eBay opens NFT transactions. How does the e-commerce giant start the crypto payment enclosure movement?

E-commerce giant eBay announced that it would allow the sale of digital collectibles such as trading cards, pictures or video clips, non-fungible tokens (NFTs), on its platform. It is the first traditional e-commerce company to follow the recent NFT craze.

The company said that in the short term, NFT inventory will be available to sellers who meet eBay standards, adding that users will see more NFT trading plans, policies and tools in the future, allowing for a wider range of NFT buying and selling transactions. Currently, NFTs sold on eBay are based on the WAX ​​blockchain and can only be paid in US dollars.

Jordan Sweetnam, senior vice president and general manager of eBay North America, said, “In the coming months, eBay will add new features to bring blockchain-based collectibles to our platform.”

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eBay had already foreshadowed its entry into the NFT world

It is worth noting that eBay mentioned as early as a week ago that it was studying the NFT market and hoped to realize NFT transactions on eBay.

The huge market potential is an important reason for eBay to enter the NFT market. In 2021, the NFT industry ushered in a new bull market. According to the latest report from NonFungible.com, NFT sales in the first quarter of 2021 exceeded US$2 billion, an increase of more than 20 times compared with the fourth quarter of 2020.

Among them, the number of buyers in the first quarter was more than twice that of sellers, with 73,000 buyers and 33,000 sellers. The asymmetry in the number of transactions between buyers and sellers shows that newcomers are interested in NFTs. But it also shows that existing investors want to keep their assets, which creates scarcity in the market.

Additionally, the NFT industry is largely dominated by the art and collectibles sectors, particularly projects such as CryptoPunks and SuperRare.

On the crypto art trading platform SuperRare, the average price was $1,231 in the fourth quarter of last year and $6,585 in the first quarter of this year. The average price on the trading platform CryptoPunks soared from $2,500 to $95,900 in the first quarter in just a few months.

In the report on NFT trading solutions, eBay stated that it would initially only offer some categories of NFTs for sale, including music, trading cards, entertainment industry and other sectors that could be sold on eBay.

In addition, only sellers trusted by the platform can sell NFTs. The report also pointed out that as eBay continues to collect user feedback and transaction information, more NFT categories will be added in the future.

It can be seen that in addition to traditional art collections, sports stars, etc. who have continued to join the NFT field, traditional e-commerce sales platforms have now also realized the considerable benefits that NFT will bring in the future.

eBay has millions of users around the world. Its first trial not only greatly lowers the threshold for users to trade NFTs, but may also become a leader in the field of NFT electronic sales platforms in the future.

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Taking on PayPal? eBay is exploring cryptocurrency payments

On May 4, eBay CEO Jamie Iannone said in an interview with CNBC that eBay is expanding its current payment methods such as Apple Pay and Google Pay, adding that the company plans to "continue to explore other options, such as cryptocurrencies."

eBay is not a novice in the field of cryptocurrency payments. Two years ago, it joined Facebook's blockchain project Diem (formerly known as Libra), but in 2019, eBay said in a statement: "We highly respect the vision of the Libra Association. However, eBay has made the decision to give up becoming its founding member. At present, our focus is on enhancing eBay's managed payment experience."

While eBay withdrew from Facebook’s cryptocurrency project at the time, it has been considering adding Bitcoin and other cryptocurrencies as a payment method on its platform since at least 2014.

As of now, eBay has not announced any specific plans for how it plans to add cryptocurrencies to the platform.

Interestingly, on the same day, payment giant PayPal was revealed to be exploring the launch of a stablecoin. Four sources familiar with the situation told The Block that PayPal has discussed with some stablecoin protocol developers in the industry and may be inclined to cooperate with third-party companies to develop stablecoin business.

“PayPal continues to explore the potential of digital currencies, digital financial services infrastructure, and how we can help enhance digital commerce as a trusted partner in this space,” a PayPal spokesperson said.
If PayPal is indeed moving forward with a stablecoin project, it would represent an expansion of its presence in the crypto space. Stablecoins are digital assets that represent fiat or government-backed currencies and use blockchain networks as payment instruments.

According to data collected by The Block, there are currently more than $80 billion in stablecoins in circulation.

There is no direct competition between Paypal and eBay in the field of encryption. In 2002, the cooperation between Paypal and eBay caused a sensation and became one of the most classic mergers and acquisitions in the global Internet industry.

But the good times didn't last long. In April 2015, eBay announced that PayPal would be spun off and signed a five-year operating agreement before the spin-off.

The agreement prohibits eBay from launching a payment service for five years and prohibits PayPal from developing its own online marketplace for physical products.

This agreement could only be changed if PayPal was acquired by an eBay competitor, and eBay could not create its own payment platform until 18 months after the PayPal acquisition.

Since PayPal launched its cryptocurrency payment service last year, it has achieved good performance in terms of transaction volume and number of users. Earlier in April, PayPal CEO Dan Schulman revealed at an event that PayPal's crypto service will reach a transaction volume of $200 million in a few months or less.

Whether due to competitive threats or based on the innovations and challenges that the crypto market itself brings to traditional finance, it may only be a matter of time before eBay launches a cryptocurrency payment service.

On April 22, Dogecoin became popular when more than 140,000 people signed a petition calling on Amazon to accept Dogecoin as a payment method.

While Amazon did not respond to the request, the company previously posted a job ad seeking candidates to join its digital and emerging payments division, but has since taken it down.

Currently, due to the uncertainty of legal supervision, traditional e-commerce giants still have many considerations when considering supporting cryptocurrencies as a payment method.

However, as cryptocurrencies are increasingly accepted by merchants, hotels and more service platforms, the expansion of their use scenarios will prompt e-commerce platforms including eBay to take more practical actions to meet consumers' transaction needs.