While Twitter’s new NFT profile display option has been met with a decidedly mixed response, it seems likely that we’re going to see more of the same from other platforms, as they look to tap into the rising popularity of NFTs, and facilitate more direct connection to NFT ownership for such display.
Which is probably little surprise – cryptocurrency was the most discussed topic on Reddit in 2021 and the platform has been testing the waters on digital currencies and transactions for some time, so it makes sense that it would also look to lean into NFTs.
But then again, much of those discussions of crypto, including NFTs, haven’t exactly been positive, with many Redditors highly critical of the space, and the perceived potential of the NFT market.
I mean, there are divisions across the board on NFTs, with most people seemingly firmly in the camp of either ‘these are the future’ or ‘these are total crap’. There are, of course, many flaws and issues with the NFT process, in relation to ownership rights, usage, copying, etc. But at the same time, the surge of attention suggests that there’s something there, and I suspect that there is a core functionality within NFT trading that will expand to the exchange of digital goods on a broader scale, especially in the coming metaverse shift.
Whether that means your $300k Bored Ape is going to be as valuable in a few years, or even months’ time, I wouldn’t be so sure.
Which is another issue. Many NFTs right now are already worthless, but they’re being used in ‘pump and dump’ scams to catch out unsuspecting investors who think that they’re latching onto a bargain – when really, the price of the piece has been artificially inflated by their friends and connections to make it seem like it’s on the rise, when it’s actually not.
That happens in many markets, but the crypto and NFT space is especially open to manipulation right now, due to lack of official oversight and the capacity for traders to obscure their identity.
Add to that the fact that NFTs are taxed as capital gains, and there’s even more motivation for the rich to use them as an offset, in order to reduce their tax burden moving forward.
Which is why there’s such a conflict in the burgeoning crypto market – while ideally, the community impact and traceability of the blockchain brings increased transparency and freedom, away from the interference of traditional gatekeepers and rule-makers, in reality, it also opens up these networks to manipulation. And accountants and investors are swooping on the opportunity.
Eventually, there will need to be some level of oversight and accountability, otherwise billions in tax payments could be lost through crypto platforms and trading. Which Government and regulatory authorities won’t allow. Which is why we’re now seeing crypto being banned in more and more regions, pending further assessment.
Over time, that could see the perceived benefits of crypto reduced, as it comes back into line with other monetary options, and NFTs are in the same boat, with enthusiasm for the space likely to die down as more buyers get burned, and more users call for increased security in their transactions.
But the trading of digital goods, beyond just profile pictures, will be big. It’s already huge in games like Fortnite and Roblox, and younger users are increasingly accustomed with spending money for in-app items, which will become a bigger focus as we all spend more time in expanded digital worlds.
That’s where it seems like the confusion over NFTs stems from – that there is clearly a value proposition there, a real use and value to virtual items. But I doubt the true benefits of such will lie in still, digital images.
Still, it also makes sense for social platforms to lean into the popularity of NFTs, and provide the option for users, and with Instagram also experimenting with its own NFT display tools, you can expect to see more of them coming in future.
Whether you like it or not.