For most customers, the recent NFT boom looks to be definitively finished. However, it seems as though the job has only begun for significant social networks. So Why are social media networks after NFT?
Reddit is the most recent platform to accept non-fungible tokens; on Thursday, it introduced “blockchain-backed collectible avatars,” which buyers can use both on and off the site. People can use only fiat dollars to buy the avatars, and Reddit keeps 5% of each sale.
Reddit isn’t referring to digital collectibles as NFTs.
In a reminder of how poorly the crypto brand has been tarnished, Reddit’s statement makes a point of never referring to these avatars as NFTs, even though they are kept on the Polygon blockchain. Instead, they are simply referred to as “collectible avatars” in the marketing pitch.
“We view blockchain as one approach to empower and empower communities on Reddit,” the business stated in its release. “Reddit has always been an example of what online decentralization may look like; our communities are self-built and operated, and as part of our commitment to better empower them, we are investigating technologies to enable them to be even more self-sustaining and self-governed.”
Reddit is the most recent social network to allow members to choose an NFT as their profile image. Last week, Facebook started allowing certain creators to display their NFTs on a new “digital collectibles” page of their profile. The change comes just a month after Instagram introduced a platform for creators to display their NFTs. In May, Spotify began allowing select artists to use NFTs as profile images.
Back in January, sites like Reddit had numerous compelling reasons to explore incorporating NFTs into their offerings. The technology seemed to have solved a long-standing dilemma for admirers of digital artists. Their work may now be copied immediately and indefinitely online, lowering its value. Encoding art as non-fungible tokens seems to allow artists to better capture the value of the work they make and distribute online — while also allowing tech companies to earn a reasonable part of the transaction.
Demand for NFTs increased throughout 2020, finally bestowing high status on owners of “blue-chip” collections like CryptoPunks and Bored Ape Yacht Club. Twitter stated in September 2020 that subscribers to its premium product, Blue, will be able to validate their NFT ownership and showcase their purchases with hexagon-themed profile images. This function was introduced in January, just in time for the market to reach its peak.
What goes up must come down.
You already know what came next: Russia’s invasion of Ukraine, soaring inflation, collapsing tech stocks, and cryptocurrency prices following suit. People exchanged less cryptocurrency when its value decreased. (Except for a few high-profile situations in which too many people attempted to withdraw their funds, forcing different crypto lenders to seek bankruptcy protection.)
The cultural worth of NFT collections appears to have declined proportionately to their OpenSea floor pricing. Last month, ArtNet reported that several celebrities promoting NFTs the hardest — and who could have benefited handsomely from those purchases — had silently removed them from their Twitter avatars. Jimmy Fallon, Serena Williams, Reese Witherspoon, Shonda Rhimes, Lil Durk, Travis Barker, and Meek Mill are among them.
What was previously considered trendy, at least among an excessively online and crypto-zealous fraction of Twitter users, has now become horribly cringeworthy. Thus the saying, what goes up must come down.
Of course, by then, all of the social platforms had formed large teams to figure out how to implement NFTs into their own businesses. And a slew of products that entered development in January, when any junior product manager could have made a compelling case for them, arrived several months later looking out of date.
If social media platforms ever got the memo on crypto’s demise, they have yet to recognize it. Whether due to future optimism or knowledge of the significant buried costs involved, the firms’ NFT product roadmaps appear to remain mostly intact.
You’ll value your NFTs if you can use them in more places.
Meta, in particular, has continued to advocate for NFTs’ long-term potential, even portraying them as the foundation of the virtual reality metaverse it hopes to establish. Because individuals own NFTs, they may theoretically be transferred from service to service and platform to platform, resulting in a more flexible version of the internet than we now have.
In a June Facebook post, Mark Zuckerberg stated, “Ideally, you should be able to sign into any metaverse experience, and everything you’ve paid for should be right there.” “There is still a long way to go, but this type of interoperability will result in far better experiences for individuals and more opportunities for artists.” That is, the more areas you can easily utilize your digital goods, the more valuable they become, resulting in a larger market for creators.”
Stephane Kasriel, the head of the fintech at Meta, told the Financial Times this week that the company wouldn’t change its plans for cryptocurrencies “in any way” because of the current crash. “The chance [Meta] sees for the hundreds of millions of people who use our apps today to be able to collect digital collectibles and for the millions of creators out there who could make virtual and digital items to be able to sell them through our platforms,” he told the paper.
Maybe that chance will come up in the long run. It seems likely that platforms are right about the basic idea, which is that people want to own unique digital objects, but that they are wrong about making those objects. Or maybe they’re just too early.
In the meantime, social media platforms keep adding NFT features that people shrug at. As layoffs happen all over the tech industry because of the downturn, it’s worth asking if NFTs still deserve to be so important on the product roadmap or if NFTs should add to the growing list of things these companies can no longer afford.