Meta (META -0.09%), the parent company behind Facebook and Instagram, announced last week that non-fungible tokens (NFTs) will be rolled out to Instagram users in over 100 countries across Africa, the Middle East, and Asia in coming weeks. NFTs, digital certificates of ownership of art, videos or other media, first made their appearance on Instagram in May to select users in the U.S.
The new feature will allow users to connect crypto wallets like MetaMask, Dapper Wallet, Coinbase Wallet, Rainbow, and Trust Wallet. Once a wallet is connected, users will be able to share their digital collectibles to show off to the world. NFTs shared on the platform will have a shimmer to them so they stand out from ordinary posts. In addition, there will be further information on the NFTs like the blockchain it was purchased from and the artist who created it. Meta has made it clear that its platforms will not be a marketplace but rather a site to share your recent purchases.
If you've followed news in the world of NFTs, you are likely aware that Ethereum dominates the space. However, competing blockchains continue to grab some share of the lucrative market -- and Instagram is helping to diversify this field. Not only will Ethereum (ETH -1.38%) NFTs be supported on the platform, but others like Polygon (MATIC -1.90%) and Flow (FLOW -0.23%) will join the list of compatible blockchains.
It makes sense for Instagram to support Ethereum-based NFTs given that the vast majority of the market runs on it. Yet for the other blockchains, growth has not been as substantial. That might all change with the new NFT feature being unveiled to a good portion of Instagram's 2 billion users.
The case for Flow and Polygon
With the possibility of more NFTs arriving on Flow, the blockchain will be more than capable of handling the increase in users. The blockchain uses a proof-of-stake mechanism and a unique validation process split up into four separate tasks. This makes Flow run faster than counterparts like Ethereum and keeps fees low.
Flow has made a name for itself as one of the premier blockchains for interactive crypto experiences primarily revolving around collectibles and gaming. Flow NFTs originally made a splash in the world of sports with projects like NBA Top Shot, which has generated over $1 billion in sales, and NFL All Day, which has pumped out almost $75 million in sales. More recently, NFTs on the blockchain have branched out from sports as digital artists have started minting their work.
Polygon's NFT ecosystem has quickly grown as the result of users looking for alternatives to Ethereum's high fees and low speeds. That's exactly why Polygon was created -- to scale Ethereum. As a Layer 2 sidechain to Ethereum, Polygon processes transactions on its blockchain and then adds them to Ethereum later. Users on Polygon can make transactions in a matter of seconds and often for less than a penny. This alone might be why Meta decided to add the blockchain to Instagram.
Risk or opportunity?
Although Ethereum still has a hold on the NFT market, that might slowly be coming to an end. Tired of the high fees and low speeds that plague Ethereum, users have started to look for alternatives. We should expect this trend to continue as more NFTs begin to make their way to the feeds of Instagram users all over the world.
Both Flow and Polygon present investors with an opportunity that might not come around again. Flow is down about 90% from its all-time high. Even with this monumental dip in price, Meta developers and executives felt that the blockchain was worthy enough to become one of the few blockchains to be integrated into Instagram. As for Polygon, it hasn't suffered quite as much as Flow but is still down about 70% from its all-time high of $2.92. It's trading at just under $0.90 today, so what's not to like about the long-term potential of Polygon?
As artists and collectors look for blockchains besides Ethereum with which to buy and sell NFTs, Polygon and Flow have garnered attention from one of the most popular social media platforms in the world. If NFTs can regain some of the popularity that swept through the market last January, then Polygon and Flow would have the most to gain if that next wave came along.
