Unlike DeFi, which presented opaque regulatory and compliance risk for major brands, NFTs provide an opportunity to retain digital IP and activate online communities in ways that were never before possible. (seretonin.co)
After a hot 2021 and half of 2022, NFTs trended beyond the crypto community. Especially after some high-profile NFT sales, including digital artist Beeple selling his “The First 5,000 Days” piece for over $69 million in March 2021.
The below graphic shows the monthly volume of Ethereum transactions on OpenSea NFT marketplace. OpenSea is currently the largest NFT marketplace. The buzz around NFTs cooled off in the second half of 2022, likely due to inflation and overall economic uncertainty. You can view this Dune query here.
Despite the falling NFT sales, 2022 started to see the integration of NFTs into web2 social media companies. Reddit’s NFT avatars, and Facebook/Instagram’s entrance into the digital collectibles sphere are some examples of the early adopters of NFTs in social media companies. Although the NFT craze is over, social media companies see a new value proposition created by integrating web3 technology.
In this post, I will go through NFT integrations on popular social media platforms and talk about the future of NFTs on web2 platforms.
Reddit NFTs
The social news aggregation and forum website, Reddit, started offering the opportunity to make custom collectible avatars in its avatar builder in July 2022. These independent artists that minted these avatars can sell them on OpenSea for users to bid on.
Reddit uses their own digital wallet called the Vault to manage NFTs directly on the web. According to this Reddit press release , collectible avatars are stored on Polygon, an Ethereum-compatible blockchain due to Polygon's, “low-cost transactions and sustainability commitments.”
Chief product officer Pali Bhat announced during a TechCrunch Disrupt panel in October 2022 that Reddit users have created over 3 million Vault crypto wallets to date.
Reddit has offered the ability to create custom avatars for a few years now, but what makes Collectible Avatars different than their other custom avatars?
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They are made available for purchase, and artists are paid for each avatar sold
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These avatars are backed by blockchain technology, which gives users the right to use the art on and off Reddit.
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Each avatar is priced at a fixed amount, and can be purchased with fiat currency.
Reddit offers a unique community ran platform, which is attractive for those looking for a more decentralized social media experience. This quote taken from its July 2022 press release sums up Reddit’s vision for how they will continue to explore Web3 tools:
Reddit has always been a model for what decentralization could look like online; our communities are self-built and run, and as part of our mission to better empower our communities, we are exploring tools to help them be even more self-sustaining and self-governed.
Meta Digital Collectibles
Meta announced in May 2022 that both Instagram and Facebook are testing out NFT functionalities with select U.S. creators and collectors. This feature allows users to connect a crypto wallet, share digital collectibles on their profile, and tag the collector and creator.
According to that Meta blog post, the Ethereum and Polygon blockchains are supported, with Flow and Solana integrated in the future. Unlike Reddit, Facebook would not offer a digital wallet but will allow the integration of third-party wallets, including MetaMask, Rainbow, Trust Wallet, and with Coinbase, Dapper, and Phantom, coming soon.
Meta digital collectibles are stored on the Arweave blockchain, which offers permanent data storage. The below Tweet thread from Arweave founder Sam Williams details how Arweave technology works and how it will enhance the quality of the NFT integration in Meta products.
Twitter is a popular platform for the crypto community to share new ideas and promote new projects, so it is no surprise that the company sees value in web3. In a Tweet from @TwitterDev, NFT Tweet tiles were announced to be in testing:
The NFT Tweet Tiles allow users to buy, sell and display NFTs with links to third-party NFT marketplaces, which include Magic Eden, Rarible, Dapper Labs, and Jump.trade.
In January 2022, Twitter announced that IOS users can now integrate NFTs as verified profile pictures through the OpenSea API. This is only accessible to Twitter Blue users and was only accessible for a limited number for testing reasons.
With the active crypto community on Twitter, this integration is attempting to boost subscribers for Twitter Blue.
2023 Predictions for NFTs on Web2 Platforms
In 2023 I expect to see more established web2 companies integrate web3 tools and build unique brands and communities by incorporating NFTs. Tech companies are taking calculated approaches for how to integrate this new technology. This allows companies to retain their web2 architecture and user experience and build new communities.
The current web3 stack does not offer the user experience for mass adoption. Accessing the decentralized internet with a digital wallet is not the smoothest process for the average user, so that is where familiarity with centralized platforms and business models makes this technology sustainable.
Web3 technology will likely create challenges for some web2 companies to properly communicate these new integrations with users that do not understand the technology or view it as a scam. The proper integration of web3 technology will set some companies apart and can create a new community of passionate users. Social media companies like Meta, Reddit, and Twitter already have active crypto communities, so they will likely continue to grow and incorporate more web3 technologies.
For a more comprehensive read on the integration of web3 into web2 platforms, I recommend reading the marketing firm and product studio serotonin.co roadmap for what they coin as “web2.5.”
“Web2.5 is the adoption of web3 assets like NFTs within web2 infrastructure that allow for strong discovery, user experience, and brand retention.”
Final thoughts
I am very excited to see established companies continue to explore new technologies and connect with new communities, and I believe 2023 will bring lots of that. The first NFT craze is over, but companies are now seeing real value in building a brand and giving users the opportunity to own a piece of it.
I would love to hear some feedback on this post. Let me know if you have had any experience with web3 technology on these social media platforms or if you have any predictions for how crypto adoption will go in 2023.
Reach out on Twitter (@alexgfisher124) and check out my street art on Instagram (@alexfishermedia_)
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