Under the dark tide, count the digital collection evangelists in the country

| invited author of TechNode

Written | Joy Wu

Compiled | Li Penghui

Edited | Steven Lee

Since digital artist Beeple sold his work Everydays: the First 5000 Days for $69 million last March, the commercial market around digital art, a genre of NFT, has seen its highlight moment around the world.

The non-homogeneous token/NFT is a form of recording based on blockchain technology, which represents a unique item with uniqueness. Some common forms of NFTs include digital artwork, photos, music, videos, game items, and other forms of media. However, NFTs are more than that. Instead, it can even be used to record ownership of almost everything.

After artist Kevin McCoy's first NFT work came out in 2014, the field has only been quiet in recent years. For example, the NFT trading platform OpenSea, launched in 2018, has prompted more people to trade in digital artworks. According to Forbes, last year, the platform's transaction volume reached $23 billion.

Domestically, the NFT digital art market is also gradually hot with the addition of new players and projects. This may come as a surprise to those familiar with China's cautious approach to cryptocurrencies. Last year, The country announced a total ban on cryptocurrency trading and mining. However, some controllable blockchain technologies (such as the digital yuan) are also accepted here, and these technologies are encouraged to be developed in more areas. What is known is that, at present, conventional forms of NFT other than speculation and trading are not prohibited domestically.

Of course, in this context, NFTs will be seen more as derivatives of blockchain technology than as a tradable asset. At this stage, giants such as Ali, Tencent, and JD.com have created their own corresponding platforms or services. From there, users can purchase and collect digital items, but cannot trade or resell them. It is worth mentioning that in the dictionaries of most platform giants, the word NFT does not seem to appear very frequently. In order to avoid unnecessary associations with the concept of cryptocurrency, "digital collection" has become its most common synonym.

This paper deeply studies some well-known digital collection platforms in China, hoping to sort out the development of the domestic digital collection market from the inside out.

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Most of the country's digital collection platforms are built on the infrastructure of the consortium chain or BaaS (Blockchain-as-a-Service). As a result, these companies or organizations have control over the platform. This is in stark contrast to a number of digital collection platforms overseas, which rely mainly on public chains: these participants have no administrative authority, there is no barrier to participation, and they are more of a decentralized product, such as Ethereum or Solana as we know it. Therefore, it can be seen that under the premise of complying with the corresponding laws and regulations, there are significant stylistic differences between domestic digital collection projects and projects in the international market.

BSN: BSN-DDC

On January 25 of this year, BSN, a national blockchain infrastructure network, launched a foundational network called BSN-DDC (BSN Distributed Digital Credentials) to provide an application programming interface for businesses or individuals. The latter can build a corresponding digital collection platform from it.

The infrastructure has integrated 10 public chains, including Algorand, Cosmos, Ethereum, Polkadot, Tezos and Nervos. It is worth mentioning that the operation mode of these integrated versions of the public chain is not the same as that of its original version. In contrast, the former sets rules and conditions for the manager of the blockchain, the participants need to have a clear identity, and the payment will be made using fiat rather than cryptocurrency.

Ant Group: Whale Detective

Whale Detective is renamed from AntChain Fan Granules, a digital collection platform launched by Ant Group in June last year (renamed in December), which operates on AntChain, a blockchain technology platform developed by Ant Group.

On Whale Detective, users cannot resell digital collections and can only be given away to authenticated users after holding them for more than 180 days. It is understood that the common price range of the collections on the platform is 20 to 30 yuan, and each collection contains about 8,000 to 10,000 limited digital collections. (As of the end of the draft), the purchase is mainly completed through Alipay.

A major feature of the speed of fast and affordable whale detective trading. According to its relevant person in charge, during the Spring Festival Five Blessings Event in 2022, the TPS throughput of Whale Detective can reach 100,000 levels, "and this is at the leading level in the field of alliance chains."

Whale Scout has collaborated with many museums in the country to produce a digital collection of historical artifacts. In addition, Whale Scout has collaborated with painters, ethnic embroidery artists, etc. Recently, Whale Detective also approached the Shanghai Symphony Orchestra to jointly release a digital audio collection of 10,000 of China's earliest symphony records, each priced at 19.9 yuan.

Tencent: Phantom Core

Tencent's digital collection platform "Phantom Core" relies on its blockchain development technology platform Zhixin Chain, which is based on the underlying construction of the domestic open source "Chang'an Chain" technology. Compared to the Whale Scout, the Phantom Core has a larger collection. Magic Core has partnered with museums, artists, car brands, consumer goods brands and charities to publish a variety of digital collections.

In China, one of the main roles of the digital collection platform is to use the digital collection on the platform to promote cultural heritage and accelerate the digital transformation of the cultural and museum industry. For example, there are digital collection versions of dunhuang Mogao Cave murals on the phantom core, each priced at 118 yuan. This price is not much different from the price tag of Qi Baishi's digital paintings or other ancient Chinese artworks.

Phantom Core also works with consumer goods brands, such as companies in the automotive or home goods category, to jointly release digital collections. However, these collections are usually distributed through free and sweepstakes, mainly as a marketing tool for these brands. For example, earlier, Breeze released a free collection of five different 3D floral artworks, which attracted 14,154 people to participate in the draw. Another example is cosmetics brand collections from the Palace Museum – if people buy physical cosmetics, they can get a limited edition digital collection.

All digital collections obtained from The Magic Core can be displayed in the user's own 3D virtual gallery. Similarly, like other domestic digital collectibles platforms, collections in the magic core do not support secondary transactions.

NFT China

Unlike other digital collection platforms in China, NFT China (NFTCN) is a platform for independent artists and collectors to create, trade, share and collect NFT works. The platform uses NFT's technical form to sell digital and physical artwork and has a built-in virtual gallery to showcase users' collections. According to its website, the back-end technology used by the platform is based on Ethereum's sidechain, but it is not further elaborated.

Buyers purchase deposit vouchers (fuel cards) from the website in fiat currency to trade on the platform. Unlike other digital collection markets in the country, NFTCN has a spin-off secondary market from which collectors can resell their collections. For example, a piece called "Violent Goose #78" was first sold for 599 yuan on March 7 and then resold the next day for more than double the price.

China vs Overseas

There are always footprints that move on the edge

Domestically, while reselling and trading NFT and digital collections is illegal, there are still those who hope to be able to reap the benefits of these current purchases in the coming period.

In February, I saw a private collector from Whale Detective successfully purchase a digital collection on the platform and enthusiastically commented: Looking forward to the arrival of whale detective's secondary market.

And that's not the case. In June last year, the Dunhuang digital collection, which was first sold online on Alipay, was sold out. The original price of the collection was about $10. But soon after, on the idle fish, there was already a list price of 100,000 yuan, and then there was a 1.5 million yuan asking post. After that, of course, these goods were quickly found and removed from the shelves by Idle Fish.

Also in February of this year, as some collectors reached the 180-day transfer period, some users were trying to sell these "giveaways". At the end of the month, Whale Detective issued an announcement saying that it had punished 56 users who tried to do the above.

Digital property rights, where to go

The immutable properties of NFTs essentially create a digital property right that makes NFT record items more valuable than other forms of digital media such as JPEGs. From this point of view, if a developer of a decentralized NFT platform developed based on a decentralized public chain decides to abandon the project, in this case, the NFTs published on the platform can still continue to exist in the public chain. For example, Hic et nunc, a Tezos-based NFT platform, discontinued service last November, but all published NFTs on the platform are still available on the Tezos blockchain. In contrast, since most of them are based on non-public chains, this situation may vary slightly in China.

In addition, some NFT communities believe that NFTs play an important role in building metaspaces. As a result, some collectors are betting that the domestic digital collection market will go through a period of profitability in a controlled form, after all, on a global scale, they have witnessed the rapid appreciation of virtual land, virtual activities and virtual clothing.

KYC or not

All digital collection platforms in China require user real-name registration (KYC). Overseas, however, the NFT market is more made up of anonymous community users – an attribute I believe can help people reduce discrimination and protect privacy while maintaining transparency on public ledgers when conducting digital collection-related activities. Because traditional financial systems tend to have biased elements, with an "anonymity systems," people have equal access to investment opportunities, so that when investing in NFT collections or decentralized financial (DeFi) products, their skin color, gender, age, or educational background are not factors.

Note: This article is compiled from China's NFT market: Who are the major players, and what makes them different?, originally written by JOY WU. This article represents the views of the author only and does not represent the position of this website.

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