What happened
Meta Platforms (META 2.29%) announced late on Wednesday that it's building an "end-to-end toolkit" for creating, displaying, and selling non-fungible tokens (NFTs) on its platform. Flow (FLOW 2.14%) and Polygon (MATIC +0.00%) are two of the blockchains supported and Meta said that Arweave (AR 5.80%) is the Web3 storage solution that will be used.
Arweave has been the biggest winner, gaining 52.5% in the last 24 hours as of 12:30 p.m. ET. Flow is up 14.4% in that time, and Polygon is up 11.3%.
CRYPTO: AR
Key Data Points
So what
Meta has been slowly increasing support for crypto and NFTs for months, announcing that Facebook and Instagram would allow posting of Ethereum, Polygon, and Flow NFTs at least as far back as August 2022.
What changed yesterday was the company giving creators the tools they'll need to display and sell NFTs. Meta said that select creators will be allowed to use the tools first with more being added over time. It's not clear exactly how limited these NFTs will be, however, given the fact that Apple recently said apps could sell NFTs but those NFTs couldn't unlock any features. That potentially means that Meta's NFT tools will be limited to selling art on the blockchain.
One cryptocurrency that didn't move today was Solana, despite the fact that Meta said its NFTs would be supported.
CRYPTO: MATIC
Key Data Points
Now what
A big social media company like Meta giving more support to NFTs is definitely a good sign. But it's not clear exactly how much that will increase adoption. Much of the crypto conversation happens on Twitter and Facebook and Instagram haven't been nearly as popular.
It's also not clear what kind of NFTs would sell well on those platforms. If the idea is just to sell art, an NFT isn't necessarily the most efficient especially if Apple or Alphabet are taking 30% of sales for their service fee.
From the crypto side, I'm not sure there will be much value added to anyone but Arweave. Apple doesn't allow crypto sales on its platform, so if Meta is going to have tools to sell NFTs on the Facebook or Instagram app it will put the crypto interaction in the background, meaning most buyers and sellers won't be buying cryptocurrencies at all. Arweave may see more demand because its token is used to pay for services.
As bullish as I think this news is for the adoption of blockchain technology, I don't think it will ultimately lead to much value for cryptocurrencies themselves. Users will buy NFTs with fiat currency, which will then be converted to crypto to interact with the blockchain, but the transfer to creators in cryptocurrency will likely be converted to fiat again. There's ultimately no buyer for tokens in this scenario, which will limit upside. That's why I think the reaction today may be overdone.
