NFT trading has grown significantly over the past few years. These blockchain-based digital works of art are being sold for exorbitant prices in the best markets. OpenSea, the Ethereum-based NFT marketplace, has been the reigning king when it comes to trading volume. concerning. In January 2022 alone, the platform recorded NFT sales worth $5 million.
Therefore, suffice it to say that the NFT market is an extremely lucrative place. Perhaps that’s why Instagram is also looking to throw its hat into the NFT ring. At the South by Southwest (SXSW) conference held in March 2022, Mark Zuckerberg announced that NFTs would soon be coming to Instagram. This is after the company shared its plans to create an immersive metaverse, of which NFTs would be a core focus.
The potential of Instagram as a marketplace
At the SXSW conference, Zuckerberg said, “Hopefully in the next few months you can create NFTs in Instagram.” It will be an incredibly monumental achievement as the popular social media platform has a user base of over a billion people. However, rolling out changes under the hood to accommodate NFT typing for so many people will be a daunting task, even for Meta.
So far, Opensea has done very well. With their 1.4 million users and a transaction volume worth $23 billion, they sit at the top of the NFT game. But with the possible introduction of NFTs on Instagram, Opensea may have to vacate its throne.
Deutsche Bank analysts predict that Instagram’s introduction of NFTs can bring millions of new users to participate in NFT trading, potentially generating billions in revenue for the social media giant.
Deutsche Bank predicts that Instagram will have 2.2 billion monthly active users in 2023. According to their estimates, even if 2% of those users start trading NFTs, that would create a market of 44 million people. That’s about 31 times more users than Opensea.
As a theoretical exercise, Deutsche Bank has assumed that if each user performs three NFT transactions, and those transactions are worth an average of $250, this will translate to $33 billion in trading volume for the platform. That’s $10 billion more than Opensea’s current trading volume.
And if the average transaction fee for all transactions were around 2.5%, Instagram would have an annual revenue of around $1.7 billion.
How Instagram Embraces Art
While Instagram is primarily used for socializing with friends and family, several artists use it as a platform to showcase their talents. Many content creators and brands already have a significant presence on the site. It is an exhibition of various art forms such as photography, animation, short films, loops, memes and music.
By using chain hitting, these artists and brands can create a new business avenue for themselves. This will benefit their existing subscribers while attracting new fans with assets that can appreciate over time.
Meta being a monumental giant in the tech space, they can also innovate in the way NFTs are traded. Most NFT traders complain about the high and volatile transaction fees associated with most blockchain-based markets. Meta can work to reduce transaction fees by creating the necessary blockchain infrastructure themselves.
They can also host cheap NFTs like NBA TopShot or OneOf. This will enable wider access to NFTs, allowing millions of people on the platform to purchase affordable digital assets.
NFT market growth
Deutsch Bank recently shared that NFT transaction volumes in 2021 were 250 times higher than in 2020. An analyst from the bank further explained that the market opportunity for new investors is “very large”.
“Bringing NFTs to Instagram’s broad audience has the potential to energize the overall market (“going mainstream”). We believe Instagram will simplify the process of buying/selling NFTs, lowering barriers to entry. Additionally, we believe that Insta’s strong global brand recognition will lend itself to legitimizing NFTs, which could serve to erode purchase hesitancy across the company’s audience,” said the analyst according to an article by CoinMarketCap.
NFT and Web 3.0 enthusiasts strongly believe that the future of money and the web should be decentralized. There is a lack of trust in big tech companies and their control over people’s data and content. So when it comes to Instagram, which is owned by Meta, one of the biggest tech companies in the world, trust issues are bound to arise. The platform will facilitate and store its users’ data, which may be frowned upon by those involved in the crypto/web 3.0 movement.