FT Cryptofinance: Meta tries to revive the NFT party

Hello and welcome to the FT Cryptofinance newsletter. This week we take a look at Meta’s push into non-fungible tokens.

If it’s been a painful year to own cryptocurrency, it’s been even worse if you’d spent money buying a unique digital collectible known as a non-fungible token.

While flagship tokens bitcoin and ethereum have only lost about 70 percent of their value, the average price observed in the markets for all NFTs traded has fallen 85 percent this year to $154 in the third quarter, according to data tracker NonFungible.com.

These symbols usually represent art or memorabilia, so artists and sellers have more control over the ownership and sale of their work. Theoretically, it gives them more financial freedom, even if the art is just dubious pictures of unenthusiastic monkeys.

But the bottom has fallen out of the market as the crypto bubble popped, buyers lost money and gained a better understanding of what it really means to own a digital image online.

Faced with such profound uncertainties, it would take a special kind of bulletproof optimism to make it big in the NFT market right now. Enter Meta Platforms.

This week, the company once known as Facebook said creators will be able to create their own NFTs and sell them directly to fans, both on and off the Instagram platform.

If anyone is impervious to doubters, it’s Meta. CEO Mark Zuckerberg has spent nearly $10 billion building the Web3 and metaverse so far this year and will spend even more next year. Investors have cut 75 percent of the value of the company this year in horror at the size of the experimental efforts, but it plows on. The FT first reported the company’s intentions back in January, so Zuckerberg and co have had plenty of time to rethink their plans.

Charles Storry, co-founder and head of growth at crypto index platform Phuture, told me he believed Meta’s decision was an “attempt by Meta to save itself from another terrible quarter . . . the chatter in the industry is that this is a desperate attempt to bring a certain degree of excitement for investors.

Clearly, it’s going to take more than an embrace of NFTs to rake in $89 billion from Meta’s market cap, but the company seems committed.

The announcement coincided with Creator Week, a Meta initiative that features events designed to help creators grow, connect and build careers. Over at Facebook, the company’s “Stars” feature is expanding to allow users to pay creators when they rate their content.

Can Meta’s interest revive the NFT market? A big-name buy-in with massive distribution could provide the missing boost missing in NFT land these days. But ether and solana, the symbols most associated with NFTs, are flat.

Questions of timing – and indeed the point of NFTs – remain just as relevant. The retail investors who got burned are no longer flooding the markets.

To the extent that an NFT market still exists, the social media giant is wading into a market filled with competition, including established crypto-native marketplaces such as OpenSea, Rarible, SuperRare, and LooksRare. . . the list goes on and on. Rival social media platform Reddit also launched a “collectible avatar” marketplace this summer. Instagram doesn’t even get first-mover advantage.

And then there is Meta’s brand reputation to consider. Operators of NFT marketplaces must be on guard against insider trading, and whether certain people received tips about upcoming NFT sales. Another risk is laundry trading, when the same party is both seller and buyer, and generates extra fees for no financial purpose. Regulators have long had concerns about Meta’s commitment to privacy and ethics. It must show that it has changed.

However, the problem for the market is: who is bigger than Meta? If the embrace of NFTs can’t save the market, then it might be over for good. But what do I know? Maybe I want to have fun staying poor.

What do you think of Meta’s new NFT policy? Will it bring a much-needed resurgence to the niche market? Send me an email at [email protected].

Weekly highlights

• A rare M&A deal. Digital asset platform Bakkt has agreed to buy crypto platform Apex Crypto for a price of up to $200 million. Bakkt CEO Gavin Michael said the acquisition will expand the company’s crypto client base, and could even enable the firm to unlock opportunities that appeal to the “next generation of consumers,” such as NFTs.

• Goldman Sachs, MSCI and crypto data company Coin Metrics announced the launch of “datonomy”, a new classification system for digital assets that can help people see the complex world of crypto.

• The Hack of the Week was at crypto exchange Deribit, which posted a tweet on Wednesday saying its hot wallets had been compromised to a value of 28 million dollars. The year is only getting worse for the Panama-based crypto platform, which watched as Three Arrows Capital, which fell into liquidation, failed to repay an $80 million loan this summer.

• The crypto C-suite resignation train continues to roll. Coinbase’s Chief Product Officer Surojit Chatterjee resigned, claiming that it is “now time to step off and take a breather”. He plans to “help Coinbase grow” by serving as an advisor to CEO Brian Armstrong.

• The search for an ideal “crypto hub” continues as exchange platforms Huobi and OKX pivot to the Caribbean. The former plans to move its headquarters there, while the latter secured registration in the Bahamas and opened a regional hub in Nassau. Both follow in the footsteps of Sam Bankman-Fried’s FTX, which moved from Hong Kong to the Bahamas in 2021. Read our story here.

Soundbite of the week: Ethereum co-founder hits on Elon Musk’s Twitter blue check pitch

Ethereum co-founder Vitalik Buterin spoke about what has become the talk of the “digital square” this week: whether Twitter should charge money for those who have a “verified” blue tick against their profile (full disclosure: I have one too).

With the exception of “more factual confirmation”, Buterin warned that allowing users to purchase blue ticks could harm the feature’s “anti-fraud role”.

“How well this works depends on exactly how much due diligence is done to ensure that blue checks are who they say they are. ‘Pay $8 per month and call yourself whatever’ would hurt the blue check’s anti-fraud role.”

Data mining: Dogecoin. . . to the moon?

The price of the joke crypto token dogecoin soars as Elon Musk completes his takeover of Twitter.

Musk has been a longtime fan of the dog money, and his rise to “Chief Twit” has excited dogecoiners.

Figures shared by data provider CryptoCompare show that the token’s value has increased by more than 100 percent since the beginning of October.

“Some people are taking Musk’s tweets as a sign of intent to connect Twitter and dogecoin, which is driving a huge surge in activity,” Edmond Goh, head trader at crypto-liquidity provider B2C2, told me via email.

Although a small time frame, this also paints a stark contrast to the “serious” cryptocurrencies that have been stuck in a post-crash freeze for months. It also shows what even a semi-coherent narrative can do for crypto tokens – the kind of special sauce that has been lacking across the industry’s more popular coins for months.