Jan 21, 2022 2:25 PM

Meta and Twitter's NFT Landgrab Could Backfire

A new plan to lure social media users to the metaverse could legitimize NFTs, but it could also ruin them.

An NFT circles a drain. — Illustration: Elena Lacey; Getty Images

Whether you view Web3—the decentralized vision of the future of the internet—as a utopian idea or a Ponzi scheme, one thing is for certain: It’s meant to look different from what’s gone before.

This is what makes the latest moves by Meta, parent company of Facebook and Instagram, and Twitter so strange. On January 20, Twitter rolled out the ability for users of its paid premium service, Twitter Blue, to change their profile picture to a non-fungible token (NFT) they own—a key part of Web3.

On the same day, The Financial Times reported that Meta was working on integrating NFT ownership into their profiles on Facebook and Instagram. The company is also developing a tool to allow users to mint NFTs of their own on Meta platforms, according to reports. It follows public statements in December 2021 from Instagram chief Adam Mosseri that his app was exploring the promise of NFTs.

The co-opting of NFTs by big tech platforms is, in some way, unsurprising. Web3 and NFTs have become hot commodities—the biggest player in the space, NFT marketplace OpenSea, raised $300 million in funding earlier this month, giving it a valuation of $13.3 billion. It makes sense that the biggest names on Web 2.0 would want to capitalize on the trend and stay relevant.

Unfortunately, Meta and Twitter’s plan to sanitize NFTs goes directly against the principle by which they were created. Both companies favor key practices that Web3 supporters want to do away with—centralized control of key digital services by a handful of multibillion-dollar corporations. Both make inordinate amounts of money from the things that Web3’s biggest boosters want to remove.

And for the Silicon Valley titans, the backing of a market full of scammers and fraudsters is an odd move.

“At the moment it’s the wild west—there’s nobody to police this,” says Alan Woodward, professor of cybersecurity at the University of Surrey. “The problem is these social media companies become responsible. They become policemen.” That’s particularly worrisome given the sheer volume of copyright and ownership disputes that have blighted NFT artwork in recent months. “If there’s a dispute over those NFTs, who do those people go to?” asks Woodward. “It’ll be Facebook or Twitter. Why would you want to take that liability?”

Already buffeted by regulators who want to curb their power, Twitter and Meta are among the internet companies caught in the middle of a polarized political debate over whether they are responsible for the propagation of violent and extreme content online, so giving any ammunition to their critics seems foolhardy. And yet they’re about to share the imprimatur of their implicit support to a technology that is famous for a rug pull that stole millions of dollars from victims, racism (lots of racism), and theft, as well as questionable ties to shady Russian crime gangs who are happy to fictionalize their nationality and gender to take money from rubes. Both Twitter and Facebook did not respond to a request for comment for this story.

“Despite the positivity around NFT use cases, there’s a lot of distrust in the community—perhaps due to the anonymity of key artists and influencers, and almost certainly due to the scammers that circle like vultures and frequent rug pulls,” says PJ Cooper, founder of Pandimensional Trading Co., which is launching its own NFT collection later this year. Despite those reservations, Cooper is largely supportive of Twitter’s entry into the NFT space, and says he will display an NFT as his profile picture when functionality rolls out to the UK.

Cooper does, however, have worries about the fact that people can still right-click and save NFT profile pictures and mint their own version of them as NFTs.

A company spokesperson for NFT marketplace OpenSea, Allie Mack, confirmed that NFT profile pictures that appear on Twitter are verified through the company’s site. In fact, Twitter uses API, metadata, and collection information from OpenSea to authenticate an NFT displayed on a user’s profile and turns it into a “soft hexagon” on the site. Around the same time as Twitter launched NFTs, OpenSea crashed. At the time, security researcher Jane Manchun Wong tweeted that OpenSea’s platform had taken out Twitter’s NFT feature. OpenSea says that the outage had “absolutely zero impact on the public Twitter integration” and that the issue flagged by Jane happened in a closed beta. Since the Twitter integration launch, Mack says there has been zero interruption to the Twitter service.

Others are not convinced that relying on a third party site is the right decision. “OpenSea is pretty unreliable,” says Patrick McCorry, senior system engineer at blockchain startup Infura. This may be one thing Big Tech wants to fix before embracing NFTs full bore, he says.

The OpenSea platform itself has not been free of controversy. Artists have pointed out that the site is rife with rip-off NFT versions of their real-life art, or versions of their sculptures and paintings that could easily be purchased by unwitting social media users. The problem got so big that DeviantArt, an art hosting website from which works were repeatedly lifted, developed its own tool to scan the blockchain for works that also appear on its site, and inform the creators. The platform does have procedures for those whose art has been stolen to appeal for work to be taken down, but the problem persists. A recent investigation found profiles selling NFTs of trademarked logos from some of the world’s biggest brands, including Microsoft, Disney, Amazon, and Adidas, without permission.

Theft is a perennial problem for the NFT world, and one that seems unlikely to be easily fixed, but McCorry thinks that’s a non-issue for Meta and Twitter. “What matters really is custody and the ability to sell it on a secondary market,” he says. For now, it is clear that neither company would own or have custody of an NFT. “Custody is a liability for them,” he said.

For those deep in the NFT space, the adoption of official standards by Twitter in particular is welcomed. Plenty of Twitter users have NFT art as their profile picture, but find it difficult to prove ownership, particularly when faced by trolls who like nothing more than to right-click and steal their NFTs to show them the fallibility of their investments. “Right now, anyone can just put up a CryptoPunk picture and pretend to have one,” says McCorry. Twitter’s plans to prove ownership officially are “a nice way to demonstrate digital property rights.”

It’s easy to see why Twitter and Meta want to get involved in the NFT space—Woodward says it’s a land grab that, in the case of Meta, gives it ownership of one of the key technologies that could be involved in constructing its own version of the metaverse. For Twitter, it’s a way to build credibility around a forward-thinking tech community. “But there’s a point when the rubber hits the road, and there could be real commercial disputes about it,” says Woodward.

The legitimacy that Big Tech lends the NFT experiment is a major benefit for boosters of the technology. But it could also be the thing that signals the beginning of the end for it in the long run. “One of the things about NFTs is that you and I can agree to exchange wherever we like,” says Woodward. “But if you get a corporate involved, isn’t it all becoming a bit Big Tech and commercial?”

Behind this decision is an assumption that users on all three social media sites want to be involved in buying, selling, and displaying NFTs. But none have provided evidence to back up this assumption. Once the functions on these sites are rolled out, this will be the first time that the general public will be exposed and encouraged to join a digital token market that, until now, may have been perceived as obscure and niche. Zoomers on Facebook could suddenly join the once-nerdy ranks of OpenSea users and bid real money to buy digitally minted pictures of a monkey, or whatever else takes their fancy. And they may not want to at all.

Woodward cautions overexuberant members of the NFT community from being too jubilant. “I don’t think anyone fully understands what the true potential or implications of NFTs are,” he says. “But I think there’s a bundle of bollocks being talked about it. I’m not sure people have got their thinking all aligned on this yet. I suspect it’s very much a case of the big tech companies wanting to jump on the bandwagon—because it is a fairly fast-moving bandwagon.” What might the big social media giants do when they’re in charge of the bandwagon? Woodward has one theory. “I think it’s just another way of acquiring and keeping users.”