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The ‘OpenSea’ tale on the future of NFTs

  • Category
    Economy
  • Published
    27th Aug, 2022

Context

About

What is OpenSea’s place in the sector?

  • OpenSea is a decentralized marketplace that allows users to buy and sell non-fungible tokens.OpenSeais said to be one of the largest NFT marketplaces in existence.
  • OpenSea is an online marketplace that allows users to purchase, sell, and trade non-fungible tokens via its website.
  • It is based on Ethereum blockchain data and was used by two million traders who transacted at least once on the network.

NFTs are digital assets whose ownership is verified through transaction records stored on blockchains. Artwork, digital avatars, and accessorized monkeys are some of the most commonly traded NFTs.

The Collapse of Crypto-Bubble:

  • The sales of digital goods on OpenSea jumped to a high in August 2021 as a result of bitcoin and Ether hitting their all-time high.
  • Later, OpenSea's monthly volumes soared between December 2021 and January 2022 and appeared to be replicating the rise in the monthly volume for Ethereum, which shot over $4.8 billion.
  • But it experienced a nosedive after its partner coin ‘LINA’ collapsed and wiped off billions of dollars from the market in May 2022.
  • As a result, both Bitcoin and Ether fell to half of their values in the first six months of 2022. Daily transactions on OpenSea have been gradually declining since then.

Trust issues of users with OpenSea:

  • OpenSea users complain of excessive downtime on the platform.
  • There have also been reports of breaches and security vulnerabilities.
  • OpenSea users were targeted by an alleged phishing attempt.
  • There are also ethics-related issues.
    • A number of artists have complained that OpenSea users frequently steal their work, mint them as NFTs, and begin profiting from them without their consent.
  • These artists have condemned the NFT platform for not doing enough to combat art theft and also for making the stolen art takedown process troublesome for non-crypto users.

Future of OpenSea:

  • Uncertain Future: At this time, it is difficult to derive any conclusion from the rise and fall of the Open Sea. The crypto run and the NFT boom, both had translated into the hiring spree in order to scale the operations at a rapid pace.
  • Hibernate for resilient recovery: The market is entering into an unprecedented combination of crypto winter and broad macroeconomic instability. It is time to prepare the platforms for a prolonged downturn.
  • Optimistic Approach: Many might have concluded that the era of NFTs is over and it’s time to exit their positions and give up their creations, but there are enough in the world of crypto who believe that panic sellers are giving them generous discounts. The NFT market might be volatile, but there’s enough underlying potential too.
    • Volatility allows investors to develop strategies like buying low, and selling high, which creates the possibility for astronomic returns.

Future of NFTs and their Marketplaces:

  • Changing Employment Landscape: Digital transformation and adoption of blockchain technology are manifesting in the changing employment landscape.
    • More people are already working on NFTs, blockchains, and cryptocurrencies than ever before.
  • Interoperability Will Be Essential: As NFTs and metaverses develop, so will the complexity of their use, and interoperability between metaverses will be as important as their utility in real life.
    • Creating new economies and digital spaces for people to explore and participate in will be the course many companies take going forward.
  • Greater Ease of Adoption: Web3 is a chance to reinvent and reimagine the undesirable parts of Web2.0.
    • When there are hacks or attacks, users have complete control over their data and funds, and there will be no intermediaries to turn to.
    • In Web3, security is a primary priority and doesn’t set back growth and development.
  • Metaverse: The metaverse has become a fast-growing industry and it is the NFTs that will become the building blocks of these digital worlds, and encoded utilities will unlock experiences such as VIP events or unique discounts.
  • Creating fluid socio-cultural interactions: The integration of borderless virtual worlds and interoperability will expand the possibilities for utility, bringing a seamless experience and higher value for users.
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