NFTs Will Be Bigger Than Crypto: Coinbase Founder.
Coinbase Global Inc. co-founder Brian Armstrong says the market for non-fungible tokens could rival or even be larger than the company’s cryptocurrency business.
Coinbase’s chief executive officer, made the statement on a conference call after the largest U.S. digital-asset exchange reported third-quarter revenue of about $1.3 billion. The declaration helped to ease concern that revenue was below forecast even after a more than fivefold increase from a year earlier.
Coinbase plans to open its own NFT marketplace, where people will be able to trade digital art and other items, in the next quarter or two. The company wants to offer a one-stop experience for users where they can make purchases and store their holdings on a platform that would provide a social media experience more similar to Instagram than a traditional marketplace such as EBay Inc.
“We are very excited about NFTs, this is going to be a very large area for crypto in the future, and it already is today,” Armstrong said Tuesday. “It could be as big or bigger” than the company’s cryptocurrency business.
Assuming the NFT marketplace feature launches this year, “it can be 7% accretive to COIN’s 2023 earnings,” said Owen Lau, an analyst at Oppenheimer & Co.
The NFT market overall has ballooned in the past year. OpenSea alone saw nearly $2 billion in transaction volume in the past 30 days, according to DappRadar.
Coinbase makes most of its revenue from retail users’ trading fees. That means that during times of high volatility and falling prices, when small traders stay away, Coinbase’s revenue can drop.
To increase predictability, Coinbase has been working to diversify its revenue by courting institutional traders, and offering and looking to offer other services, of which NFT trading is just one.
While Coinbase hasn’t disclosed its fees for the NFT feature, they will likely be in line with those charged by OpenSea, or about 2.5% of transaction value, said John Todaro, an analyst at Needham & Co.
“At a high level, this product suite could materially add to COIN revenues and would be a great diversification add,” Todaro said.
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