Meta’s two main social networks, Facebook and Instagram, are planning a big move into the nonfungible token (NFT) market, according to reports.
By making it possible — and likely cheap — for Facebook and Instagram users to mint, trade and display NFTs, the social media giant is not only jumping into a very hot and lucrative part of the cryptocurrency market, Meta is taking an important first step in transforming itself into the metaverse powerhouse CEO Mark Zuckerberg wants.
See also: Facebook Rebrands as Meta in Push to Align With Metaverse
NFTs are unique and unchangeable — that’s what nonfungible means. They are digital assets that can hold any type of media, from pictures to videos to data and even smart contracts. Aside from storing the media, the tokens are traceable on the blockchain, providing proof of provenance.
Read more: What Are NFTs and Why Are They Crypto’s Newest ‘Next Big Thing?’
NFTs have several uses, such as a medium for artwork, but they are also widely used as avatars and to represent tradable — and saleable — in-game items in blockchain-based decentralized video games like Axie Infinity. Both uses have adapted easily to metaverses like Decentraland and The Sandbox.
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Meta’s move would also likely expand the size of the NFT market dramatically, both by exposing a far larger audience — Facebook now has 2.6 billion members — and by making it far simpler for people unfamiliar with cryptocurrencies and digital wallets to purchase them.
Read also: In the Metaverse, NFTs Can Buy Experiences, Luxury and Eyeballs
The NFT project is being pursued by teams at both Facebook and Instagram, the Financial Times (FT) reported Thursday (Jan. 20), adding that they were at an early stage.
NFTs have turned into a $44.2 billion business, blockchain intelligence firm Chainalysis reported earlier this month. It tracked the value of the cryptocurrency sent to the smart contracts in the two main types of cryptocurrency tokens used by Ethereum and compatible blockchains to mint NFTs.
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Another prime use case for offering NFTs on Facebook and especially Instagram is to give users a reason to open Meta’s Novi digital wallet. Created for the controversial Libra/Diem stablecoin project, the company recently revealed that Novi would support the Paxos stablecoin (USDP) on its 2 billion user WhatsApp messaging app.
Read more: Is Paxos the New Diem?
Paxos will allow WhatsApp users to send and receive payments anywhere in the world without fees and effectively instantly. Opening the payments tool to Facebook and Instagram, users would give Meta an in-house cryptocurrency also usable outside the platform — an idea that terrified central bankers and elected officials when Facebook announced the Diem stablecoin project in June 2019.
Once members have created digital wallets, loaded them with funds, and sold or purchased something, it would be far easier to convert them to making other purchases within Meta ecosystem.
And, they would have NFTs easily transferable to a future Meta-controlled metaverse, potentially attracting users.
Beyond that, there is a diversity case to be made.
Presuming Meta plans to keep the core NFT-building minimum prices down, the project could also open the NFT creation market up to a broader international audience where the price of minting a new NFT — $50 to $100, or even higher on Ethereum — puts them outside the reach of artists and other creators — as well as buyers — in many countries.
See also: From Famous Artists to Forgers, the Art World Embraces NFTs
NFTs are expensive to create because the vast majority are built on the Ethereum blockchain, where transaction fees — known as “gas” — have skyrocketed in the last year. But on competing blockchains that use the same token standards as Ethereum, the cost could fall to pennies without making them incompatible.
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