‘NFT’ is Collins Dictionary’s word of the year, despite non-fungible tokens remaining a confusing concept for many. This hype is symptomatic of the herd behavior propagated by social media. The other technology-related words on Collins’ top 10 list are ‘crypto’ and ‘metaverse’—two more buzzwords that are not widely understood yet have become ubiquitous in 2021.
An NFT is a unit of data stored on a blockchain to certify ownership of a digital asset like an image, audio, a video, or other types of collectibles like books, blogs, tweets, or memes. Indeed, many popular NFTs originated from widely circulated memes on social media, like Disaster Girl and Success Kid, two classic memes that have recently been sold as NFTs. The monetization of internet memes is a trend also showcased by the Dogecoin and Shiba Inu cryptocurrencies.
NFT and social media
Social media can have a herd effect on users, whereby they feel pressured to keep up with the latest trends flaunted in the posts they follow. The use of ‘#nft’ on social media increased by a massive 3,566% between January and October 2021, according to GlobalData’s social media analytics tool.
Alongside social media traction, venture capitalists are massively increasing investment into start-ups developing NFT collectibles. Moreover, there was a 20x jump in mentions of the keyword ‘NFT’ in company filings between 2020 and 2021 thus far, according to GlobalData’s filing analytics database.
The extortionate prices that NFTs sell for make them the latest playground for the super-rich. The hype is propped up by people jumping on the bandwagon and replicating the actions of influencers, celebrities, and entrepreneurs. One of the most popular NFT projects is the Bored Ape Yacht Club, with musician Post Malone and talk-show host Jimmy Fallon among the proud owners of a unique cartoon of an unimpressed-looking primate living on the Ethereum blockchain. In October, a rare Bored Ape Yacht Club NFT was sold on Sotheby’s metaverse NFT marketplace for $3.4 million.
NFTs will be perceived as a fad until real-life use cases are developed. Like all market bubbles, it threatens to burst once investors realize the lack of substance.