NFT avatars are distinctive algorithm-generated digital images utilized as profile pictures on social media. Since the inception of NFT projects, such as the CryptoPunks in 2017 or Bored Ape Yacht Club (BAYC) NFTs, the non-fungible token avatars have been steadily gaining popularity until their peak in 2021.
With the sudden inflow of the bear market, we can consider 2022 a bit chaotic year for crypto and NFTs. Yet still, some of the most ambitious PFP (profile picture) NFT projects reached all-time highs with just a little decline in 2023.
The Main Benefits Of PFP NFTs:
- NFT avatars combine a type of digital identity, investment, and source of community benefits.
- Because of their place in the greater NFT metaverse, there is plenty of room for discovering new frontiers in the future.
- NFT avatars are becoming increasingly useful in the metaverse due to their internal functions evolving.
- NFT avatars are community-driven assets and have inherent value as a ‘social currency’ stemming from the psychology of humans
Are NFT Avatars Sustainable, Or Is It Just A Fad?
Before delving into the specific role of NFTs on social media platforms, let’s take a look at the standing of social media avatars as such. Our profile pictures, in fact, convey much more than just fancy looks in mere pixels.
Profile avatars are substantial in crafting our digital presence online. Just think about the distinct approaches we take when choosing a suitable avatar for specific social media channels. On LinkedIn, we try to come across as professionals. On Instagram, we tend to take a more laid-back, not seldom scant artistic attitude, while Twitter offers a vast space for aligning your social appearance with your interests.
Having said that, in any case, social media avatars are defining our digital identity and deepening our sense of belonging, which, from a psychological point of view, forges their value as a sort of social currency.
That might also be the reason why NFT avatars enjoy the biggest market cap among the NFT categories, according to NFTGO research.
Inherent Value Of Social Media NFTs
Regardless of the current standing of the market, from among the crypto-projects, NFT profile pics enjoy a significant advantage that transcends the usual market dynamics. According to Gary Vee, the value of PFP NFTs is leveraged by the concept of ‘social currency’ – a way people signal social cues such as status, wealth, personality, and taste. The major behavioral psychology concepts grant this value.
Scarcity, Social Proof, And Tribalism In the NFT Market
Three key psychological factors wield considerable influence over individuals’ market behavior. This concept was articulated in the Arts DAO Medium article, where the author argues that the value of PFP NFTs is backed up by scarcity, social proof, and digital tribalism.
- Scarcity – The fundamentals of economics apply to scarcity; as supply declines, demand rises. Keeping this in mind, effective NFT projects understand how to leverage artificial scarcity to their advantage and limit their supply and access to whitelists in order to create a sense of scarcity in the NFTs.
- Social Proof – The concept of social proof, or signaling, is based on people’s behavioral influence. Humans are social animals by nature, which means we are easily influenced by other people’s actions and constantly desire to communicate with them vocally and non-verbally. In recent years, social media has become the pivotal channel through which we satisfy our needs to be socially recognized, approved, and respected. NFT avatars are yet another means of our social statement.
- Tribalism – People are naturally urged to be a part of a community. The communities and in-groups that emerge from holding a particular NFT project can be compared to the equivalent of a digital tribe in the domain of NFTs. In addition, membership in a tribe is more valuable the more exclusive and selective it is. This aspect is also likely to leverage the value of social media profile picture NFTs.
Utility Of NFT Avatars In Social Media
One of the first doubts that might surface in regard to NFT avatars is their utility. How to properly use a mere image? The answer to such concerns once again stems from the community nature of the decentralized web3.
Organizations and brands may use PFP NFTs as an entry point to private chatrooms, whitelists, or even voting privileges within certain communities. NFT avatars can furthermore grant airdrops, coupons, or vouchers. On top of that, profile picture NFTs open the brands’ doors for creating new client bases and restructuring their credibility.
How To Tell The PFP NFT Project Legitimity?
While well-established NFT projects may look incredibly tempting, this is not always the case. Just like in any crypto project, investors should proceed with due caution before pouring their money in. Check out our article on 5 red flags in crypto to better understand the potential pitfalls.
In general, these are the six main signs of the legitimacy of the NFT avatar project:
- A Prolific Community – Behind every successful project, there’s a strong and dedicated community. More so in web3 space. Go ahead and check out social media. Make sure that the community behind the project is active and talked about.
- Transparency – Social buzz isn’t everything. Realistic and transparent goals should grant the legitimacy of each crypto project. Keeping this in mind, you should always look for the roadmap, whitepaper, or any other document that details the goals and plans of every project.
- Know the team – Under any circumstances, don’t even consider investing in a crypto project with an anonymous or scarcely documented team. Be curious and find out the most about the people behind the project. If the team appears legit, move to the next step.
- Product quality – Before further considering the project, you should focus on quality. The design, the graphics, and the overall delivery should matter on top of bloated predictions and inflated social buzz.
- NFT Utility – Sure, buying, holding, and flipping might appear as the main purpose of every NFT. But utility is something you should consider as well. Especially in the case of NFT avatars, the tokens should provide you with something extra. Access to gaming, entry to special events, or a cut from royalties might come as a good indicator that your NFT investment was worth it.
Will NFT Avatars Take Over In 2023?
Despite the current bear market in crypto, NFT profile pictures have all the reasonable chances to succeed as a lasting trend. Thanks to psychological aspects, such as a sense of community and digital status, along with tempting utilities, well-established and legit projects can still thrive and meet the desired expectations.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.