Instagram has announced that in the first week of November it will begin allowing a select group of digital creators to create (so-called mint) and sell NFTs (non-fungible tokens) directly on the social platform.
Digital Collectibles
Digital Collectibles
The recently launched feature in the app - Digital Collectibles - is available in 100 countries and allows users to connect digital wallets with their own or purchased NFTs. Connected digital tokens can be displayed on a profile using a special "shimmer" effect that indicates their authenticity.
The latest update will allow users to create their own digital items and sell them both on Instagram and off the platform, providing tools for creating and selling NFTs. The service will initially launch on the Polygon blockchain and will be available to a small group of creators in the US, including Amber Vittoria, Refik Anadol, Jason Seife, Dave Krugman and several others.
Community First
Community First
Instagram's decision to introduce NFT selling directly through the platform is another step bringing Web3 into the mainstream. Non-fungible digital tokens, though still not popular in Poland, are gaining more and more supporters, including across the Atlantic. The concept of NFT itself is more complex - by purchasing an NFT, users gain not just the token itself but also a ticket into a community. As a result, it opens up many business opportunities, which for many is the primary goal of this investment, says Marta Naser, owner of the jewelry brand martanaser.pl, who is introducing her products to NFTs.
The best-known community is the Bored Ape Youth Club, whose total sales of non-fungible digital tokens have already exceeded $1 billion. Members include athletes, businesspeople and celebrities, such as Serena Williams, Neymar, Shaquille O'Neal, Justin Bieber, Jimmy Fallon, Snoop Dogg, Eminem, Gwyneth Paltrow and Madonna. Poland is home to the Fancy Bears community founded by two entrepreneurs, Bartek Sibiga and Jakub Chmielniak.
Instagram also plans to introduce the display of digital video collections and add support for the Solana blockchain and the Phantom wallet. Previously, the platform supported the Ethereum, Polygon and Flow blockchains, as well as connections with third-party wallets, including Rainbow, MetaMask, Trust Wallet, Coinbase Wallet and Dapper Wallet.
Meta noted that it will not charge fees for displaying and sharing digital collectibles on Instagram or Facebook, and will not charge any additional fees for selling digital collectibles until at least 2024. However, it added that "digital collectible purchases made within Instagram on Android and iOS operating systems are subject to applicable app store fees."
In addition, the platform committed that neither creators nor collectors will have to pay so-called gas fees, the fee required to successfully conduct a transaction in the cryptocurrencies that support it, namely Ethereum, Polygon or Solana.
How will NFT sales work on Instagram?
In a CoinDesk instructional video showing the new feature step by step, it appears that NFT creators will also be able to choose a royalty percentage between 5% and 25%. Creators can then connect their bank account or PayPal account to receive payment. This is a rather surprising and controversial move by the platform, which for now uses the term 'digital collectibles'.
NFT Investments Are Gen Z's Domain Gen Z
NFT Investments Are Gen Z's Domain
According to UK data from the investment platform for Gen Z and millennials - Shares - about one quarter of Gen Z investors own both cryptocurrencies and stocks, and one in ten owns an NFT. However, men are twice as likely as women to choose cryptocurrencies and NFTs. Cryptocurrencies are inherently high-risk investments due to their unstable nature.
Bartosz Czerkies, General Manager of Shares for Central and Eastern Europe, adds that mass adoption of the solution by another major platform sends a positive signal to the market. The industry still faces many challenges and the need to refine the technical aspects of the process, which is still far from the UX standards we know, for example, from e-commerce. The industry is young enough that, with the popularization of these investments and the emergence of greater competition in the market, the tools themselves - sales apps and onboarding channels - will also change to become more user-friendly. However, the biggest challenges for the NFT industry are broad education, both for investors and the wider public, and regulatory aspects. Once again, changes in business are happening so quickly that regulations cannot keep up - hence the emergence of digital assets.
What Can Be an NFT?
What Can Be an NFT?
NFT is not only the graphics everyone knows, but also digital fashion, which is a dynamically growing trend especially appreciated by Gen Z. The motivations of owners of such digital goods - mainly in the fashion industry - were examined by Boston Consulting Group (BCG) in cooperation with Vogue Polska. The study shows that for more than half of those interested in buying digital fashion in the form of NFTs, it is not only an investment but also a way of expressing themselves, and for one third, a method of shaping their image online. Major fashion brands (including Adidas and Nike) and global fashion houses (including Gucci and Dolce Gabbana) are increasingly entering digital fashion and metaverse clothing. They sell digital equivalents of products available in traditional stores, including sneakers and clothing. According to the BCG and Vogue report, out of the 120 largest fashion houses, 25 have released their own NFTs. Adidas generated the greatest value by releasing "Into the Metaverse" - an NFT collection that was worth about $24 million at the time of release, meaning Adidas was responsible for most of the market value of fashion tokens in 2021, according to the data.
Summary
Instagram is introducing the ability to mint and sell NFTs directly on the platform, initially for selected creators in the US on the Polygon blockchain. This is a step toward popularizing Web3 and digital communities such as the Bored Ape Youth Club, which has generated more than $1 billion in sales. The platform will not charge fees for sales until 2024.
According to BCG and Vogue Polska research, NFTs are not only an investment but also a way of expressing oneself, especially for Generation Z. The largest fashion brands, such as Adidas and Gucci, are already entering digital fashion. Nevertheless, the industry faces challenges: education, regulation and refining UX.
