Digital Collections: China’s Version of NFTs Versus NFTs
Since the bankruptcy and liquidation of Terra/LUNA, stETH, and 3AC, the transaction volume of the world’s NFT market has shown a downward trend. Among them, the transaction volume of OpenSea has gradually declined to $15 million per day by June. Meanwhile, China, on the other side of the ocean, is leading the digital collection market.
The single-day transaction volume of trading platform iBox exceeded $250 million. What is China’s digital collection? What is the difference between digital collections and NFTs?
What Is A Digital Collection? Chinese-Style NFTs
Digital collections and NFTs themselves are digital art derivatives based on blockchain technology, but their technology, ecology, and distribution methods are different to some extent.
- From the perspective of technical ecology, an NFT is based on the public chain, which is open to everyone, and anyone can participate, read data, send transactions, etc. The core feature of NFTs is decentralization, without any person or institution to supervise. The digital collection is based on China’s alliance chain. Many blockchains and alliance chains are infrastructure built by the government. China manages the alliance chain.
- From the content of the distribution, an NFT does not need to go through copyright audit, while digital collections in China must go through content audit before they can be published on the chain. China positions digital collections as digital publications, which means that they can only be circulated and sold after being published. Therefore, the distribution of NFTs is relatively free, but there will also be artistic infringements such as NoOkayBear and RugZuki. Incidents such as Yuga Labs suing artist Ryder Ripps are also endless. Chinese digital collections expect to deliver certified digital cultural and creative works, digital copyright, the value of the works, so the content qualified for the distribution of digital collections in China is often cultural heritage, such as various places of interest and historical figures.
- In terms of financial attributes, NFTs and digital collections themselves are digital asset derivatives and have certain financial attributes. Compared with the more open Western world, China has added a lot of supervision to the financial attributes of digital collections. Digital collections cannot be used as financial products, so businesses such as mortgage loans cannot be carried out. Digital collections cannot be publicly traded in the secondary market, but assets can be given away after the lock-up period. Therefore, Chinese users often choose to purchase in a decentralized way of P2P. At the same time, digital collections must be settled in Chinese Renminbi, and cryptocurrencies cannot be used.
Development of Digital Collections
Since the end of 2021, China’s top internet companies have entered the game.
In 2021, as Alibaba, Tencent and other internet giants successively launched their own “label” digital collection platforms, digital collections began to enter the public’s field of vision. By the end of 2021, the domestic digital Tibetan market will show explosive growth. At present, the number of domestic digital collection platforms has grown from dozens to more than 500.
There are more than 70 digital Tibetan trading platforms in my country, 43 of which are on a small scale. The current platform is divided into three echelons in terms of the quality, quantity, traffic, cultural value, and blockchain technology level of collections. The first echelon is iBox and Alibaba, Tencent and Xiaohongshu. According to data, the current digital collection market size is about $18 billion, and it is expected to reach $82 billion in 2026.
“iBox” is one of the most popular platforms in China. On June 15, iBox’s newly-released “Nonoku Avatar” was priced at 499 yuan ($74.40), and the current secondary market price is already around 26,600 yuan. The price of “Yihe Rui Beast” series blind boxes with a price of 99 yuan is currently higher than 4,000 yuan in the secondary market, and the price of “Kirin” with a rarity of “SSR” in the blind box is not lower than that in the secondary market – fifty thousand yuan. However, corresponding to the popularity, there has been a significant increase in rights protection incidents regarding user investment losses recently.
China’s digital collection market has gradually warmed up and entered the mainstream perspective, but the opposite method of strong supervision also limits the birth of a lot of content. It is undeniable that the scale of China’s digital collection market cannot be ignored.
A digital collection itself, like an NFT, is a part of the asset and can be hard to separate from its financial attributes. How the digital collection market integrates with the financial attributes is a direction worth looking forward to in the future.