Meta is ending the support of NFTs on Facebook and Instagram to focus on other projects, e.g., artificial intelligence. This move comes less than a year after NFTs arrived on Instagram. It looks surprising since Facebook changed its name to Meta in order to build around the metaverse, that includes NFTs.
So, are NFTs dead?
NFTs (Non-Fungible Tokens) are a relatively new concept, and while they have gained popularity in recent years, there is still much debate around their usefulness and potential drawbacks. Some individuals and organizations may choose not to pursue NFTs for various reasons, including concerns about the environmental impact of blockchain technology, the potential for scams or fraud, or a lack of understanding about how they can be used effectively.
Are NFTs useful?
NFTs are digital assets using blockchain technology to provide proof of ownership and authenticity. Here are some potential uses and benefits of NFTs:
- Unique digital ownership: NFTs enable artists, musicians, and creators to monetize and sell digital creations in a way that was not possible before. NFTs provide a way for creators to establish ownership of digital assets, such as art, music, or videos, and sell them as unique, one-of-a-kind items.
- Collectibles: NFTs can be used to create unique and collectible digital items, such as trading cards, virtual real estate, and other unique digital assets. These items can be bought and sold, creating a new market for digital collectibles.
- Proof of authenticity: NFTs use blockchain technology to provide a tamper-proof and transparent record of ownership and authenticity. This can be useful in verifying the provenance of art or collectibles, for example.
- Revenue sharing: NFTs can be used to create revenue-sharing agreements between creators and collectors. For example, a musician can sell an NFT that provides the buyer with a share of future royalties from their music.
- Gaming: NFTs can be used in gaming to create unique items, characters, and experiences that can be traded or sold between players.
- DeFi (Decentralized Finance): NFTs can be used in DeFi as collateral to secure loans in DeFi platforms, or to participate in protocol governance.
What are the main blockchains used for NFTs?
The main chain used for NFTs is Ethereum, although it is expensive to use it due to gas fees. Far away behind, Solana is the second one, but volumes are decreasing. Ethereum layer-2 or side chains like ImmutableX or Polygon are also used for NFTs, as well as layer-1s like BNB Chain, Tezos or Avalanche.
How does the crypto market react to this announcement of Meta?
The crypto market has not yet really reacted to that announcement. For instance, even Polygon (MATIC) that had been selected by Meta as the chain to be used for Instagram NFTs remains positive price-wise on a day-to-day basis. As the DeFi sector has literally been saved by the Silicon Valley Bank rescue plan, most of the cryptos used in DeFi have recently pumped, and the announcement of Meta regarding NFTs looks insignificant compared to USDC repeg and the DeFi rescue... It will take time to realize that big companies like Meta moving out from NFTs can have an impact on the market due to a slower adoption rate than expected. Some cryptos like Solana which has lost most of its TVL (Total Value Locked) in DeFi and has refocused on NFTs could suffer from this situation, although nothing can be guaranteed.
Disclaimer: this article does not contain any financial advice. The information is provided for general informational and educational purposes only.
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