Meta Is Giving Up NFTs. It Transmits A Strong Message About The Business And Bitcoin.

The beaten-down software business Meta Platforms META -0.72% is scaling back its intentions to push non-fungible token, or NFTs, to users from content producers. This is a sign of both the company's growth restrictions and the general decline in interest in digital assets.

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According to Stephane Kasriel, the executive in charge of the company's commerce and fintech division, Meta (ticker: META) is discontinuing NFT integration on Facebook and Instagram. 

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On the blockchain, NFTs are data that may be traded and stored . Digital media files, such as artwork, make up a large portion of NFTs and are at the core of dreams of the metaverse, a future internet characterized by virtual worlds, about which Meta bet heavily when it underwent a name change from Facebook in late 2021.

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With a fee of up to 47.5% applied to the selling of digital products in the metaverse, Meta intended for NFTs to be an extremely lucrative industry. As recently as last summer, the group stepped up its NFT plans for apps, stating goals for billions of Facebook and Instagram users to purchase digital artifacts.

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With the abandoning of NFTs on the leading platforms of the business, those hopes now appear to be essentially dead. The timing of Meta's decision to stop expanding into a high-risk yet high-margin industry and announce its most recent round of massive layoffs on Tuesday couldn't have been more symbolic. In addition to the 11,000 layoffs that were previously announced late last year and which at the time resulted in a 13% reduction in headcount, Meta just stated that it would eliminate another 10,000 jobs.

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NFTs are in jeopardy as CEO Mark Zuckerberg's "year of efficiency" goes on. This is consistent with Wall Street predictions that Meta will spend and lose less money in the metaverse. In contrast to earlier projections that put annual losses for the company's Reality Labs division (which develops technologies required for the metaverse) above $17 billion and $18.5 billion in 2023 and 2024, respectively, analysts surveyed by FactSet now predict losses of upwards of $16 billion for this year and the following year.

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It's not like more people have taken an interest in NFTs than Meta had planned or that its goals have been saved. Since the late 2021 high both in NFT trading activity and BitcoinBTCUSD +0.65% prices—the latter being a harbinger of broader sentiment for digital assets—interest in the crypto world's equivalent of collectibles has plunged off a cliff.

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According to Trade Algo's data, about 220,000 NFTs were sold in the most recent month. This is a sharp decline from the 1.6 million sold a year ago as well as the 5 million sold during a monthly window close to the market peak in December 2021.

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Who can accuse Meta of giving up NFTs? Almost everyone else has, too. But, it still has plenty to say about the problems in the crypto sector as well as the tech giant reducing the fat on its metaverse bet.

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