There hasn't been a lot of good news for Coinbase's (COIN -3.97%) non-fungible token platform, Coinbase NFT, lately. Non-fungible tokens (NFTs)are the digital assets on a blockchain that are often represented by images; examples include the Bored Ape Yacht Club or CryptoPunks. According to Dune Analytics, Coinbase, one of the leading crypto exchanges, has sold just $2.95 million of NFTs on its platform since launching on April 20. That's a paltry sum compared to the $6 billion traded on OpenSea, the industry's leading NFT marketplace.
To make matters worse, NFT trading volume is down about 75% in dollar terms for NFTs on the Ethereum blockchain since mid-April. If NFTs are in decline and Coinbase can't take share, what would you do? How about make a call to actor Bill Murray and culture and image website theCHIVE?
Bill Murray's Coinbase NFT
Today, Bill Murray will release, or drop, 1,000 NFTs in a collection created with theCHIVE and branding agency Project Venkman. There are 100 story NFTs, each with 10 color modifications of each image that make up the collection. The drop will be auctioned off with one real-life painting and promises "once-in-a-lifetime experiences with the man, the myth, the legend."
The NFT drop is one of four upcoming, including one related to NBA star Damian Lillard, a feature from graphic designer Jeff Staple, and a "Historical Figures" collection that includes Athena, Queen Victoria, and others.
Generally, the idea is to bring celebrity exposure to Coinbase NFT. But the challenge is that the buyers of NFTs today are probably already used to trading on one of the existing platforms, so moving from a marketplace like OpenSea to Coinbase NFT isn't all that appealing.
The NFT problem
Maybe it was just poor timing, but Coinbase NFT launched at a time when sales of NFTs were dropping like a rock. You can see below that OpenSea's volume is down about 75% from mid-May and Coinbase NFT hasn't been able to capture more than 1% of transaction volume for more than a day or two.
Is this a matter of Coinbase entering a declining market and having no luck attracting existing users? Would Coinbase NFT have don't better if the NFT market overall was growing?
It's impossible to know what caused Coinbase NFT's poor launch, but it's safe to say that it's not gaining market share today. Could celebrities change that? I'm not so sure.
An eye on the future?
I have to wonder if NFT drops like this are foreshadowing what's to come for Coinbase NFT. We know from Coinbase's first-quarter 2022 conference call that the company has bigger plans. It said there are "features we're planning to add, the ability for people to do NFT drops, mint their own NFT tokens, there's token-gated communities we want to support, and even the option to buy a piece just directly with your credit card or any funds that you currently have in your main Coinbase account."
The marketplace is now showing more NFTs with U.S. dollar pricing, even if a purchase has to be made in Ethereum. This drop would be testing auction features, as well. We could be seeing a high-profile test of minting tools, or tools that create NFTs on the blockchain, that could come to the marketplace.
Coinbase and the NFT long game
I don't think Coinbase's long game is just being competitive with OpenSea. Its growth potential is in making NFTs easier to create, buy, and own, which is where integrating with the Coinbase App, Coinbase Wallet, and Coinbase Pay could make it easier to onboard the next generation of users.
This is a very long game Coinbase NFT is playing, but it needs to both prove that its tools (minting and auction) work and attract buyers to the platform. Bill Murray is a name that could do both, but it's an uphill battle against the entrenched business at OpenSea.