Snap will be the last giant to roll out NFTs – just as the market cools down in the middle of the crypto winter
Top line
Snap explores ways for creators to showcase NFTs on their platform, the Financial Times reported on Wednesday, and together with technology giants Meta, Reddit and Spotify, launch NFT features in the midst of a declining cryptocurrency market.
Snap plans to test ways for creators to showcase NFTs from the end of August.
Keywords
Snap’s new feature will allow users to create off-platform NFTs and display them on Snapchat as augmented reality filters, for which the platform has been known since 2015.
But that’s not happening yet, as Snap plans to test the feature with a few content creators by the end of August, according to the Financial Times.
Snap joins several of its peers in early attempts at NFTs this summer: Reddit announced a marketplace for NFT avatars on July 7, Facebook launched NFT integrations on June 30, and Instagram and Spotify did the same in May.
These companies’ NFT product launches come in the middle of a crypto winter and reduced NFT sales, which totaled just over $ 1 billion in June, down from $ 12 billion in January.
And it’s all happening against a broader decline in technology, in part due to reduced earnings forecasts – Snaps’ share price, for example, fell from $ 46 per share in January to below $ 15 now.
Crucial quote
“If social networks have ever received the note about the decline of crypto, they have so far refused to acknowledge it,” Casey Newton wrote last week in his technical newsletter Platformer. “Either out of optimism about the future or in recognition of the significant reduced costs involved, companies’ NFT product roadmaps appear to be largely intact.”
Key background
NFTs, or non-fungible tokens, provide ownership of a unique digital object. They are entries on a blockchain, the decentralized digital ledger technology on which cryptocurrencies such as bitcoin are based. What makes NFTs distinct, however, is in the name: They are non-fungible, which means they are unique, undoubtedly authentic and irreproducable. The first known NFT was minted, or created, in 2014, but the NFT market did not take off until last year, when NFT sales brought in $ 25 billion. TikTok and Twitter were some of the first common social media platforms to explore NFTs. TikTok launched a creator-led NFT collection in September 2021, a rollout that some considered messy and largely unsuccessful. Twitter made NFT-based profile pictures available to paying users in January. These efforts – in addition to the recent ones from Snap and others – are another premise in the pressure of social media companies to compete for the bulk of the $ 100 billion content creation economy.
Main critic
Because NFTs host blockchain platforms that require extensive revision, it takes a lot of energy to create them, which has resulted in widespread criticism of their negative environmental impact. A digital artist estimated that the extraction of a single Ethereum-based NFT used enough energy to run a house in the United States for almost five days.
What we do not know
How far technology companies will take these early NFT rollouts. Demand is down right now, but with the historically volatile crypto market it can go up again. In particular, though, Reddit’s announcement of its NFT avatars does not mention the word “NFT,” but instead describes them as “blockchain-supported collectibles.”
Tangent
Last week, James Murray, the former director of the US Secret Service, announced that he would retire at the end of July and join Snap as security chief.
Further reading
Snap explores plans to let users view NFTs as filters (Financial Times)
What is an NFT – and should you buy one? (Forbes)
Snaps’ forecast for reduced profits sends shares down 30%. Which technology giant is next? (Forbes)
Bitcoin investors fear that the cryptocurrency crash will be much worse (Fortune)
What is the environmental impact of NFTs? (Vice)
