TikTok To Launch NFTs — Could Gen Z Take NFTs To The Next Level?
TikTok trounced its competition with AI-augmented video flicks. Now that it will release NFTs on a regular basis, the attached blockchain landscape could be about to receive a boost.
Why Is TikTok So Successful?
TikTok is known for two things: highly addictive and highly attuned to your preferences. TikTok’s filtering algorithm is so powerful that it is often said it knows you better than you know yourself. This is not at all surprising once you understand it absorbs an exhausting collection of cues based on both implicit and explicit feedback.
- Accounts you’ve followed or liked.
- The comments you’ve made.
- Time-frame between swipes.
- Your own content and favorites.
- Sounds, hashtags, captions, effects, regional settings, and mobile device model.
Because of this emphasis on advanced machine learning to generate constant video feedback, TikTok’s success has been remarkable. Since its launch in 2016, TikTok hit one billion global monthly users this summer.
In contrast, it took Facebook eight years to reach this milestone. Within the US, it has 130 million active users, 60% of which are within the 10 – 29 age group, according to Wallaroo Media.
NFTs Arriving on TikTok
Seeing that TikTok is all about deploying cutting-edge software tech, expansion into NFTs is no surprise. Although NFTs have been around since even before Ethereum, no year has been as hectic as this one. As the top NFT marketplace, OpenSea recorded $3.4 billion in trading volume — and that’s just on Ethereum.
This massive NFT wave even lifted less-known blockchains such as Solana, resulting in it outperforming Ethereum by 500%. However, TikTok will use neither Ethereum nor Solana, but Immutable X. This is another Layer 2 scalability solution on top of Ethereum. Immutable X was specifically designed to have zero gas fees so it can onboard blockchain games, marketplaces, and applications.
The company receives its funding from Coinbase, Galaxy Digital, Continue Capital, Naspers, Apex Capital, and Nirvana Capital. Up to September 2021, Immutable X’s total funding reached $77.5 million.
In turn, Immutable X is powered by Starkware with its StarkNet ZK-Rollup (zero-knowledge rollups) blockchain. The first scheduled TikTok NFT collection is set to appear on October 6th, which you can follow via the Immutable X Twitter account.
This places the world’s two biggest social media platforms in the NFT game – Twitter and TikTok. Needless to say, every time there has been an NFT blowup, Ethereum’s (ETH) price has skyrocketed, lifting all other smart contract platforms with it.
TikTok’s Revenue Poised to Balloon
It is now clear that 2020 is the year when all digital ecosystems exploded, from stock trading and video conferencing apps, to blockchain dApps. This is in large part due to lockdowns and the transition from physical to remote work and entertainment. TikTok’s revenue mirrors this trend as well.
On top of this, 60% of TikTok’s user base is younger than 29. This age range is the key indicator to forecast TikTok’s growth, now ready to be boosted with NFTs. We already know that Fortnite generated $5.1 billion for Epic Games in 2020, more than double that of TikTok’s. As a free-to-play Battle Royale game, Fortnite mirrors TikTok’s customer base to a T – 60% within the 18 – 24 age bracket.
They love to buy digital assets as a way to show off their gaming prestige. In the same manner, TikTok’s countless user escapades are just waiting to be immortalized as NFTs, later to enter the secondary market with royalties included, all thanks to Immutable X.
In essence, both Twitter and TikTok count on people’s ingrained social signaling instincts to generate value. For example, even before Twitter announced NFT integration, people were in droves replacing their profile pictures with Bored Apes.
Other NFT collections achieved similar success. Even Mike Tyson, the legendary boxer, put Cool Cat as his Twitter profile. NFTs accommodate every style and personality under the sun, from CryptoPunks and Axies to Shiba Inus from The Doge Pound.
Blockchain Loot Boxes Incoming
However, the controversial loot box business model is already creeping into the NFT marketplace. Akin to gambling, loot boxes contain random virtual items, enticing users to buy more and more to receive a coveted rare item. On October 1, DeFine launched a loot box NFT collection disguised as puzzles:
“The artwork will be divided into ten random puzzle pieces, and will be included in a blind box. A total of 100 boxes will be sold on DeFine. Users will be able to gather the pieces by purchasing blind boxes, and those who complete the puzzle with all ten puzzle pieces will be able to own one complete artwork.”
In the US, the legislative bill titled “The Protecting Children from Abusive Games Act” was introduced in May 2019, but nothing came of it. Likewise, the UK decided not to classify loot boxes as gambling, except to add the supplementary label “Includes Paid Random Items” on such games.
Nevertheless, according to Statista, loot boxes are projected to generate up to $20.3 billion in revenue annually by 2025.
What is your favorite NFT collection? Do you gauge it by profits or by art quality? Let us know in the comments below.