Chinese authorities are currently taking a cautious approach to non-fungible tokens (NFTs) to ensure they are secure and controllable. But don’t jump to the conclusion that China is missing out on this technology. In fact, if you take a closer look, you can think of China as being at the forefront of blockchain technology. Probably the first country to see a live version of web3 in the future.
China is closed to cryptocurrencies, but digital yuan is already in circulation. On the NFT side, Alibaba and Tencent each released a platform for trading NFTs in August and carefully renamed them to “Digital Collectibles” in October. Baidu and JD.com follow suit. Since then, with careful adoption of NFTs and blockchains, we can see that they are gradually gaining acceptance in the industry.
However, China’s NFT development path follows a business model different from that seen in overseas markets, such as copyright protection and “digital property certification”, and is a fraudulent use of fake coins, separated from cryptocurrencies. Helps avoid fraud.
based on AntChain Sales and global NFT growth rate, China’s NFT forecast
The market will grow at a rate of 150% and will reach 29.52 billion yuan (US $ 4.64 billion) by 2026. This still reflects the great potential for future development.
Also, the number of popular collections in China is increasing. Many have heard about the popular NFT collection’Boring apes‘. A similar Chinese collection called’Bored Wukong’ Accused of being an impersonatorChina has its own counterparts such as:Fanta Bear‘, This has proven to be just as popular. The NFT project was started by Taiwan-based singer Jay Chou’s brand Fantachi and digital entertainment platform Ezek. Fantabear is a collection of digital collections generated by 10,000 algorithms that double as a membership card for the Ezek Club. Each Fantabear NFT was sold for 0.26 Ethereum (ETH) as of January 7. The NFT project Fantabear was all sold out within 40 minutes of its release, with revenues of approximately US $ 10 million.
What is the difference between Chinese NFTs and other NFTs?
To understand the main differences in China, it is necessary to understand that there are two types of NFT casting models and distribution models. Let’s call them PGC and UGC. The PGC (Professional Content) model is a model in which the platform finds artists, jointly issues NFTs, and divides sales revenue among artists.This example is Nifty Gateway.. In China, many large platforms use the PGC model. For example, Ali’s Antchain, Tencent’s Magic Core, Jingdong’s Lingxi.
UGC (User Generated Content) models, on the other hand, come from the creators of audio, video, or digital photos, and you can create your own NFT content and upload it directly to platforms such as OpenSea, Rarible, InfiNFT, and Mintbase. increase. .. The compensation scheme is based on the difference between the payment of fees and the subsequent gas charges (payments to compensate for the energy used in transactions on the Ethereum blockchain). Users have to pay a commission for the platform to sell NFTs. Usually about 5% to 15%.
1. Professionalism: The biggest difference between the two methods is the creator’s professionalism. The PGC model works very well with well-known IPs, splitting sales according to agreed ratios. In the PGC model, the platform signs the IP at a fixed price and sells it on the platform to share profits. This works well and applies to the majority of Chinese NFTs where there is no competition for fees.
2. NFT Creators: The second difference is in creators inside and outside China.According to the recently released 2021 China NFT Platform Survey Report, China’s NFT creators can be broadly divided into individual creators, who make up more than 90% of creators, and groups or teams, which make up less than 10%. This decentralized model is unique because the global NFT market is even more centralized, with 10% of NFT creator groups or companies accounting for 85% of all transactions.
3. NFT Audience and Guochao Culture: In China, NFT buyers are primarily millennials and generations, and NFT products that differ from other traditional arts that are most commonly defined elsewhere. I highly appreciate the artwork.Guochao culture’. Guochao Art includes more media formats and artistic expressions that can be expressed in VR or AR. These can be transferred or auctioned online in NFT format. How the rise of NFTs Guochao Art, its value is taken to new heights.
But the biggest difference is in the way NFTs are traded. There are four main differences.
1. Blockchain: Overseas markets are mainly based on public chains with community-built technologies such as ETH and Flow. These are under-monitored and may be exposed to potential security issues. The Chinese market is dominated by consortium chains such as AntChain and ChanganChain. This is a variety of technologies backed by very large enterprises.
2. Transaction currency: Cryptocurrencies such as Ethereum and RARI coins can be used in overseas markets. Fiat transactions between RMB and RMB are available in the Chinese market.
3. Volatility: Cryptocurrencies are associated with foreign NFTs, so the market remains relatively volatile and exposed to more speculation. There are ups and downs in China as well, but they are relatively controlled.
4. Copyright: Complaints are mostly ignored in the event of an infringement abroad. NFTs still lack copyright compliance.. Currently, there is no legal obligation to obtain a license or permission from the rights owner to use the copyrighted work in the NFT. However, in China, you need to be aware of the NFT copyright.
How China is destroying traditional NFT models
China is moving cautiously, overseeing the NFT market and thereby giving it confidence. This is the “Together NFT” app, overseen by the Hainan International Culture and Art Exchange Center Co (Haiwenjiao), which completed the NFT Development Center, forming the first country’s NFT to hold a RMB settlement compliance license. I am. To determine its value, the “Together NFT” follows a six-step verification process that includes both physical and digital rights protection for the NFT.
Other players also play their part in maintaining the credibility of the industry. Last August, Tencent officially released the NFT trading software “Magic Core”. The Magic Core app requires users to obtain real name verification before they can subscribe to digital collections. So far, only brands, IPs, and artists are allowed by the platform to publish their work after being invited. With these measures, the MagicCore app can reduce the user’s ability to hype digital art. The goal is to avoid soaring NFT prices, increase liquidity so that NFT values are based on real popularity, and create a better experience for collectors.
Alibaba has also established an NFT trading platform based on Ali’s ecosystem and released several NFTs launched in collaboration with major IP players. For example, at the Hangzhou Asian Games last September, a digitally licensed product called “Xinhuo” was launched. The NFT purchase had a 180-day transfer limit. It can only be transferred to another person after this period has expired. It was also built on a currency-free blockchain using RMB payments.
What can you expect in the future?
Despite its appearance, China really embraces NFTs. China’s National Blockchain Services Network (BSN) launched its infrastructure at the end of January to support the deployment of non-fungible tokens (NFTs) in the first digital currency (RMB). This is a major step towards building the Chinese NFT industry independently. Cryptocurrency.
Currently, NFTs are mainly used for digital art. However, a larger market for managing certificates such as vehicle license plates and school diplomas has not yet been created. In the future, as blockchain technology expands and China establishes NFT-related trading rules, brands will also enter the NFT market through the Metaverse.
What we have learned from the past is that China’s digital industry is full of innovation and is rapidly becoming one of the most advanced and sophisticated ecosystems in the world. What’s happening on the blockchain isn’t surprising, it looks like history is repeating. It may seem like a slow start compared to the West, but in reality it’s pretty specific to want to establish the framework and infrastructure needed to take a strong lead in a very important industry in the future. It is a desire.
Ramzi Chaabane is the China Managing Director of Shanghai-based Stink Studios.