Meta's NFT Marketplace and The future of Decentralization in the Metaverse
Meta (Facebook) joins the $41 billion NFT market after announcing plans to integrate NFTs into its social network platforms such as Instagram and Facebook. With this move, Meta will launch a marketplace that will allow people to not only trade NFTs but also create and display them on Facebook and Instagram.
Reports about the move by the tech conglomerate sparked both optimism and concern among some members of the blockchain and crypto community. Already, Meta has pushed to hire more employees and succeeded by recruiting some hundred people who were previously employed with Microsoft. With Meta barrelling through silicon valley hiring the best people for the job, Apple has moved to offer generous bonuses and stock options to its employees so as not to lose them.
In this article, we examine the implications of Meta’s move, both for the NFT market and cryptocurrencies as a whole.
Will Meta's move make NFTs More Mainstream?
NFTs could gain higher visibility and recognition from Meta's social media platforms given that Facebook, WhatsApp, and Instagram account for over 6 billion active users.
On the other hand, critics say that existing confusion about what NFTs are could make Meta's move counterproductive. Presumably, some people think that NFTs are only useful as "collectible" in-game cards or digital art. However, NFTs extend into many use-cases.
A major concern is that Meta's poor track record when it comes to data management and privacy might compromise the decentralisation of the metaverse. This is crucial consideration, given that the roots of the metaverse stem from projects like Decentraland which are designed to give power back to content creators instead of a centralized entity.
Meta's move to set up an NFT marketplace could alter what the nature of the metaverse will be. Instead of a decentralized metaverse where everyone has ownership of their NFTs through a Web 3.0 network, Meta could potentially set up a standard where users must give up their private data to engage in the marketplace.
While it is still uncertain, there is some consensus that Meta would want to maximise its profits through a monopoly in the NFT marketplace, giving it more power to decide which digital assets and collections should make it into the metaverse, effectively giving Meta control over the space. This scenario could potentially see other corporations install similar stringent policies for accessing content or NFTs in the metaverse.
Which Companies are Likely To Follow Meta's Move?
Meta's rival Twitter is equally exploring NFTs and considering the development of tools that will have its users use NFTs as their profile picture. In a video released by Twitter's Justin Taylor, users on the platform will soon be able to merge their digital wallets from Coinbase or Metamask to their Twitter profile thereby allowing them to select the NFTs they own as profile pictures.
This will allow true owners of NFT digital art to have verified ownership not only on the blockchain but also on Twitter. In addition, users will also be able to show off their NFTs collections through Twitter's upcoming "Collectible" menu.
Last year, Reddit auctioned three unique NFTs built on Ethereum's blockchain. It is possible that Reddit could scale up its interest in NFTs on the back of Meta’s announcement.
Will this affect Facebook's Stock Price?
Given the fact that the NFT market is booming at the moment with platforms like The Sandbox receiving millions in funding to advance the development of NFTs, it is likely that Facebook's stock price will appreciate if its NFT ecosystem takes off. There is already a spike in Meta’s stock price given that it was spiraling downwards from a high of $327 just 5 days ago, hitting a resistance level at the $290 mark only to reverse its previous bearish trend to a bullish uptake.
While the NFT market is still relatively new, existing marketplaces such as OpenSea boast more than $169 million in sales every day. If an NFT marketplace were to launch on Facebook, Instagram, and WhatsApp, the total volume of NFTs in the market could skyrocket creating more demand for NFTs from a mainstream audience.
What will be the Effect on Cryptocurrencies?
The jury is still out on whether Meta will proceed with its plan as the project is still in its early stages.
In any case, a surge in NFT trades with a growing marketplace will have a positive effect on cryptocurrencies that are used as transaction fees for minting NFT. Ethereum for instance has had a surge in its overall price and popularity given the rise of NFT platforms such as OpenSea. Although Ethereum’s price has currently dropped to about $2,400, its price skyrocketed above the $4500 mark at the height of the NFT market craze in November 202.
As the popularity of NFTs continues, the use of cryptocurrencies such as Ether and other cryptocurrencies that support NFTs, is bound to also increase— potentially seeing crypto prices rise. However, with the threat of stricter regulations and higher interest rates on the horizon, there is still much uncertainty— but one thing is certain, NFTs will continue to gain interest throughout the year.