Instagram’s push into NFTs is a big win for several smaller blockchains
Instagram is diving into the buzzy world of non-fungible tokens, or NFTs.
The photo sharing service said Monday it will begin a test that lets users display NFTs in their profile pictures that show up in stories, feeds, and messages. The idea is to help influencers make a living by letting them better market their NFTs, which will focus initially on art.
Instagram described the test as a sort of baby step into the hot NFT market, which has seen some high-profile digital artwork sell for millions of dollars. Other than letting users show off their NFTs, Instagram provided limited details about what it plans to do next.
“It’s a limited number of people to start, and there’s a lot more functionality that we’re going to need to build over time, but we wanted to start small and learn from the community,” Instagram CEO Adam Mosseri said in a video posted on Monday.
The new Instagram test will not only include NFTs from the most popular blockchain for the technology, Ethereum, but also from the lesser-known Polygon blockchain. Smaller blockchains including Solana and Flow will be added later, Facebook spokesperson Christine Pai told Fortune in an email.
Whenever someone buys an NFT, the purchase is recorded on a transparent and unalterable blockchain that lets everyone see who the current owner is. The most popular blockchain is Ethereum, which is the backbone for the most expensive and notable NFT collection, Yuga Labs’ Bored Ape Yacht Club, but other blockchains have their own selling points.
Major traffic can lead to high transaction fees when buying NFTs on the Ethereum blockchain, like the recent fee spike during Yuga Labs’ Otherside land sale last week. Solana, Polygon, and Flow have lower transaction fees, but are sometimes less secure.
Jon Victor, the head of NFT business development at blockchain company Protocol Labs, said Facebook will need to expand its NFT test to include more features and decide how much freedom to give its users compared to the typically high level other crypto applications give.
“Instagram itself is a very traditional Web2 organization, so how are they leaning into Web3? Are they going to maintain these ideas of owning your own keys [to a digital wallet] and actually be in control, or is it going to be something that’s a little bit more centralized?” Victor said.
Victor said Instagram incorporating blockchains like Polygon and Solana could be a plus for users who are not as familiar with NFTs and may be surprised by the high transaction fees for buying them.
“Bringing more awareness to the other technical innovations that are there [besides Ethereum], I think there is something exciting there,” Victor said.
Incorporating Polygon, Solana, and Flow into Instagram could be a boon for the blockchains, which host significantly less NFT activity than Ethereum’s blockchain. With roughly a billion monthly active users, Instagram could bring increased exposure to the less-used blockchains, Victor said. If NFTs are incorporated into Facebook, as Mark Zuckerberg said is planned, this effect could be amplified.
The biggest NFT marketplace, OpenSea, supports the Ethereum, Polygon, and Solana blockchains. Over the last seven days, $773.4 million in Ethereum-based NFTs were sold on OpenSea, whereas only $10.3 million worth of Polygon-based NFTs were sold on OpenSea over the same period, according to DappRadar, a website that aggregates crypto and NFT data across multiple blockchains.
With its new NFT feature, Instagram is following in the footsteps of Twitter, which started letting users set NFTs as profile pictures in January. Yet unlike Twitter, which limits its NFT feature to users who pay $3 monthly for its Twitter Blue service, Mosseri said in a tweet that Instagram would not charge its users for posting NFTs.
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