Why social networks do not stop pushing NFTs

The NFT boom of the last couple of years seems to be finally over for average consumers. For large social networks, however, it seems that the work is just getting underway.

The latest platform to embrace non-fungible tokens is Reddit, which on Thursday announced the arrival of “blockchain-supported collectible avatars” – unique profile pictures of artists riffing Reddit’s “Snoo” extraterrestrial mascot, giving buyers the right to use them on and off the site. The avatars can only be purchased with fiat currency; Reddit takes a 5 percent cut on each transaction.

As a sign of how badly damaged the crypto brand has become, Reddit’s announcement makes an effort to never refer to these avatars as NFTs, even though they are stored on the Polygon blockchain. Instead, they are in the marketing copy simply “collectible avatars.”

“We see the blockchain as a way to bring more authority and independence to society on Reddit,” the company said in a statement. “Reddit has always been a model for what decentralization can look like online; Our communities are self-built and driven, and as part of our mission to better empower our communities, we explore tools to help them become even more self-sustaining and self-governing. ”

Reddit is just the latest social network that offers users a way to set an NFT as a profile picture. Last week, Facebook began letting some creators display NFTs that they own on a new “digital collectibles” tab in their profile. The move came 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 remarkable is that they came just when the demand for NFTs and cryptocurrencies in general fell off a cliff. Here is Dan Milmo, who writes on Saturday at Verge:

Sales of NFTs totaled just over $ 1 billion (£ 830 million) in June, according to crypto-research firm Chainalysis, their worst performance since the same month last year when sales were $ 648 million. Sales peaked at $ 12.6 billion in January.

The cryptocurrency market, worth around $ 3 trillion in November last year, is now worth less than $ 1 trillion.

Back in January, platforms like Reddit had several good reasons to consider adding NFTs to their products. For enthusiasts, it seemed as if technology had solved a long-standing problem for digital artists: their work can be reproduced instantly and endlessly online, reducing value. By coding art as non-fungible tokens, it seemed that artists could be better able to capture the value of the work they create and share online – and enable technical platforms to capture a healthy percentage of the transaction.

Demand for NFTs increased through 2020, eventually giving owners of “blue-chip” collections such as CryptoPunks and Bored Ape Yacht Club a measure of social status. In September 2020, Twitter announced that it would allow subscribers to the premium offer Blue, authenticate their NFT ownership and highlight their purchases with hexagon-themed profile photos. This feature came in January, just in time for the market to reach its peak.

You know what happened next: Russia’s invasion of Ukraine, rising inflation, crashing technology stocks and cryptocurrencies plummeting with them. The less crypto was worth, the less of it people traded. (Except for some high-profile cases where too many people tried to get their money out, and drove various crypto borrowers to seek bankruptcy protection.)

The cultural value of NFT collections seems to have coincided with their floor prices at OpenSea. Last month, ArtNet noted that some of the celebrities who had pushed NFT the hardest – and who may have been in a position to take advantage of these sales financially – had quietly dropped them from their Twitter avatars. Among them: Jimmy Fallon, Serena Williams, Reese Witherspoon, Shonda Rhimes, Lil Durk, Travis Barker and Meek Mill.

What had once appeared elegant, at least to an extremely online and crypto-eager subgroup of Twitter users, suddenly seemed unbearably cruel.

Of course, by then, the social platforms had all set up large teams to figure out how to integrate NFTs into their own products. And a bunch of products that were on their way into development in January, when any junior product manager could have made a compelling case for them, came several months later and looked passé.

If social networks have ever received the note about the decline of crypto, they have so far refused to acknowledge it. Either out of optimism about the future or in recognition of the significant reduced costs involved, the companies’ NFT product roadmap appears to be largely intact.

I contacted Reddit, Meta and Twitter today to see if they would talk to me about how their NFT efforts are going; no one agreed to talk to me. It is a measure of their confidence in a possible comeback for NFTs as they at least are let go their NFT exhibits, no matter how indifferent the user base seems to be to them so far.

Meta in particular has continued to champion the long-term potential of NFTs, and even positioned them as a bedrock for the virtual reality meta-verse it seeks to build. The fact that NFTs are owned by individuals means in theory that they can be moved from service to service, platform to platform, creating a more interoperable version of the internet than the one we have today.

“Ideally, you should be able to log in to any metaverse experience, and everything you’ve bought should be there,” Mark Zuckerberg said in a June Facebook post. “It’s a long way to get there, but this type of interoperability will provide much better experiences for people and greater opportunities for creators. This means that the more places you can easily use your digital goods, the more you will value them, which creates a larger market for creators. “

Stephane Kasriel, Meta’s head of fintech, said Financial Times this week that the company would not change its cryptocurrencies “in any way” due to the current crash. “The opportunity [Meta] “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 out there who can potentially create virtual and digital goods to sell them through our platforms.” , he told the newspaper.

Maybe that opportunity will materialize eventually. It seems quite possible that platforms have the basic idea here – that people really want to own unique digital objects – but the product execution is wrong. Or maybe they are simply too early.

Meanwhile, social platforms continue to release NFT features only to be met with shrugs. As the decline in technology leads to layoffs across the board, it is worth asking whether NFTs still deserve such a prominent place on the product’s roadmap – or whether they belong on the growing list of goods these companies simply can no longer afford. to.