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3 questions about Coinbase’s NFT push

The U.S. cryptocurrency trading giant’s entry into the market for non-fungible tokens has been a long time coming and lands at an important time for the public company. Shares of Coinbase are trading near all-time lows today ahead of its earnings that will land in early May.

Sadly, data on the Coinbase NFT push is de minimis today. This is not a huge surprise, really, as the new service from the former unicorn is well, new. So instead of trying to parse what appear to be the first dribs and drabs of numbers from third-party analytics services, let’s ask a few questions. Today we’re outlining our three top head-scratchers concerning the new Coinbase NFT project.

In basic terms, we want to know how fast Coinbase’s NFT marketplace can scale in the near term, its potential economic profile, and, finally, its long-term growth prospects. We’ll take them in order. Let’s have some fun!

Over the next few weeks, we’ll be curious to see how much volume there is in terms of total trades, as well as the value of those trades driven by Coinbase’s NFT marketplace.

The company has an enormous waitlist and has a simply massive user base to shuttle into its new product. How well that waitlist converts into active users, and then activity, is a critical question. And after the waitlist is chewed through, the fraction of Coinbase that heads over to the NFT product will help us determine volume growth at the company in the immediate future.

In the long term? Good. In the near term? Weird!

Here’s an excerpt from our coverage of the Coinbase NFT launch from earlier in the week:

There will also be no transaction fees on NFTs on its marketplace “for a limited time.” Over time, the fee will increase, but will be a “low single-digit fee,” Sanchan Saxena, vice president of product at Coinbase, said during the meeting. Users can either use a Coinbase wallet or any self-custody wallet they own to trade NFTs on the platform.

By charging no fees to start, Coinbase is flexing the fact that it is incredibly wealthy and profitable. It can afford to forgo fees to encourage volume. Once its marketplace reaches a healthy level of supply and demand, it can begin to extract revenues.

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