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Here's Why Crypto Exchanges Are Getting Into The NFT World

Here's Why Crypto Exchanges Are Getting Into The NFT World

Beeple’s sale of his $69 million art in March 2021 is definitely the game-changer that shone the much-anticipated spotlight on the non-fungible tokens (NFT) industry. Since then, NFTs are currently being used to commodify several digital objects ranging from sports and arts to digital clips, real properties, and gaming collectibles. 

Some of the world’s global celebrities, retail investors, social media influencers, and companies have jumped on the NFT bandwagon to maximize the potential of the market. Now even cryptocurrency exchanges are flooding the NFT space and changing the status quo as they present users with more opportunities to trade NFTs. 

In October, two of the world’s biggest and popularly used crypto exchanges announced their entry into the NFT race, just a few months after Binance pioneered the movement for exchanges. The big question is why are crypto exchanges getting into the NFT world, and which exchanges have made the crossover in recent times? Let’s find out.

Crypto Exchanges Are Out To Diversify Their Revenue By Entering NFT

The global non-fungible token market has boomed in 2021. According to DappRadar, sales volume has reached a chart-topping amount of $10 billion in 3Q

Some of the high-profile names in the crypto exchange scene have chosen to get involved in the NFT space to diversify their revenue. The bulk of the revenue exchanges make come from fees they collect when users transact. 

Relying on that alone, in an industry that is given to massive volatility, is something most crypto execs and founders don’t look forward to heading into 2022. Notably among them is Coinbase who opened a waitlist for its very own marketplace, Coinbase NFT

Here users can mint, collect, and trade a wide variety of NFTs. The guys at Coinbase expect such a move to lead into new and lucrative streams of revenue for the crypto exchange, which presently relies, to a great extent, on exchange fees.

The global crypto exchange says user experience of making or buying NFTs has been lacking and that its foray into NFTs will make things easier. Users should expect to create NFTs and have control over them using decentralized contracts. Coinbase also incorporated social features to make things more interesting.

How the World’s Largest Crypto Exchange Started the NFT Trend

As stated earlier, Binance was the first crypto exchange to dive into the NFT sphere with the launch of its Binance NFT Marketplace, where users could freely make, purchase, or sell digital assets. 

Users can now buy or sell digitized works of art, trading cards, and other rare virtual items on the marketplace. Binance is working towards incorporating these in addition to what the marketplace currently offers.:

  • A standard trading market where people can mint new tokens
  • A premium space for high-profile auctions and exhibitions.

Binance’s payment structure is one of the things users and digital creators looked out for when Binance announced its plans some months back. Its premium segment would get a cut of 10% from major auction proceeds while the artists receive 90% of the proceeds.

Meanwhile, the daily trading market charges a processing fee of 1%, with creators receiving royalties from it too. The Binance NFT feature launched in June 2021 and is already home to some of the world’s hottest digital creators and collections.

Helen Hai, who heads Binance’s NFT project, was hopeful about the exchange’s move into the NFT space. 

She said,

“Our aim is to provide the largest NFT trading platform in the world with the best minting, buying, and exchanging experience by leveraging the fastest and cheapest solutions powered by Binance blockchain infrastructure and community.” No doubt, this will serve as a new income stream for Binance.

The World’s First LSEG Technology-Powered Crypto Exchange Is In On The Trend

In the extensive list of high-profile cryptocurrency exchanges delving into the NFT space and creating marketplaces, we’ve got AAX. The platform debuted five NFT art pieces co-created by popular creator FrankNitty3000 at the Hong Kong FinTech Week, 2021.

The NFT series titled “The Crypto Gods” ushers the world’s first cryptocurrency exchange powered by LSEG tech into the crypto space. AAX has been around since its creation in 2018, and the exchange has amassed more than a million users from over a hundred countries around the world. 

The exchange is also the first to switch to a Satoshi Standard or SATS to assist in improving Bitcoin’s adoption. AAX and FrankNifty3000’s Crypto Gods NFT Series is something for actors in the NFT scene to reflect on, especially the role pop culture, celebrities, and art plays in the wider crypto world.

With this debut, AAX surely has more in store for creators and collectors hoping the exchanges offer top-notch marketplace features than the other crypto exchanges.

Content From Snoop Dogg and Lionel Ritchie Announces Crypto.com’s Foray Into NFTs

With digital content from global superstars Lionel Ritchie and Snoop Dogg, Crypto.com announced its foray into the NFT space. As at the time of launch, the Hong Kong-based exchange claimed it would become the largest and most user-friendly NFT platform in the world. 

Crypto.com's then announcement revealed that the platform would be an invite-only one, featuring solid collaborations between digital artists and their mainstream counterparts. Upon launching, Crypto.com and Ashton Martin Cognizant Formula One Team partnered up while marking the team's return to F1 after a 60-year hiatus with a cool collection of NFTs.

So Why Are Crypto Exchanges Diving into the NFT World

The simple answer is profits. It’s fair to say that 2021 is the year for NFTs as the market grew at an astronomical rate of 704% from August last year. While the surge may be attributed to the media hype surrounding the trend, it’s noteworthy that such hype was sustained by the big guns that penetrated the market.

Of course, some of them are crypto exchanges. NFTs and crypto are intertwined, being from the same parent technology—blockchain.

Having championed transactions for cryptos successfully, it only makes sense that crypto exchanges will position themselves as the ideal mover of the NFT vision. True to that, they’ve made it easier for enthusiasts to trade NFTs.

Before their emergence, marketplaces like Rarible, OpenSea, and Nifty Gateway, were the only transaction points for non-fungible tokens. While they did their bit towards the growth of the industry, some of them had high requirements, which some artists couldn’t meet.

So apart from raking in profits, crypto exchanges are working towards demonopolizing the industry, making it possible for new entrants to mint their NFT works and sell them with little or no barrier. 

Conclusion

With Bitcoin’s slump to $32,000 in the summer, before the eventual rally to $68,000, more exchanges have been pushed into the NFT space. Around $10.7 billion worth of NFT was sold in the 3Q of 2021.  

Hundreds of popular celebrities, entertainment companies, and athletes are getting into non-fungible tokens; there’s no doubt that rapid booms will follow through in coming years. While OpenSea is still the world-leading marketplace for NFTs, crypto exchanges like Binance, Coinbase, and AAX could be big competitors next year.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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