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"Non standard" digital assets are messy and sexy. Where is the "Chinese version of NFT" going?

Time : 11/10/2021 Author : p9ralz Click : + -
        According to Caixin and various multimedia reports yesterday, Tencent's NFT digital collection platform "magic core" business was exposed to be about to shut down, including the abolition of the team, the adjustment of business direction, etc., because of avoiding policy risks. Magic core is an NFT distribution platform incubated internally by Tencent. The app was officially launched on August 2, 2021. Following the regulatory trend, all NFT Related words in the platform were adjusted to "digital collections" from March 22. At present, magic core is also the largest digital collection platform in China. In Q1 2022, Tencent's net profit fell by more than 20%, which was the third consecutive quarter. Ma Huateng also said that facing industry challenges, the company implemented cost control measures and adjusted some non core businesses, which would help to achieve a more optimized cost structure in the future.
        Caixin's report said, "the regulation does not allow secondary market transactions, so it cannot incubate NFT exchanges similar to foreign opensea, and the space of domestic alliance chain is very limited". Not long ago, the "14th five year plan" for the development of Shanghai's digital economy (hereinafter referred to as the "plan") issued by the Shanghai municipal government put forward new requirements for the development of digital economy, taking new digital industries, new data elements, new digital infrastructure, new intelligent terminals and other blocks as the key areas of Shanghai's development of digital economy. At the same time, the words "NFT", "digital assets", "digital finance" and "blockchain" have attracted market attention.
        However, in fact, the context and scope of the concepts of NFT and digital collections in China are very different from those abroad. NFT in a general sense includes multiple levels of connotation and series of links. It is not a "currency", but it is related to transactions, and its value may change dramatically over time. If it is not properly mapped to the financial field, IIR believes that perhaps we can compare NFT to "non-standard products" such as equity. The regulation and supervision of NFT are in the exploratory stage at home and abroad. The United States has now applied NFT to election campaigns, while NFT in China seems to match more digital collections / digital assets in the field of China's "cultural digitalization strategy".
        However, in terms of the current number and speed of development of digital collection platforms in China and the dispersion of underlying blockchain technology, it seems that under the principle of clarifying boundaries and encouraging development, technical consensus and norms should also be implemented as soon as possible. The full name of NFT is non fungibletoken, which relies on the tamper proof and traceability characteristics of blockchain. It is a kind of blockchain token, and has the characteristics of uniqueness, indivisibility, tamperability, manageability of ownership (ownership, transferability), etc. There are different opinions about the earliest origin of NFT, but it is recognized that 2021 is the year of NFT outbreak. In the context of the epidemic and currency overload, traditional investment has lost its appeal, and people have begun to focus more on fields that seem to be "blue oceans".
        In 2020, the NFT work everydays:thefirst5000days, which was created by digital artist beeple every day since 2007 and finally assembled with 5000 pictures, was auctioned by Christie's at a sky high price of $69.246 million. Since then, NFT has completely broken the circle, and all kinds of stars, stars, artists, etc. have released NFT through various platforms. NFT is often referred to as non homogenous token in China at present. However, IIR more agrees with the concept of non-homogeneous equity certificates / certificates. Because NFT represents the digital certificate of digital or physical asset ownership, it is represented as a set of timestamp metadata on the blockchain, which has unique and eternal directivity with specific digital content stored in the network. The metadata is displayed as a specific URL link or a set of hash values (blockchain ID) storing specific digital content.
        The voucher is associated with the smart contract on the blockchain and can record the initial issuer, issuance date and each future circulation information about the specific object. Just as the congressionalresearchservice (CRS), founded in 1914, is a separate department within the U.S. congressional system, writing authoritative, objective, non partisan analytical reports on topics of interest to congressmen, and providing assistance in the legislative and oversight process of Congress, it has just released an NFT report on July 20, which pointed out that behind NFT, It includes two levels of concepts: NFT project object (nftitem, project object not stored on the blockchain, IIR based on its own understanding, in this paper, project and object are defined as two levels of meaning, see the following description for details) and NFT metadata (nftmetadata, that is, metadata stored on the blockchain, corresponding to the underlying project location information, ownership and transaction information, etc.).
        In short, an NFT "project", such as an artist's work, may have multiple "objects" (such as NFT that has issued 40 identical images), but behind each NFT project "object", there is a unique NFT metadata. Most users buy NFT in the special NFT market, but due to the limited storage space and high energy consumption of the blockchain, the NFT project object itself (such as an image or MP3 audio file) is actually stored outside the chain. By uploading the digital file of the NFT project "object", the user records the NFT project "object" on the blockchain through a smart contract (an automatically executed contract that can exchange money, property or other valuable items without third-party services, which is a group of code lines located at a specific address on the blockchain), and also records the NFT metadata on the blockchain, It represents a "voucher", a data unit that carries value (the value of NFT is determined by people's willingness to pay for it.
        Certificates / vouchers are essentially worthless. They are just data recorded on the blockchain). The CRS report shows his understanding and illustration of the whole process of NFT trading. At the same time, taking everydays:thefirst5000days as an example, it disassembles the conceptual connotation of nftitem and NFT metadata. In this way, NFT in a general sense is indeed not a "currency" or "cryptocurrency". The assets under the chain mapped by cryptocurrency are homogeneous and can be divided by equal amounts, but the underlying assets of NFT. However, it cannot be divided by the same amount as cryptocurrency or currency measurement. It represents a kind of equity with "real value" outside the blockchain system, not "currency", but is associated with transactions, and the value may change greatly with the passage of time.
        NFT brings disruptive changes to the confirmation and circulation of digital content. If we make an inappropriate analogy with the concept of products in our financial markets, IIR believes that perhaps we can compare NFT to "non-standard products" such as equity. NFT is a new form of digital assets. Because NFT is still an emerging thing in the world, and there is no recognized statement about the scope of digital assets, at present, including the United States, which has the highest activity, the supervision of NFT is still in the exploratory stage. In March 2022, the president of the United States signed an executive order (see the following paragraph) to address the potential risks of digital assets and their underlying technologies.
        In the same period, the Ministry of justice heard a case of investment fraud using NFT (involving US $1million); In April 2022, the jointchiefsofglobaltaxenforcement issued a notice on how to identify the use of NFT for money laundering and other illegal purposes. David · In Hamilton's "what is digital asset", cryptocurrency (such as bitcoin), digital token (such as Ethereum), digital stable currency (such as usdc), NFT, virtual real estate, etc. are all defined as digital assets. On March 9, 2022, In the executiveorderonensuringresponsibledevelopmentofdigitalassets signed by US President Biden, the categories of digital assets include legal digital currency, digital stability currency and digital token.
        Assets that do not use encryption technology or blockchain technology, such as funds in the banking system, are classified as "electronic assets" and excluded from the category of "digital assets". (this information comes from official account: Qin Shuo's circle of friends: Digital Collections: connotation, risks and regulatory suggestions, by Guan Haocheng). Even in the United States, NFT has been used for campaign fundraising. In Minnesota, California, Arizona and Wisconsin, candidates have used NFT to encourage donations, attract supporters, and establish token holder communities to organize campaigns. As of May 2022, the Federal Election Commission (FEC) has not issued formal guidance, but a Commissioner of the Federal Election Commission said that the use of NFT is in line with existing laws and regulations (this information is derived from CRS).
        In China, the boundary corresponding to NFT is obviously different. From 2013 to 2022, the state issued several important policies, including bitcoin, virtual currency, "mining" and preventing the speculation of virtual currency, and issued many notices (in December 2013, the central bank and other five ministries and commissions issued the notice on preventing bitcoin risks). On April 13, 2022, the China Internet Finance Association, the China Banking Association and the China Securities Association jointly issued the initiative on preventing financial risks related to NFT (hereinafter referred to as the initiative). The initiative officially recognized NFT for the first time. As an innovative application of blockchain technology, it shows certain potential value in enriching the digital economy model and promoting the development of cultural and creative industries.
        But at the same time, it clearly denies that financial assets such as securities, insurance, credit, precious metals and so on are the underlying assets of their equity value mapping. In short, it is "de financialization" to curb the tendency of NFT financialization and securitization. At present, in China, where the word "NFT" is not often mentioned, its main corresponding concept is "digital collection". During the Winter Olympics at the beginning of the year, NFT was released and the collection sold well, which popularized the people's understanding of the collection. In May, the general office of the CPC Central Committee and the general office of the State Council issued the "opinions on promoting the implementation of the national cultural digitization strategy", pointing out the direction for the healthy development of China's digital collection market. According to the "digital collection application reference" edited by the blockchain copyright application center of the comprehensive Key Laboratory of science and technology and standards of the State Press and Publication Administration on July 6, the definition of digital collections in China is based on works, copyright and online publications.
        Digital collections use blockchain technology to anchor works to generate digital certificates of the only ownership or use right on the chain, which can not be tampered with, separated, and limited edition. The purpose is to realize the true and credible digital distribution, collection, use, and circulation of works. Digital collections are usually described as "NFT with collection value" overseas. As for the differences between Chinese and foreign digital collections and NFT, the people's network article has summarized the following three points:. 1. Foreign NFT is based on the public chain, which is open to everyone, and anyone can participate, read data, send transactions, etc. The core feature is that it is not managed or controlled, and there is no person or institution to supervise.
        However, domestic digital collections (NFT) operate on the blockchain technology at the bottom of the alliance chain, and are only open to specific members. In comparison, it has a higher access threshold and security (according to the degree of opening permission required for access, blockchains can be roughly divided into three categories, public chain, Alliance chain and private chain). 2. In terms of the content of the collection, foreign NFTs have not been subject to copyright review, and domestic standardized digital collections must be subject to content review before they can be released on the chain. 3. Foreign NFT is to token a work or a virtual thing, which does not convey the value of real digital cultural and creative works and digital copyright works.
        Domestic digital collections use blockchain traceable, unchangeable, open and transparent technical means to circulate cultural elements, anchoring the value of digital cultural products and copyright works, and transmitting the value of digital cultural elements. From the current map of the development of digital collections in China, the application direction of digital collections has gradually penetrated into art collection, art works, music, cultural tourism, entertainment, cultural IP, catering, shopping, sports, ticketing and many other fields (on July 11, writer Feng Tang also released the first digital collection "spring breeze is not as good as you", which was officially sold out in Baidu xirang mall and Xiaodu Xunyu, with a limit of 2000 copies, and sold out when it was launched online).
        The main types of participants involved are: publishers, copyright owners, underlying technology (blockchain) and digital collection trading platforms. Although the development of China's digital collection market has just started, it is indeed quite spectacular from the current number of platforms and development speed. According to the statistics of Yuan airship data collection ship, as of June 22 this year, more than 100 new platforms have been added every month in the months since the domestic launch. This means that in recent months, an average of 3 to 5 new platforms have been launched every day. Such popularity, coupled with the imperfect policy and regulatory system, of course, has also increased market risks. In the face of fierce competition, in addition to the changes that Tencent magic core may face, after July, small data collection platforms such as magic yuan data collection and Yingjing have closed the consignment market, and even the data collection platforms of listed enterprises have announced that they will stop operating. For example, on June 27, the data collection platform "yuzang" of Hang Seng Electronics announced that it would shut down its business and be cleared by means of "original price repurchase".
        On February 8th, 2022, The international standard project of blockchain based digital collection service technology framework (led by Tencent and jointly proposed by ant group, China Academy of information technology, Beijing University of Posts and telecommunications, Zhijiang laboratory and other industry, University and research institutions) was launched in the International Telecommunication Union (ITU, the United Nations specialized agency responsible for information and communication affairs, is an intergovernmental international organization, established on May 17, 1865, currently has 193 Member States, more than 900 department members, associate department members and academic members, headquartered in Geneva, Switzerland). The project was approved at the relevant meeting. The standard will regulate the technical architecture, technical processes, functional requirements and security requirements of digital collection services based on blockchain, Promote the global consensus on the collection service framework, and promote the standardized application of digital collections.
        In combination with the characteristics of China's digital collections that strictly prevent hype and do not open secondary market transactions (some platforms have set up a gift transfer function), and returning to the recent Shanghai municipal government's "plan", IIR believes that the focus of NFT in the plan should also be to support "leading enterprises" to develop underlying technology (blockchain Technology), And "blockchain +" digital asset ownership and trading platform construction (although the full text does not give the scope or definition of "digital assets"). For example, the fourth point of "supporting project" in the plan &mdash& mdash; The blockchain technology application and industrial development project also mentioned that "strive for the construction of the backbone nodes of the national blockchain new integration infrastructure" spark · chain network ", and undertake the pilot task of national blockchain innovation and application (2
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