NFTs Are Coming to Instagram: Why Meta is Bullish on These Cryptos and You Should Be Too

Back in May 2022, Meta platforms (META 10.25%) said that NFT (non-fungible token) functionality will come to social media sites Facebook and Instagram, allowing users to post or show off their digital collectibles to followers. But based on a recent announcement, it has added more features, which will essentially turn Instagram into an NFT marketplace.

Details suggest that creators will be able to list NFTs on their profiles available for purchase, similar to other notable NFT marketplaces such as OpenSea or SuperRare. Furthermore, a tip option will be created that allows users to send money to their favorite content creators. All this is made possible by connecting a digital wallet for user profiles to seamlessly receive and send payments via cryptocurrency.

The decision to enable full NFT functionality, rather than just a place to showcase digital collectibles as first planned, appears to be a move in the right direction for Meta. While you might think this translates into good news for Meta’s stock, investors will find the real opportunity if we drill down a little further.

The next big blockchain

Meta announced it Polygon (MATIC 16.72%) will be the primary blockchain supporting NFT transactions. Fortunately, you can buy Polygon’s native cryptocurrency, MATIC. Like a stock, the more a cryptocurrency is in demand, the more its price increases. As Polygon becomes the primary blockchain for Instagram NFTs, there could be an increase in demand for MATIC.

Meta chose Polygon for a handful of reasons. First, Polygon is extremely quick to process transactions. Unlike Ethereum, which can get stuck in traffic and cause speeds to drop to just a trickle charge, Polygon boasts impressive speeds of up to 7,000 transactions per second. This high throughput is essential to ensure that Instagram users have a smooth experience.

Additionally, Polygon has some of the lowest transaction fees of any blockchain. This means that selling and buying will not require any additional payments from users, which has plagued Ethereum during high usage.

Finally, the blockchain is extremely environmentally friendly. The blockchain is so energy efficient that it is already carbon neutral, and there are plans for it to eventually become carbon negative.

The functionality that Polygon presents is slowly becoming the best kept secret in the blockchain world. During 2022, a number of companies have partnered with Polygon, such as Disney, Coca Colaand now Meta searching for ways to make transactions faster and cheaper.

This is where the real opportunity presents itself for investors: Polygon is down more than 60% from its all-time high, but has arguably had the best year of any blockchain in terms of performance. If companies continue to pay attention to what they offer over the coming years, it seems more than likely that demand will return to all-time highs.

Data storage, but on a blockchain

There is another benefactor at the center of this news. Known as Arweave (YEAR 10.89%), this blockchain will be used by Instagram as a decentralized storage solution to archive creators’ digital collectibles. Like Polygon, investors can purchase the AR token as a means of investing directly in the Arweave blockchain.

Like Polygon, there are a few features that made Arweave an easy way to be a part of Instagram’s new NFT functionality. First, perhaps, is Arweave’s duration. All data stored on Arweave stays there forever.

In addition, Arweave’s blockchain capacity is virtually infinite. Most importantly, because Arweave uses a blockchain and is inherently decentralized, user data remains anonymous, censorship-resistant and immutable.

The decision to use Arweave is one of the first examples of a large technology company like Meta exploiting its potential. But in the blockchain world, Arweave has been recognized as an innovator for quite some time now. Cryptocurrencies like Cosmos, Polka dot, Avalanche, NEAR, Solanaand The graph everyone uses Arweave to store transactional data. By doing so, this helps make their own blockchains less bulky and more streamlined. The potential use cases for Arweave over the coming years seem endless in a world of ever-increasing data.

The way forward

Consequently, since the news dropped, Polygon and Arweave have been on a tear. Polygon is up almost 40%, and Arweave posted an increase of almost 60% in a few hours, trading as high as $17, but has since retreated to around $10. However, despite these gains, Polygon remains well below its all-time high, and Arweave is down nearly 90% from its peak of around $85.

In my opinion, the value of these two cryptocurrencies is not sufficiently reflected in their prices, and their future potential is definitely not properly priced either. It would be hard to imagine a scenario where more use cases do not arise, especially considering that these two blockchains have already partnered with some of the most prominent companies in the world.