Why Coinbase and Mastercard’s Partnership Will Start to Address Legal Concerns in NFT Market
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On Wednesday, Coinbase announced that it is partnering with one of the world’s largest credit card processors, Mastercard, to help simplify the user experience to allow more people through the doors of the NFT community.
In providing for a more inclusive, accessible digital collectibles space, payment processors such as Mastercard lend additional credibility to the space as the market is witnessing a surge in financial institutions dipping their feet into the active NFT waters.
Right now, the digital collectibles space is still in its infancy stages, leaving the industry with several challenges needing to be addressed, specifically accessibility and authenticity.
With over $2.5 billion in sales volume in the first half of 2021, the digital collectibles space has (quickly) captured the attention of millennials and Gen-Zers who are excited and re-thinking how and what they choose to invest their money into.
For those new to the world of blockchain technology, cryptocurrency, and of course, non-fungible tokens, figuring out where to start isn’t always easy when it comes to investing money – especially when it comes to finding trusted resources that are able to provide a comprehensible breakdown of how to safely enter the space.
Last year, when Coinbase announced its peer-to-peer (P2P) marketplace, Coinbase NFT, the idea that the largest cryptocurrency exchange which has been fairly accessible and easy to navigate will also explore ways to make the minting, purchasing, showcasing, and discovering of NFTs easier, lends additional support for the exchange’s recent Mastercard partnership.
“That’s why we’re working with Mastercard to classify NFTs as “digital goods”, allowing a broader group of consumers to purchase NFTs,” said Prakash Hariramani, Senior Director, Product at Coinbase. “And, coming soon we’ll “unlock” a new way to pay using Mastercard cards.”
Another barrier to entry, which requires such a high level of due diligence, involves determining the legitimacy and authenticity of the (alleged) NFT being offered or promoted – as well as the (alleged) artist behind the digital artwork.
As it stands, the market offers few tools that help consumers determine the legitimacy of any given project and/or offering. In other words, it is still somewhat of a risk for individuals to invest in an artist and/or their NFTs – despite how good and “transparent” the communication may be.
With the collective powers of Twitter, Instagram, and Discord, there are many “cooks in the kitchen” that try to capitalize on hype, popularity, and industry breaking news that makes it easy at times for consumers to just “trust” what they are being told or messaged.
And in the end, even if you are subject to a scam or misrepresentation, it’s very difficult to trace the actual bad faith actor to the account or social media handle they are hiding behind – another challenge for the legal landscape to tackle.
“We’re working to make NFTs more accessible because we believe tech should be inclusive,” said Raj Dhamodharan, Mastercard’s executive vice president in charge of digital assets and blockchain partnerships, in a release. “When more people are included in new technologies, it spurs innovation, helps economies grow and expands choices for consumers.”
Educating consumers about how to safely and securely enter the NFT market is a priority and necessity to see this space truly thrive and succeed to help provide for an interconnected fine art economy.
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