After a difficult year for crypto, many are looking to the utility of non-fungible tokens (NFTs) as a signal of Web3’s longevity.
The recent collapse of centralized crypto firms Celsius, FTX and BlockFi proved — even to Web3’s most loyal proponents — that the industry must move its focus from NFT price speculation (aka “JPEG flipping”) to the real-world applications of blockchain technology.
Fortunately, NFTs have several practical use cases that mainstream platforms like Instagram, Twitter and Reddit are beginning to test. NFTs’ underlying technology enables buyers to track the provenance of digital assets, making them theoretically well-suited for the emerging creator economy in which more people are making a living online.
Instagram, the most visual social media platform, seems so far like the most natural fit for NFT integrations. If adoption takes off, users will not only be able to create Instagram visuals, but sell and own them too. Instagram’s move may be the most meaningful of all Web2 platforms, but Twitter and Reddit are also exploring this space with varying degrees of success.
Ahead, BFF compares the NFT rollout strategies between the three.
In January 2022, Twitter announced it would be integrating NFTs into the platform, allowing users to display digital collectibles as their profile pictures (PFPs) in the shape of a hexagon. The move excited crypto die-hards (known as “degens”), for whom showing off their prized JPEGs was the marker of status and identity.
However, for a platform built on words, Twitter’s NFT integration wasn’t earth-shattering. The hexagon PFP feature was only made available to paying users. While many prominent figures opted for the hexagon (including several BFF You holders!), it has not become a rite of passage for Crypto Twitter.
Another text-first social platform, Reddit, also decided to enter the NFT world in a somewhat unexpected, but spectacular, manner. In July, Reddit launched its marketplace and PFP collection of avatars and has since amassed 4 million new wallets, an onboarding exercise not to be sniffed at — particularly in a bear market. For context, Reddit accounted for 62% of Polygon NFT trading volume on OpenSea during October 2022.
Reddit went about the rollout in the right way, making the process simple and fun, avoiding Web3 jargon and referring to the avatars as “digital collectibles” rather than NFTs.
A few favorable points of note on Reddit’s Collectible Avatars:
“Reddit communicated a very simple value proposition that they were able to deliver on almost instantaneously,” observes Alexa Lombardo, founder and head of strategy at AtomicNo8, a creative studio working with clients across Web2 and Web3. “The ease, convenience and the value was there, and it was immediate.”
In May, Instagram announced its NFT integration giving users an ability to showcase their digital collectibles with a shimmery overlay signifying the image is, in fact, an NFT and automatically tagging both the owner and the creator of the image.
Fast-forward six months and the company is announcing Phase Two of the rollout, with plans for a multi-blockchain integration across Ethereum, Polygon, Flow and Solana. Starting in November, 2022 Instagram began allowing a select group of digital creators — including founding BFF Maliha Abidi — to mint and sell NFTs directly from the social media platform. According to CoinDesk, Instagram parent company Meta will not charge fees for displaying and sharing digital collectibles (NFTs), nor will it charge fees for selling NFTs until at least 2024. However, purchases made within the mobile app are still reportedly subject to app store fees.
Instagram’s integration is by far the biggest Web3 move of any social platform to date. If Instagram gets this right from a user experience perspective and manages to create a friction-free experience for its 500 million daily users, it could play a major role in getting Web3 to mass adoption.
Judging by the marketplace prototypes (see screenshot below), Instagram too opted to stay away from the Web3 vernacular, avoiding terms like “NFTs” and “gas fees”, in favor of “digital collectibles” and “blockchain fees” presumably to appeal to a non-crypto-native audience. Similar to Reddit, users are able to pay for the digital collectibles using their debit and credit cards.
And what about Instagram’s 3D avatar feature announced by head of Instagram Adam Mosseri back in February 2022? While avatars certainly do point to the future normalization of personal metaverse identities, one can only speculate that Instagram’s move to blockchain will eventually turn these avatars (and their accompanying assets) in to own-able NFTs.
If legacy Web2 platforms execute their NFT integrations properly, Web3’s “read/write/own” narrative, which describes creators’ ability to monetize their creations through blockchain technology, could come true. Web2 industry leaders appear united in their commitment to make the onboarding experience more user-friendly as they encourage their audiences to experiment with the new Web3 features.
“In the grand scheme of things, the biggest barrier for mass adoption is the friction in the onboarding process,” says Lombardo. “There are all these hoops we need to jump through in order to engage with this technology. Until we focus on better front-end user experiences that actually mask all that is going on in the back-end, we are not going to see mass adoption.”
Lowering this barrier also relies on eliminating Web3 jargon, which is understandably intimidating for new adopters: “This area is still new for so many,” says Alexandra Edmonds, product marketing lead for creator blockchain experiences at Instagram. “What we hope we can add to the ecosystem is making it more accessible, understandable, demonstrate its value to mainstream audiences at scale — and do so in a way that can lower barriers of entry for creators that are new to the space.”
As Web2 platforms experiment more and thereby create a more seamless user experience (UX), Edmonds predicts NFT integrations will invite more creators from a diverse range of geographies, crafts and backgrounds.
Lombardo agrees: “People don't necessarily need to know the tech, they are not here for how it works, they are here for what it does and what the benefit is,” she says.
For now, here are some points of friction that are still being resolved as Web3 integrations become more mainstream:
While buyers can pay in fiat, they still need a Polygon-compatible wallet to collect NFTs on Instagram, hence adding a major friction point in the user onboarding. This was not the case with Reddit NFTs, where many users may not have even realized they were creating digital wallets as part of the buying process. Instagram, of course, is trying to pull off a much more complex process with greater functionality.
“While the need for a Polygon wallet is not ideal, Instagram could build a bridge to solve that very easily in the future,” says Lombardo. “As a test case, this is a good way to gather how users engage with their platform in new ways.”
In Web3, creators are the lifeblood. This creator-first ethos is a relatively new phenomenon for the world of media, which has traditionally been bolstered by distribution models that prioritize corporate profits over all.
“We want to do whatever we can to support creators do what they do best,” says Edmonds, “whether that be making new art, building new communities or strengthening connections with their closest fans."
However, these new methods of community building are emerging and experimental. Creators and consumers alike need a growth mindset to enjoy the process and participate.
Royalties and platform fees continue to be a topic of debate in the NFT world. Platforms and creators are still negotiating what’s fair and developing the smart contract technology that (in theory) shares fees from crypto wallet to wallet. Web3 proponents continue to push in favor of generous creator compensation, which could hopefully move the needle.
“This is a democratization of the system, allowing creators to earn a living through their art and fans to support their favorite artists”, says Katherine Boiciuc, a futurist and director at Maximus International, a technology and innovation advisory firm.
Read More: Why Zero Royalties Stand To Hurt Diverse Creators The Most
The full effect of these developments by Web2 social media platforms will take time to unfold and is unlikely to have any significant impact on existing NFT collections. What it will likely do however, is create more opportunities over time for artists to monetize their work and reach global audiences in new innovative ways, hence empowering the creator economy.
Liya Dashkina is a VC, contributor to a number of DAOs, Web3 consultant, chapter lead at the Australian DeFi Association and an advocate for women in Web3.
This article and all the information in it does not constitute financial advice. If you don’t want to invest money or time in Web3, you don’t have to. As always: Do your own research.
