I’ve been doing a deep dive recently on all things NFTs. It’s one of those subjects where you’re either committed or quite skeptical. I’m the former. But it is early days and the value derived from owning an NFT isn’t and shouldn’t just be to make more money on something you previously purchased at a cheaper price.
Regardless of what camp you’re in, it’s a trend worth watching, and perhaps dipping your toes into. That’s the best method for myself to learn about these new marketplaces and tools.
I was on Opensea last night looking at the expensive to cheap options and identifying what I’d like to purchase for fun or for investment. Currently a bottleneck in the system is that gas fees are high. For example, a $5 color swatch NFT I liked (of my favorite color) had an associated $90 in gas fees. Imagine going to the store and not having cash, and your processing fees being 19x higher than the goods you’re purchasing. You’d give pause (I hope)!
What I find to be fascinating is that the marketplaces themselves are only about one year old. The biggest of them is Opensea.io and said to have 98% of market share currently. Five months ago it was valued at $1.5BN, and as of last week it is rumored to be getting new bids to value the company at $10BN.
You’ll see in the two graphs below that their monthly volume spiked over the summer, and has been tapering off. Similarly to that on a daily basis for the right hand graph.
Another view is the number of total traders who have made at least one transaction. That number continues to rise. I believe it will only continue. Yet Opensea and other marketplaces (i.e., Rarible, Mintbase, and Foundation) will soon be competing with the 10,000lb gorilla in the room: Coinbase. The company is (not) arguably the largest centralized company providing a gateway to all crypto. Soon to be NFTs.
Coinbase will soon be launching their marketplace, reaching tens of millions (65M+) of potential customers. This platform will allow you to connect your external wallet (MetaMask to Coinbase Wallet) and similarly to Opensea, allow you to follow individuals and their portfolios, while creating a centralized marketplace to purchase and sell your own.