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How Instagram is trying to get you to use NFTs

How Instagram plans to enable NFTs
Mark Zuckerberg has confirmed Instagram plans to support NFTs. Photo: Samantha Burkardt/Getty Images for SXSW

In the future, Instagram account holders will be able to put NFTs into their pages, opening up the possibility of turning the platform into an NFT marketplace of over 1.1 billion users.

Last week, Mark Zuckerberg confirmed that Instagram is preparing to support NFTs.

At this year's SXSW festival in Austin Texas, the Meta/Facebook (FB) CEO took to the stage to announce that his company is "working on bringing NFTs to Instagram in the near term".

However, the Facebook CEO added that he is "not ready to kind of announce exactly what that’s going to be today".

The announcement has raised questions over which blockchain the NFTs will be deployed on, what payment channel will be used to purchase them, and whether Instagram will become a new marketplace for NFTs, in direct competition with Opensea, Rarity and Nifty Gateway.

Many artists, musicians and fashion designers use Instagram as a platform to showcase their creations.

If Facebook/Meta allowed each image in a user's Instagram page to be monetised as an NFT, it would become a major disruptor in a market that is currently controlled by OpenSea, which operates using the Ethereum (ETH-USD) blockchain.

Referring to the new developments, Mike Dickens, COO of Blockasset.co, spoke to Yahoo Finance and said: "It’s unknown which blockchain Instagram is likely to build their NFT project on.

"However, for greater mass adoption and acceptance, they will need a blockchain with low fees for a greater user experience."

Dickens sees Solana, with its Phantom wallet, as currently offering one of the better NFT purchasing options for Instagram users.

The proposed NFT interface for Instagram could resemble that of the OpenSea marketplace where a user would click on an image and be shown its current price, usually in ethereum (ETH-USD), and the sale history of the item, which shows its price appreciation or depreciation over time.

Dickens added: "There are also wallets like Torus allow users to create wallets with their social accounts without the need to remember a seed phrase, a barrier to user adoption."

Read more: Club for women in crypto promises to close gender funding gap

He believes that the advent of Meta using NFTs will allow its own cryptocurrency to come into play in the future.

But until that time, he states that for the reasons of securing mass adoption and acceptance, "Instagram is likely to adopt a number of cryptocurrencies as payment options, including bitcoin and ethereum".

Watch: Boy George: Bowie, Dali and Picasso would be heavily involved in NFTs

Meta has developed its own digital wallet, called Novi, which allows users to "send and receive money internationally, instantly, securely, with no fees, and which runs on secure blockchain technology".

It has been reported by Bloomberg that Meta would explore the buying and selling of NFTs on its Instagram platform by incorporating its Novi digital wallet.

The company's head of financial service David Marcus said that Facebook is "definitely thinking about" using its Novi digital wallet to support non-fungible tokens (NFTs).

The Novi digital wallet is in a limited trial stage and in its current incarnation will be used to send and receive a stablecoin called the USDP, or Pax Dollar.

The switch to the Pax Dollar comes after Facebook's Diem (formerly known as Libra) stablecoin was abandoned this January.

The majority of the rest of the NFT market is operated on the decentralised Ethereum blockchain, where purchases are settled using ether (ETH-USD).

According to The Verge, Zuckerberg also said that in the coming months, Instagram members could have a facility to mint their own non-fungible tokens (NFT) within the app.

He added: "Over the next several months, the ability to bring some of your NFTs in, hopefully over time be able to mint things within that environment.”

The Financial Times reported that Meta (FB) is working on plans for both Facebook and Instagram users to be able to place NFTs as their profile pictures.

Profile picture NFTs, or PFPs, are by far the largest market in this growing sector of the web3 space.

High-end NFTs, such as Cryptopunks and Bored Ape Yacht Club, are considered PFP collections and give their owners exclusive access to specific membership groups.

NFTs could solve many of the revenue problems that have hit artists and musicians since the advent of the internet and the propensity to copy and paste content.

Read more: 'Crypto lobby groups are dictating terms in Washington'

However, others have highlighted the vast environmental harm that validating transactions on the blockchain is having.

This is because the Ethereum network still runs on a proof of work consensus mechanism, and so is very energy-intensive.

Watch: Boy George: NFTs and the importance of the Metaverse

Last year Facebook changed its name to Meta in a move to reflect its focus on the metaverse and virtual reality.

During a presentation in October, the newly branded tech giant said that its version of the metaverse would support NFTs.

During the SXSW panel discussion that is taking place this week in Texas, Zuckerberg added: “I would hope that you know, the clothing that your avatar is wearing in the metaverse, you know, can be basically minted as an NFT and you can take it between your different places.

“There’s like a bunch of technical things that need to get worked out before that’ll really be seamless to happen.”

Yahoo Finance has reached out to Meta to give comments on the plans for NFTs on Instagram, but have yet to receive a reply.

Watch: Economist Steve Hanke: 'Cryptocurrencies are fiat money on steroids'