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.