Non-fungible tokens might be all the rage right now, but they’re in fact the early foundations of the social networks of the future, according to Solana co-founder Anatoly Yakovenko.
NFTs are often sold as part of a collection, or come as part of a play-to-earn gaming platform, linking up owners all over the world. The sense of community is built in from the get-go and requires no external involvement.
“I think these are the early starts of true web social networks that do not rely on ads for monetization that don’t rely on Google or Facebook to function,” Yakovenko told Insider in a recent interview.
“They are purely these digital communities that can monetize/self monetize from their own content without the need of any of these external poison marketplaces,” he said. Yakovenko is a long-time critic of some of the advertising and data-privacy strategies of larger social platforms such as Facebook or Google.
Hype around the metaverse, a virtual reality where people can buy land, homes, luxury items that they pay for in cryptocurrency, helped make NFTs November’s best performing digital assets.
In the past week alone, a whopping $275.5 million worth of NFTs have been sold, according to Non Fungible data, thanks in part to rockstars’ avatars hanging out in the likes of Decentraland or the Sandbox with those of ordinary people, as well as digital art sales from the Bored Ape Yacht Club and CryptoPunks NFT collections. Community-based NFTs often bring perks to their members too.
The solana blockchain is a smaller rival to the ethereum network. It too can host decentralized finance applications, like smart contracts, as well as run NFTs, which are unique digital tokens that represent a real-world piece of content, such as artwork, music or video. Unlike cryptocurrencies, they can’t be exchanged like for like, making them a kind of digital collector’s item.
Chainalysis, a blockchain analytics platform, says the success of NFTs is a result of “community and word of mouth growth”.
They certainly appeal to communities such as celebrity fan bases. K-pop idol band BTS, pop star Katy Perry, along with fashion houses Burberry and Louis Vuitton are just some of the names that have dived into the NFT space. TikTok, a video-sharing social media platform, launched its own NFT collection in October. Snoop Dog even has his own metaverse called the Snoopverse and a fan coughed up $450,000 for a plot of virtual land to be the rapper’s neighbor.
Even with all the glitz and glamour around NFTs, they’re mainly something ordinary people will own. 80% of all NFT transfers between January and October this year involved people that spent less than $10,000 per transaction.
“I am really excited to see an NFT community go from – 10,000 people to 100,000 and then a million and then 100 million – that’s unbelievable, right?” Yakovenko said.
“What does that look like when there’s 100 million people that are all in – the same community that is driven by this digital content?” he said.