What do an American actress and producer known for her successful romantic comedies and drama series, an English hard-rock singer famous for biting the head of a bat on stage in the ‘80s, and a young Brazilian football player with almost supernatural skills have in common? Not much, at first glance. But as it turns out, the three of them -we are talking about Resse Witherspoon, Ozzy Osbourne, and Neymar Jr.- use NFTs as their Twitter profile pictures. And they’re certainly not the only ones – a short glimpse at celebrities’ social media profiles will reveal a myriad of NFTs deployed all along.
Now, this is not just famous people having fun on the Internet. It is a strategic choice based on the awareness of the role that social media plays in the valuation of NFTs. So let’s take a quick look at how this relationship works.
Twitter and the value of NFTs
As we know, Non-Fungible Tokens or NFTs were made possible by the emergence of blockchain technology, which allows for the association of proof of ownership to a variety of digital products, ranging from artistic images to game assets. But it is through social media platforms, especially Twitter, that they have gained public notoriety and, in more than a few cases, achieved virality.
Twitter accounts for 70% of the total traffic on social media at OpenSea, one of the most prominent marketplaces for buying and selling NFTs. This alone should give us an idea of the importance it has for building public perception around NFTs and attracting potential buyers.
But how is it that a particular NFT is made attractive for the public? Or, to put it more plainly, what determines the value of an NFT? Mainly, the way its owner or creator is perceived by buyers and potential buyers, and the effectiveness of the marketing campaigns created around it. This is where our diverse ensemble of celebrities is getting it right.
How social media impacts NFT valuation (and how this can be measured)
One of the difficulties of analyzing NFT values and predicting their prices is their exposure to high levels of volatility, as well as the irregularity of sales periods. Until recently, most of the studies on NFTs aimed at establishing correlations with more traditional crypto-assets. But models based on social media features and activity have proved much more efficient to predict NFTs’ future values.
How is this achieved? Basically, the aim of these models is to establish correlations between price trends on marketplaces such as OpenSea across time and popularity metrics on Twitter. User-level Twitter attributes such as followers counts, listed count, and favorites, along with tweet-level properties such as likes, replies, and retweets, can be combined with asset-level features and collection-level features at OpenSea to establish accurate measurements on how social media influences NFT valuation. Furthermore, due to the tight relationships between Twitter activity and variations in token values, this can be used to develop an efficient NFT investment strategy based on identifying which assets are undervalued and which are overvalued.
This brings us back to Resse Witherspoon, Ozzy, and Neymar. Basically, by choosing to pose an NFT at a prominent place in their social media profiles, what they are doing is leveraging the recognition they have gained throughout their professional careers to boost their NFT marketing strategy. And this is certainly a smart move. In the end, the prestige and recognition of an NFT owner in the social media landscape are of paramount importance for its present and future value.
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