Affiliations: [a] Department of Business Administration, Faculty of Economics, Administrative and Social Sciences, Cyprus West University, Famagusta, Cyprus
| [b] Inonu University, Malatya, Turkey
| [c] Yalvac Vocational School, Isparta University of Applied Sciences, Yalvac, Turkey
Correspondence:
[*]
Corresponding author: İbrahim Dağlı, Cyprus West University, Faculty of Economics, Administrative and Social Sciences, Department of Business Administration, Famagusta, Cyprus. E-mail: i.dagli@cwu.edu.tr; ORCID ID: 0000-0001-8199-821X.
Note: [1] ORCID ID: 0000-0001-5632-2955.
Note: [2] ORCID ID: 0000-0002-7756-3835.
Abstract: BACKGROUND:Like Bitcoin or any other cryptocurrencies, non-fungible tokens (NFTs) count on blockchain technology, and NFTs are the latest and the most popular in a series of blockchain solutions. Traders in this ecosystem need to pay a dynamic fee, called a gas fee, for making any transactions on the Ethereum blockchain. The gas fee is measured by gwei, and traders must consider this as an additional cost. So, the current price of this fee may affect the decision of NFT creators or traders. OBJECTIVE:This study investigates the interrelationships between NTFs, cryptocurrencies (Ethereum and BTC), and gas fees using daily market data from January 2019 to November 2021. METHOD:Fourier Shin’s (2016) cointegration test, Fully Modified Ordinary Least Squares, and Group Dynamic Least Squares tests were employed to analyze the data. Then, the variance Decomposition method was applied to determine what other variables explain the percentage of the total variance on NFTs— it also used Impulse-response functions for measuring the response of the NFTs variable for one standard deviation shock. RESULTS:Results show that an increase in gas fees, the daily volume of Bitcoin, and the daily volume of Ethereum decrease NFTs sales. There is a unidirectional relationship between lnSales and lnGasFee variables. Also, there is a determined unidirectional relationship between lnBTC and lnSales variables. Lastly, there is a one-way causality relationship between lnSales and lnETH variables. CONCLUSIONS:The primary causation of the relationship between NFTs, gas fees and Ethereum fees is most likely related to the use of Ethereum as the primary means of payment in the NFTs market and gas fees being a significant cost element in NFTs trading. Another point of view is that the dominance of Bitcoin in the market is very effective in pricing of other cryptocurrencies and in the sales and pricing of NFTs indirectly. It is supported by empirical findings that the main elements in the blockchain ecosystem are interrelated.
Keywords: Non-fungible token, cryptocurrencies, and blockchain technology
