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Coinbase’s digital currency exchange has moved into a new online marketplace where users can coin, buy, sell and promote non-replaceable tokens† Also known as NFTs, these assets represent ownership, in digital form, of creative works such as:
Trading cards and other collectibles
The NFT grants a unique digital representation to its holder. It does not reserve any right to reproduce any work in digital or physical form† Copyright and reproduction right still belong to the original creator or organization†
However, NFT tokens of their works can be sold by creators and NFTs deemed important have yielded very large sums of money. The NFT of Twitter founder Jack Dorsey’s first tweet in history, for example, sold for nearly $3 million in 2021† Artists, newspapers, filmmakers, graphic designers and even the Disney company are jumping into the NFT market†
Coinbase Competitors in the NFT Space
Coinbase entered the NFT space in competition with OpenSea, which emerged as the largest NFT marketplace in 2021† In September 2021, OpenSea reached $2.8 billion in NFT transactions† And the Coinbase NFT marketplace won’t be OpenSea’s only new rival – Binance and FTX, two other cryptocurrency exchanges, have also launched NFT boards†
NFTs are held in a blockchain ledger, a secure way to track ownership that does not rely on data held by banks, governments or financial exchanges† Blockchains have also launched digital currencies, such as Bitcoin, which are stored in digital “wallets” and traded through Coinbase and other exchanges.
The Coinbase NFT marketplace uses: Ethereum as a medium of exchange† This blockchain currency is increasingly accepted in direct competition with Bitcoin. It is by far the most used currency for trading NFTs†
Coinbase Targeting Social Media Engagement
Coinbase adds value to the NFT marketplace with a new social media dimension. “We design for community involvement,” the company claims. “We’re adding social features that open new avenues for conversation and discovery†
Following in the footsteps of Facebook or Twitter, the Coinbase NFT hub offers individual profiles, personal feeds, and a showcase for all user-created NFTs†
NFTs can open an important new source of income for the company. Since Coinbase’s IPO in April 2021, the company’s shares have not been able to keep up with the rising value of digital currencies such as Bitcoin and Ethereum† The exchange has caught the attention of regulators and researchers in the US and abroad, and also faces a crowded field from competitors, including Robinhood and PayPal.†
Good to know
In the future, Coinbase may accept other digital currencies for NFT transactions. In theory, it could also use traditional fiat currencies – the dollars, yen, yuan and euros that are exchanged physically and digitally every day, all over the world.
What does the future of investing in NFTs hold?
if non-fungible assets, NFTs cannot be freely exchanged in the same way as currencies or stocks. Each NFT token is unique, with the value assigned by the market or the price asked by the seller† It can represent anything created, with the human imagination as the only limit† A clever meme could theoretically yield a multimillion dollar NFT. Traders were able to bid dizzyingly on the sign of a simple avatar, a video, or a short GIF animation.
There is understandable excitement among the “creator community” about NFTs. With the physical art market dominated by auction houses and wealthy investors, humble digital creatives see NFTs as an opportunity to develop a thriving business. art marketplace of themselves.
Attention buyers and traders
The NFT market is new and its future is uncertain. NFTs may become the standard way in which all assets — including physical assets such as houses and land — are traded. They can also become as outdated as the Commodore 64 “home computer”.
The legal status of NFT property is also worked out. The US Securities and Exchange Commission may place limits on how NFTs can be bought and sold† OpenSea has had issues with insider trading, the crime of dealing with non-public information in an open marketplace†
NFT creators and traders should also be aware of online copyright issues. Photos, text, memes and other private property can be easily reproduced and used online. Often no credit is given or money paid for these reproductions. However, by assigning a unique digital identity to a work, a creator can directly and immediately benefit from it†
NFTs work to level the playing field for creators, whether they are world famous or completely unknown.
About the author
Tom Streissguth, a writer and editor with more than 100 book credits in youth and young adult nonfiction, masters the craft of explaining complex, difficult topics clearly. His books cover history, geography, economics, media and current affairs; he has also written biographies of historical figures for Lerner, Enslow, Facts on File, Greenhaven, and other major educational publishers.