Non-fungible tokens, or NFTs, have become a growing part of the digital economy. In 2021, the sale of NFTs exploded to $24.9 billion from just $94.9 million a year earlier. Cryptocurrencies like Ethereum (ETH -0.59%) and Solana (SOL -2.26%) are building out ecosystems of marketplaces to create, buy, and sell NFTs. Games and websites are using NFTs to depict ownership and gate users' access to digital goods and locations. Whether you're in the NFT space or not, it's undeniable that it's growing like crazy.
As the technology ecosystem is built out, other parts of the NFT ecosystem need to mature, and one is in discovery and community. Starting a project is one thing, but reaching the 1,000 to 10,000 niche users who highly value a specific project is difficult. But once you find them, the community discussion is a critical piece of almost every project. Twitter (TWTR) has long played a role in this discovery and community-building phase, and now it's trying to find a way to add value to the NFT community itself.
Image source: Getty Images.
Twitter's role in building NFT communities
An NFT project usually begins on Twitter, where an account will attract users and followers through posts or giveaways. Following certain accounts is often one aspect, but the project's users are typically directed to a Discord server. That's a group-chat platform with no financial ties to Twitter or any other public company.
On Discord, the conversation is more private, and information is revealed more directly to the involved community. A Discord server can only be seen by users in the server -- unlike Twitter posts, which anyone can see -- and servers can be locked to only NFT holders.
Twitter is at the top of the customer acquisition funnel, and Discord is where "qualified customers" interact. In a sense, Twitter is the most valuable piece of the community-building process, but the company gets almost no long-term benefit.
The hexagon Twitter profile
Last week, Twitter introduced the ability to use a verified NFT as your profile picture, which then shows up in a hexagon-shaped image. This follows enormous growth in Twitter power users changing their profile pictures to NFTs, like the Bored Ape Yacht Club or Crypto Punks. But until now, there was no way to verify the user owned the NFT.
The move is significant because of the role Twitter plays in the community highlighted above. A verified profile picture is like your bona fides in the market. It could show a willingness by Twitter to lean into NFTs, now that it's under the leadership of recently appointed CEO Parag Agrawal.
Building the go-to community organizer
NFT verification will ultimately lead to more community features built around NFTs. For example, NFT collections could have groups gated by NFT ownership, as you can do on Discord or Telegram. This would allow project developers to build their communities on Twitter instead of porting them over to Discord, which has a huge problem with scams and spam.
Twitter could monetize these groups in some way, too. Discord charges for certain features on servers, which a group may value. Advertising could also be much more effective because an NFT project's users often have a common interest or reason to be there. For now, verification lives in Twitter's Blue service, which costs $2.99 per month, which is at least the start of monetizing the company's position in NFTs.
As nearly every tech company jockeys for position in NFTs, Twitter has a potentially big role to play. It's a great tool for discovery and building a community, but it should keep users on its platform rather than having projects push users over to Discord or Telegram. If Twitter can build tools to make NFTs a hub for projects in the long term, it could grow its active user base and improve its financials. Verified profile pictures are a step in the right direction, and I'm hopeful there are more steps along this path in the future.
