NFT trading has grown significantly over the past few years. These blockchain-based digital works of art are being sold for exorbitant prices in top marketplaces. OpenSea, the Ethereum-based NFT marketplace, has been the reigning king as far as trading volumInstagram NFT marketplace, Deutsche Bank Instagram NFT, NFT trading, blockchain-based digital works of art, OpenSea, NFT marketplace, NFT sales, Instagram NFTs es are concerned. In Jan 2022 alone, the platform saw $5 million worth of NFT sales.
Therefore, suffice to say that the NFT marketplace is an extremely lucrative place to be. Perhaps, this is why Instagram is also looking to throw its hat into the NFT ring. At the South by Southwest (SXSW) conference held in March 2022, Mark Zuckerberg announced that NFTs would be coming to Instagram soon. This is after the company shared plans to create an immersive metaverse, of which NFTs would be an essential focus.
Instagram’s potential as a marketplace
At the SXSW conference, Zuckerberg said, “Hopefully, in the next few months, you’ll be able to mint NFTs within Instagram.” This will be an incredibly monumental achievement as the popular social media platform has a user base of more than a billion people. However, deploying under the hood changes to accommodate NFT minting for so many people will be an arduous task, even for Meta.
Until now, Opensea has done very well for itself. With their 1.4 million users and trading volume worth $23 billion, they sit at the top of the NFT game. But with the possible introduction of NFTs on Instagram, Opensea may need to vacate its throne.
Deutsche Bank analysts predict that Instagram’s introduction of NFTs can lead to millions of new users participating in NFT trading, possibly generating billions in revenue for the social media giant.
Deutsche Bank predicts that Instagram will have 2.2 billion monthly active users in 2023. According to their estimates, even if 2 percent of those users start trading NFTs, it would create a marketplace of 44 million people. This is approximately 31 times more users than Opensea.
As a theoretical exercise, Deutsche Bank assumed that if every user makes three NFT transactions, and these transactions are worth an average of $250, it will result in a trading volume of $33 billion for the platform. This is $10 billion more than Opensea’s current trading volume.
And if the average transaction fees for all trades were around 2.5 percent, Instagram would have yearly revenue of approximately $1.7 billion.
How Instagram embraces art
While Instagram is mainly used to socialise with friends and family, several artists use it as a platform to showcase their talents. Many content creators and brands already have a significant presence on the site. It is an exhibition of various art forms such as photography, animation, short films, loops, memes and music.
Using on-chain minting, these artists and brands can create a new commercial avenue for themselves. This will benefit their existing followers while also luring new fans with assets that can appreciate over time.
Meta being a monumental giant in the technological space, they can also innovate in how NFTs are traded. Most NFT traders complain about the high and volatile transaction fees associated with most blockchain-based marketplaces. Meta can work to reduce the transaction fees by creating the necessary blockchain infrastructure themselves.
They can also host lower-cost NFTs like NBA TopShot or OneOf. Doing this will allow broader access to NFTs, letting millions of people on the platform purchase affordable digital assets.
NFT market growth
Deutsch Bank recently shared that the NFT transaction volumes in 2021 were 250 times higher than in 2020. An analyst from the bank further explained that the market opportunity for new investors is “very large”.
“Bringing NFTs to Instagram’s large audience has the potential to supercharge the overall market (‘going mainstream’). We think Instagram will simplify the process of buying/selling NFTs, lowering the barriers to entry. Moreover, we think Insta’s strong global brand recognition will lend itself to legitimise NFTs, which could serve to erode buying hesitancy across the company’s broader audience,” said the analyst as per a CoinMarketCap article.
The centralisation angle
Enthusiasts in the NFT and web 3.0 space strongly believe that the future of money and the web should be decentralised. There is a lack of trust towards big tech companies and their control over people’s data and content. So, when it comes to Instagram, which is owned by Meta, one of the largest tech companies in the world, trust issues are sure to arise. The platform will facilitate and store data from its users, which may be frowned upon by the people involved in the crypto/web 3.0 movement.