — equating to less than $60,000 in sales, according to Bloomberg (citing Dune Analytics data). This comes against the background of NFT sales that have slowed dramatically in recent months after an explosion in popularity and sales in 2021, prompting The Wall Street Journal to say that “NFT sales are flattening.” But several experts disagree with this premise.
Garry Krugljakow, founder and CEO of GOGO protocoltold GOBankingRates that he thinks The Wall Street Journal is wrong.
“Volumes on the major NFT platforms, such as OpenSea and Magic Eden, are skyrocketing – also thanks to integrations with layer 2 chains, such as Polygon, which have dramatically reduced transaction costs. We are still in the early stages of this technology and it is clear that more people are buying from a wide variety of NFT collections and in greater numbers,” he said.
However, he added that there may be something of a consolidation happening in the NFT market right now — a consolidation in which users buy so-called blue-chip projects, such as Bored Ape Yacht Club, Okay Bears and DeGods.
“So maybe they’re receiving most of the volume. I just don’t think the Coinbase NFT platform’s apparent flop is a good example of measuring the health of the NFT market. After all, its competitors already have a huge advantage by being first movers,” he said.
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NFT Market Not Collapsing, Analysts Suggest:
With nearly $8 billion traded in the first quarter of 2022, the market can’t really be considered a collapse, according to NonFungible, which qualifies the phenomenon as “more of a form of stabilization, in line with the last quarter of 2021. Conversely, the sales volume decreased by almost 50%, with a very marked slowdown in the volume of buyers and sellers.”
Coinbase’s slow start, experts say, is due to several factors, including it being seen more as a traditional platform which in turn “requires a lot of personal data to be transferred, which is unpopular in the crypto world,” explained Krugljakow out.
Toni Caradonna, CTO of Through the agesagrees, telling GOBankingRates that many other platforms operate in a way where you don’t have to divulge all of your personal information, which is appealing to many crypto users, “many of whom are concerned about infringing surveillance.”
“When you use Coinbase, all your data is captured,” he said.
Caradonna added that one of the main reasons Coinbase’s platform hasn’t worked as hoped (so far) is that platforms like OpenSea and Magic Eden already have such a huge lead.
“I should also note that FTX launched an NFT platform a while ago, and it didn’t do well either. This adds further evidence to this idea that users prefer more Web3 platforms through which to conduct their crypto trades,” he said, adding that this has nothing to do with the alleged waning interest in NFTs.
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“For example, if you look at Magic Eden, the most popular NFT marketplace on Solana, the volumes are exploding. More and more people seem to be entering the space and trying out new marketplaces outside of OpenSea. If anything, we may be in a kind of consolidation phase where users are buying higher value projects and in turn avoiding the lesser known ones,” he said. “All in all, NFTs are just at the beginning and the will increase in popularity and use cases in the coming years.”
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About the author
Yael Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including: Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also served as vice president/senior content writer for major New York City financial firms, including New York Life and MSCI. Yael is now a freelancer and most recently co-authored the book “Blockchain for Medical Research: Accelerating Trust in Healthcare”, with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in journalism from New York University and one in Russian studies from Université Toulouse-Jean Jaurès, France.