Tue. Sep 26th, 2023

Chinese authorities are presently taking a cautious approach to non-fungible tokens (NFTs), striving to guarantee they are secure and regulated. But don’t jump to the conclusion that China is missing out on this technology. In reality, if we look in more detail, one might consider China to be at the forefront of blockchain technology. It will probably be the first country to experience a live version of the future web3.

NFT Trend In China

Although China has barred itself to cryptocurrencies, a digital yuan is already in circulation. On the NFT front, Alibaba and Tencent each released a platform to trade NFTs in August, carefully renamed “digital collectibles” in October. Baidu, JD.com have followed suit. And since then we can observe that their deliberate implementation of the NFTs and blockchain has led to steady industry acceptance.

But China’s development route for NFTs will follow a different business model from what we have seen in outside markets, including copyright protection or ‘digital property right certification’, and separating them from any cryptocurrency, helping to avoid frauds and fraud using phoney coins.

market would expand at a rate of 150 percent and reach 29.52 billion yuan (US$4.64 billion) by 2026. This still represents considerable potential for future development.

We’re also seeing the rise of popular collections in China. Many have heard of the popular NFT collection ‘Bored Apes’. While a comparable Chinese collection called ‘Bored Wukong’ has been accused of being a copycat, China has its own rivals, such as ‘Phanta Bear’, which are proving to be just as popular. The NFT project was established by Taiwan-based musician Jay Chou’s company Phantaci and digital entertainment platform Ezek. Phanta Bear is a collection of 10,000 algorithmically created digital collectibles that double as Ezek Club membership cards. Each Phanta Bear NFT traded for 0.26 Ether (ETH) as of January 7. The NFT project Phanta Bear was all sold out just 40 minutes after its release, with income of around US$10 million.

What distinguishes Chinese NFTs from others?

To grasp the fundamental distinctions in China, we need to realise that there are two sorts of NFT minting and distribution schemes. Let’s name them PGC and UGC. The PGC (professional-created content) approach is when a platform finds artists and collaboratively issues NFTs, then distributes the sales earnings between them. One example of this would be Nifty Gateway. In China numerous significant platforms adopt the PGC model: Ali’s Antchain, Tencent’s Magic Core, and Jingdong’s Lingxi are examples.

A UGC (user-created content) model, on the other hand originates from creators of audio, video or digital images, who can mint their NFT material themselves and submit them directly to platforms such as OpenSea, Rarible, InfiNFT, Mintbase, and others. The compensation plan is based on paying handling fees, followed by the difference in gas fees (payments to compensate for energy consumed in transactions on ethereum blockchain) (payments to compensate for energy used in transactions on ethereum blockchain). Users need to pay a processing charge to the platform for selling NFTs, usally about 5 percent -15 percent .

1. Professionalism:

The largest difference between the two ways is the professionalism of the creators. The PGC model works very well in tandem with well-known IP, and the sales are distributed according to the agreed proportion. In the PGC model, the platform signs the IP for a predetermined price, and then sells it on the platform and divides the profit. This works nicely and applies to the bulk of Chinese NFTs where dispute over handling fees doesn’t exist.

2. NFT creators:

The second difference is in the creators inside of China and outside. According to a recently published 2021 China NFT platform research report,Chinese NFT creators may be loosely divided into individuals creators, who account for over 90 percent of creators, and groups or teams which make up less than 10 percent . This decentralised methodology is unique, since globally the NFT market is still considerably more centralised with 10 percent of NFT creator groups or organisations accounting for 85 percent of all transactions.

By Adam

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