In the world of blockchain and digital assets,
there’s one name that stands out in terms of market share and trading volume.
OpenSea has been the front-runner of the non-fungible token (NFT) marketplace
since its inception in 2017, and it shows no signs of slowing down any time
soon. How did the company do it? What’s their strategy? And what are they doing
to ensure their market dominance? In this article, we’ll take a look at the
untold story of OpenSea and the fight for control over the NFT market as we
know it today.
An introduction to non-fungible tokens
Most tokens are fungible — meaning that one
equals another. For example, if you have ten-dollar bills in your wallet, each
one is equivalent to every other dollar bill you own. So no matter which ones
you spend, it’s not a big deal because you can replace them easily (and
cheaply). But what if they weren’t? What if each dollar bill had its unique
serial number so that only that particular bill could be used as legal tender?
That would make it impossible to replace, right? Now take that idea and apply
it to crypto-assets — except instead of different serial numbers, they have
different cryptographic signatures.
What makes OpenSea different?
One thing that we at OpenSea pride ourselves
on is our transparency. To us, we’re not just building an application, but
rather a whole new way to trade NFTs; one that is better than anything else out
there (so far!). We started in late 2017 by doing what you should always do in
early-stage startups: Talk to your users. In our case, we used things like
Twitter polls and Reddit threads to find out what our potential users wanted
from an NFT marketplace. Some of their requests were simple (like faster
transactions times or improved product detail pages), but others required
rethinking our design philosophy (like being able to buy/sell on both open
markets & private ones). Our mission became clear: Make crypto fun again!
Why did ERC721 change its name to be called ERC998?
Recently, rumors spread that ERC721 was going
to be changing its name to ERC998. The move sparked outrage from cryptocurrency
users all over Twitter, Reddit, and more. Many were confused about why a
seemingly great standard would be discontinued or altered. In actuality,
ERC721’s creators never wanted them to be renamed at all—the name was simply a
placeholder until they could find better branding. Regardless of semantics,
some improvements are coming in 2019 including standardized metadata support
and non-fungible tokens (NFTs) on top of other blockchains. But what does it
mean for crypto? What does it mean for game developers? For collectors?
A history lesson on the fight against smart contracts
When NFTs first hit Ethereum, people were
shocked by their power. They weren’t limited to collectibles—and in fact, could
represent ownership of real-world items and be used in smart contracts. Want to
use an NFT as collateral for a loan? Yes, you can do that with a token. Want to
rent out your car using an NFT? Sure thing. But before anyone could realize
these possibilities, there was a fight over how exactly they should work:
through standardization or decentralization. Standardization is when one party
(in our case, OpenSea) owns all of the tools and infrastructure necessary to
create something (in our case, non-fungible tokens). Decentralization is when
everyone involved has equal say in how things are done (no one owns all of the
tools). And although decentralization sounds like it would lead to chaos, it
leads to more innovation because no one party has too much control over any
aspect of development or execution.
The pushback against smart contracts at Devcon4
In mid-November, Eric Wall (the founder of
æternity blockchain) gave a talk called Smart Contracts are not Smart Enough at
Devcon4, one of Ethereum’s biggest annual conferences. Smart contracts indeed have
flaws but it’s also true that they offer much more security than traditional
contracts. What happens if no one is using smart contracts? The platform needs
to have developers function effectively, which is where OpenSea comes in. When
there was no market, they decided to build their own NFT marketplace. If there
isn’t an audience or a need for NFTs, why build something?
Final thoughts on ERC998 (an FAQ)
Since ERC998 is still very new, there are many
questions about how to implement it. We’ve compiled a list of FAQs below that
should answer many immediate questions that you may have. If your question
isn’t answered here, don’t worry, we welcome you to ask us any other questions
on our Discord. We’re already hard at work on an official specification document
that will provide more details and guidelines on how developers can best use
ERC998 in their applications. That said, here are some frequently asked
questions 1) How do I send my tokens using ERC998? You send them exactly as you
would with any other token: transfer(). The difference is that instead of
sending one specific token, you'll be sending all of them at once.