For the average consumer, the NFT boom of the last few years seems to be definitively over. For the big social networks, however, the work seems to have just begun.
The latest platform for non-fungible tokens is Reddit, which on Thursday announced the arrival of blockchain-based collectible avatars, unique profile photos of artists who hark back to Reddit’s Snoo Alien mascot, and give buyers the right to own them on and off the site. Avatars can only be purchased with fiat currency; Reddit charges 5% on each transaction.
Reddit’s announcement strives to never label these avatars as NFTs
As a sign of the severity of the crypto brand damage, Reddit’s announcement strives to never designate these avatars as NFTs, despite being stored on the Polygon blockchain. Instead, they are simply collectible avatars in marketing copy.
We see blockchain as a way to bring greater autonomy and independence to communities on Reddit, the company said in its announcement. Reddit has always been a model of what online decentralization could look like; Our communities are self-built and self-reliant, and as part of our mission to better empower our communities, we’re exploring tools to help them be even more self-reliant and self-reliant.
Reddit is just the latest social network that offers users the ability to set an NFT as their profile picture. Last week, Facebook began allowing some creators to feature NFTs they own in a new digital collectible card on their profile. The move comes a month after Instagram added a way for creators to showcase their NFTs. Spotify began allowing some artists to use NFTs as profile pictures in May.
What makes these moves extraordinary is that they came just as demand for NFTs and crypto products in general was falling off a precipice. Here’s Dan Milmo writing in the Guardian on Saturday:
NFT revenue in June was just over $ 1 billion ($ 830 million), according to cryptocurrency research firm Chainalysis, its worst performance since the same month last year, when turnover was $ 648. millions. Sales peaked at $ 12.6 billion in January.
The cryptocurrency market, which was worth around $ 3 trillion last November, is now worth less than $ 1 trillion.
In January, platforms like Reddit had several good reasons to consider adding NFT to their products. For aficionados, it seemed technology had solved a long-standing problem for digital artists: their work can be instantly and indefinitely reproduced online, reducing its value. By coding art as non-fungible tokens, it seemed artists could better capture the value of the work they create and share online and allow technology platforms to acquire a good percentage of the transaction.
Demand for NFT increased throughout 2020, ultimately bringing a measure of social status to owners of top-notch collections like CryptoPunks and Bored Ape Yacht Club. In September 2020, Twitter announced that it would allow subscribers to its premium plan , Blue, to authenticate their NFT ownership and highlight their purchases with hex profile images. This feature arrived in January, just in time for the market peak.
What once looked elegant suddenly seemed unbearably bleak
You know what happened next: the Russian invasion of Ukraine, rising inflation, falling tech stocks, and falling valuations of cryptocurrencies with them. The less the cryptocurrency was worth, the less it was traded. (Except, of course, for some high-profile cases where too many people were trying to withdraw their money, prompting various cryptocurrency lenders to file for bankruptcy protection.)
The cultural value of the NFT collections appears to have decreased in proportion to their reserve prices on OpenSea. Last month, ArtNet found that some of the celebrities who pushed NFTs the most and could have benefited financially from those sales had quietly removed them from their Twitter avatars. Among them: Jimmy Fallon, Serena Williams, Reese Witherspoon, Shonda Rhimes, Lil Durk, Travis Barker and Meek Mill.
What once seemed captivating at least to a subset of extremely online Twitter users and cryptocurrency experts suddenly seemed unbearably pathetic.
Of course, by then, the social platforms had all formed large teams to understand how to integrate NFTs into their products. And a number of products that went into development in January, when any junior product manager could have convinced them, arrived a few months later and looked good.
If social networks have already received the note about the disappearance of the crypto, so far they have refused to recognize it. Whether it’s optimism for the future or recognition of the significant sunk costs involved, companies’ NFT product roadmaps seem essentially intact.
The more places you can easily use your digital assets, the more you appreciate them.
Today I reached out to Reddit, Meta and Twitter to see if they would tell me about the status of their NFT efforts; nobody agreed to talk to me. It is a measure of their confidence in an eventual return of NFT that they at least publish their NFT showcases, no matter how indifferent the user base seems to them so far.
Meta, in particular, continues to support the long-term potential of NFTs, even positioning them as the foundation of the virtual reality metaverse it attempts to build. In theory, the fact that NFTs are privately owned means that they can be moved from one service to another, from one platform to another, creating a more interoperable version of the internet than we have today.
Ideally, you should be able to access every Metaverse experience, and everything you’ve purchased should be there, Mark Zuckerberg said in a Facebook post in June. There is still a long way to go, but this kind of interoperability will provide much better experiences for users and more opportunities for developers. This means that the easier you can use your digital assets, the more you appreciate them, creating a larger market for developers.
Stephane Kasriel, head of Metas fintech, told the Financial Times this week that the company would not change its crypto plans in any way due to the current crash. The opportunity [Meta] he sees is for the hundreds of millions or billions of people who use our apps today to collect digital collectibles and for the millions of creators who could potentially create virtual and digital goods to sell through our platforms, he told the newspaper.
Maybe that opportunity will present itself at some point. It seems entirely possible that the platforms here have the right basic idea, that people want to own truly unique digital items, but the execution of the product is wrong. Or maybe I’m just too early.
In the meantime, however, social platforms keep releasing NFT features that just shrug. With the tech recession driving layoffs across the board, it’s worth asking whether NFTs still deserve such a prominent place on the product roadmap, or whether they are on the growing list of items these companies can no longer afford.