Innovative Ways to Purchase NFTs Without Cryptocurrencies
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Chapter 1: Accessibility of NFTs
For individuals who may not be technically inclined, NFTs represent a straightforward entry point into the world of Web 3.0. Although the process for purchasing an NFT isn't overly complex, it remains largely dominated by those familiar with cryptocurrencies. A recent study indicates that while 80% of Americans possess a credit or debit card, only around 2% have digital wallets.
Imagine if NFTs could be acquired using cash, credit cards, or other familiar payment methods. This shift could potentially expand the market for NFTs by up to 40 times. To truly thrive and empower creators and digital artists, NFTs must be accessible through simpler, more familiar purchasing methods. As noted on the MoonPay website, "One of the barriers of NFT investing is the learning curve associated with that first purchase." — Anonymous.
If someone wishes to acquire an NFT, they typically follow these steps:
- Set up a digital wallet (like Metamask).
- Fund the wallet with ETH or other cryptocurrencies.
- Connect the wallet to NFT marketplaces like OpenSea.
- Select the desired NFT.
- Complete the purchase.
The chart below illustrates the NFT buying process in a simplified manner.
While not the most user-friendly, there are two primary methods for purchasing NFTs with a credit card: either by buying cryptocurrency on credit and then using it to purchase NFTs, or by utilizing NFT platforms like Rarible that allow for credit-to-cryptocurrency conversions at the time of purchase.
However, it's important to note that credit card companies often treat cryptocurrency purchases as cash advances, leading to higher interest rates and fees. Consequently, users may miss out on rewards points for these transactions.
New Approaches to Buying NFTs
In January 2022, Coinbase entered into a partnership with Mastercard, enabling Coinbase users to buy NFTs using Mastercard credit and debit cards on its forthcoming NFT Marketplace, which has yet to launch. Details regarding this initiative are still pending.
Shortly after the Coinbase-Mastercard announcement, MoonPay, a cryptocurrency unicorn valued at $3.4 billion, introduced "NFT Checkout," a user-friendly solution for NFT transactions via card payments. The process is straightforward: users visit an NFT marketplace featuring MoonPay's widget and purchase NFTs using a debit or credit card.
NFT Checkout stands out for several reasons:
- Direct Purchases: Facilitates immediate NFT purchases using credit/debit cards, Apple Pay, Samsung Pay, and Google Pay.
- Blockchain Agnostic: Compatible with various blockchains including Ethereum, Flow, Solana, Polygon, and Tezos.
- Wallet Top-ups: Users can add funds to their wallets without leaving the platform.
- Seller Withdrawals: Secure bank transfer withdrawals for sellers, who receive payments in USD.
- Simplified KYC: Users can bypass the lengthy ID verification process for NFT purchases up to $7,500.
- Automated Payouts: Settlements occur on a predictable daily schedule (T+1 settlement).
- Secondary Trading: Supports credit and debit card purchases in peer-to-peer markets.
To delve into the technicalities, "gas fees" for transactions will be included in the NFT prices for users utilizing NFT Checkout, except on select blockchains like Polygon. MoonPay also charges users a processing fee of 3.5% or a minimum of $3.99 when buying NFTs through their tool.
I must admit that the MoonPay Checkout Tool is an excellent solution, especially for those like me who found the initial entry into Web 3.0 daunting. If MoonPay's NFT Checkout gains traction among non-crypto users, it could invigorate the NFT market with increased primary and secondary transactions. But does this solution have any drawbacks? Before addressing some potential concerns, let me introduce another innovative platform tackling similar issues: Neon.
Chapter 2: Neon — The NFT Marketplace
Neon recently unveiled a unique product in New York: an NFT vending machine located at 29 John Street, NY 10038. This machine, like traditional vending machines, accepts credit and debit cards, dispensing a box containing a unique code redeemable on the Neon platform. The vending machine offers two items: a "color" (from 10,000 options) priced at $5.99 on the Solana blockchain, and a "Party Pigeon" for $420.69. Founder Jordan Birnholtz plans to expand this concept to Las Vegas, LA, and Miami.
Neon also functions as an NFT marketplace and gallery built on the Solana blockchain, where collectors and creators can buy and sell NFTs.
Everything Looks Great, But Is It Too Good to Be True?
While MoonPay Checkout and Neon vending machines provide innovative solutions to bridge the gap for non-crypto users entering the NFT space, they still present a key challenge: users must establish a crypto wallet to receive NFTs. Additionally, those interested in future secondary transactions will need to accept payments in cryptocurrencies.
To summarize, the challenges for non-crypto users can be categorized into three main areas:
- Complexity of setting up a digital wallet.
- Difficulties associated with purchasing cryptocurrencies.
- The necessity of linking the wallet to marketplaces for NFT purchases.
Although MoonPay and Neon address the second and third challenges to some extent, they do not fundamentally resolve the first issue.
Another potential concern involves the acceptance of conventional payment methods, which may compromise anonymity. Web 3.0 is built on the principle of an open, trustless, and permissionless internet, allowing users to interact without revealing their identities. However, since debit and credit cards are linked to specific individuals, NFT purchases made through MoonPay or Neon could connect a particular card to a specific crypto wallet. This raises the question of whether Web 2 and Web 3 profiles may become intertwined.
While this compromise in anonymity is not inherently negative, it warrants caution. If Web 3 crypto wallets become traceable to Web 2 profiles, new possibilities may arise, such as profiling and targeted marketing based on purchase history. Given that the Web 3.0 industry is still in its infancy, stakeholders must implement appropriate checks and balances as new developments unfold.
I recently discovered that a former colleague of mine is the sister of MoonPay's CEO, Ivan Soto-Wright!
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Step-by-step tutorial for beginners on how to buy NFTs using OpenSea.