Brian Nguyen refers to himself as a “whale,” a cryptocurrency term used to describe collectors of high-value non-fungible tokens (NFTs). “I’m interested in buying the expensive, higher levels,” said Nguyen, a venture capital adviser based in Los Angeles.
But recently, the 28-year-old has not been focused on popular and pre-established NFT collections like those of Bored Ape Yacht Club or CryptoPunks. He has acquired Reddit Collectible Avatars, a new NFT initiative from the community-based social platform.
Despite being only four months old, Reddit’s NFT marketplace, called Vaults, has already become a $10.5 million market. And with 2.3 million Reddit Avatar owners, the platform’s number of active users has surpassed those of OpenSea, which emerges as the largest NFT marketplace. Reddit’s Collectible Avatars, variations of the site’s signature mascot, Snoo, are designed by artists active in the platform’s comics and digital art subcommunities. Ranging in price from $10 to $100, they are generally available and can be purchased via credit card. But the avatars have quickly sold out, and have fetched high prices on the secondary market.
Nguyen estimates he’s spent more than $100,000 on Reddit Avatars so far, mostly through purchases on OpenSea. He’s particularly interested in a collection of Reddit avatars called the Midas Touch, and has already bought five of the gold-colored avatars for $15,000 each.
NFTs give users social power in their communities
Reddit’s avatars are used as profile pictures for Reddit users, giving the pictures a glow-like effect when commenting in forums. “People don’t know who you are when you post on Reddit, but an expensive NFT gives you more credentials,” Nguyen said. In addition to considering them a long-term investment, he calls the avatars a “social flex,” akin to driving an expensive Ferrari or Lamborghini. And in terms of instant recognition, Nguyen said an avatar profile picture is the equivalent of being given a blue verified tick on Twitter.
As Twitter’s verification system undergoes changes under the helm of new CEO Elon Musk, the social media platform may take cues from Reddit Avatars and adopt something similar in the future, according to Andrea Baronchelli, a professor at City University of London who studies the crypto and NFT space . “It’s a new tool, very flexible. It’s perfect for community engagement, he said.
Reddit chose to store its NFTs on a blockchain called Polygon because of its low-cost and sustainability commitments, according to a press release. “The system is simple and effective,” Baronchelli said. “And the fact that there are low fees is very appealing.” The use of credit cards as payment further simplifies the process, Baronchelli said, as it ties the abstract concept of the blockchain to something used on a daily basis in reality. “Simplicity is the key,” he said.
A key part of Reddit’s surprising NFT success is the platform’s community, according to Merav Ozair, a blockchain expert and fintech professor at Rutgers Business School. The majority of NFT and blockchain users discuss their activity on platforms such as Reddit, in addition to Telegram and Discord. “This is where you find them,” Ozair said. “Reddit creates something for the community itself.”
Although Reddit isn’t as widely used as social media like Twitter or Instagram, Ozair said the Avatar concept could eventually move to those platforms — especially since they’ve already expressed interest. In January, Twitter announced that NFTs could be used as profile pictures for members of its Twitter Blue subscription service, while in August Instagram began testing “Digital Collectibles,” allowing a handful of creators to share NFTs on the platform. “Now, after Reddit, maybe they have a business model for how to do that,” Ozair said.
Despite the popularity of the NFTs, Reddit refuses to use crypto terminology
Another factor in Reddit’s success has been the push towards avatars from different companies, as a way to incorporate NFTs. “It’s a theme I see everywhere. Creating an avatar is what everyone is talking about right now: JPMorgan, Microsoft, big fashion designers,” Ozair said. In February, JPMorgan became the first bank to enter the metaverse, creating a lounge in the blockchain-based world Decentraland where people can participate as digital avatars. In October, Microsoft announced ‘Mesh avatars’ for Microsoft teams, where meeting attendees are replaced by digital versions of themselves. And in 2021, Gucci partnered with social media app Zepeto to create 3D wearable avatars Gucci outfit.
NFT avatars are particularly useful when it comes to social media, as they can be used as a form of authentication, according to Ozair. “Because it’s unique, if I own it, only I own it and no one else can pretend it’s them. It has a great power.”
A noticeable aspect of Reddit’s new initiative is the absence of the term “NFT” or other cryptocurrency jargon. “They chose a good path in branding,” said Arun Sundararajan, a professor at NYU who specializes in digital technologies. “There’s kind of a mixed association in people’s minds about NFTs right now.” In recent months, crypto and NFTs have been associated with fraud and severe economic downturns.
Ditching this kind of terminology also made the process less scary for consumers, Sundararajan said. “Reddit holds the user’s hand, which makes it seem like a more natural purpose than anything in the blockchain world.” After the advent of the internet, user-generated websites such as WordPress and social media platforms emerged following a realization that the majority of the population needed an easier form of entry, Sundararajan said. “The success was partly driven by the fact that people didn’t want to deal with uncertain technological details.”
While NFTs have been surprisingly difficult for users to access, Reddit simplified the process by using understandable terminology, integrating the new market into a familiar platform and not bothering or scaring consumers with the actual technology behind the avatars, Sundararajan said. “I think a lot of Web3 companies haven’t learned that yet.”
