NFTs Are Coming to Instagram: Why Meta Is Bullish on These Cryptos, and You Should Be Too

Back in May 2022, Meta Platforms (META 10.25%) said that non-fungible token (NFT) functionality would be coming to its social media sites Facebook and Instagram, letting users post or show off their digital collectibles to followers. But based on a recent announcement, it has added additional features, which will essentially turn Instagram into an NFT marketplace. 

Details suggest that creators will be able to list NFTs on their profiles that are available for purchase, similar to other notable NFT marketplaces such as OpenSea or SuperRare. Furthermore, a tipping option will be created that will allow users to send money to their favorite content creators. All of this is made possible by connecting a digital wallet for user profiles to seamlessly receive and send payments via cryptocurrency.

The decision to enable full NFT functionality, rather than just a place to show off digital collectibles as first planned, seems to be a move in the right direction for Meta. While you might be thinking this could translate to good news for Meta’s stock, if we drill down a little further, investors will find the real opportunity. 

The next big blockchain

Meta announced that Polygon (MATIC 16.72%) will be the primary blockchain supporting NFT transactions. Fortunately, you can buy Polygon’s native cryptocurrency, MATIC. Similar to a stock, the more a cryptocurrency is in demand, the more its price increases. With Polygon becoming the primary blockchain for Instagram NFTs, there could be a surge in demand for MATIC.

Meta selected Polygon for a handful of reasons. First, Polygon is extremely fast at processing transactions. Unlike Ethereum, which can become bogged down with traffic and cause speeds to slow to just a trickle, Polygon boasts impressive speeds of up to 7,000 transactions per second. This high throughput is crucial to ensuring that Instagram users have a smooth experience.

In addition, Polygon has some of the lowest transaction fees of any blockchain. This means sales and purchases won’t require any extra payments from users, something that has plagued Ethereum during peak usage.

Lastly, the blockchain is extremely eco-friendly. The blockchain is so energy efficient that it is already carbon neutral, and there are plans for it to eventually become carbon negative.

The functionality that Polygon presents is slowly becoming the best-kept secret in the blockchain world. During 2022, numerous companies have partnered with Polygon, such as Disney, Coca-Cola, and now Meta as it searches for ways to make transactions faster and cheaper.

Here is where the real opportunity presents itself to investors: Polygon is down more than 60% from its all-time high, yet has had arguably the best year of all blockchains in terms of achievement. If companies continue to take notice of what it offers during the coming years, a return to those all-time highs seems more than likely as demand grows. 

Data storage but on a blockchain

There’s one other benefactor in the midst of this news. Known as Arweave (AR 10.89%), this blockchain will be used by Instagram as a decentralized storage solution to archive creators’ digital collectibles. Similar to Polygon, investors can purchase the AR token as a means to invest directly in the Arweave blockchain.

Like Polygon, there are a few features that made Arweave a no-brainer to be a part of Instagram’s new NFT functionality. First, perhaps, is Arweave’s permanency. Any data stored on Arweave stays there forever. 

In addition, Arweave’s blockchain capacity is just about infinite. Most importantly, because Arweave uses a blockchain and is inherently decentralized, user data remains anonymous, censorship resistant, and immutable. 

The decision to use Arweave is one of the first examples of a big tech company like Meta tapping into its potential. Yet in the blockchain world, Arweave has been recognized as an innovator for quite some time now. Cryptocurrencies like Cosmos, Polkadot, Avalanche, NEAR, Solana, and The Graph all use Arweave to store transaction data. In doing so, this helps make their own blockchains less bulky and more streamlined. The potential use cases for Arweave over the coming years seem endless in a world of consistently more data.

The road ahead

Accordingly, since the news dropped, Polygon and Arweave have been on a tear. Polygon is up nearly 40%, and Arweave posted a near 60% gain in a matter of hours, trading as high as $17, but has since pulled back to about $10. However, despite these gains, Polygon is still well below its all-time high, and Arweave is down almost 90% from its peak of about $85. 

In my opinion, the value these two cryptocurrencies provide is not adequately reflected in their prices, and their future potential is most definitely not properly priced in either. It would be difficult to imagine a scenario where more use cases don’t arise, especially considering that these two blockchains have already partnered with some of the most prominent companies in the world.