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Digital collection NFT: the next drum and flower game?

Time : 04/02/2022 Author : dlb36t Click : + -
        Ma Le first came into contact with domestic digital collections in mid May. That afternoon, a friend suddenly sent a poster with a QR code via wechat, inviting him to scan the code and join a digital collection platform. Ma Le opened the picture. On the black and gray background, the words "Limited sales, order of creation, only this time" were printed in large gold characters. "Domestic NFT (non homogenous token)" was Ma Le's understanding of "digital collection" at that time. My friend sent three messages in succession: "xintaizi", "white whoring airdrop" and "rush". After a simple inquiry, Ma Le found that NFT was indeed defined as a "digital collection" in China, but the technology and mode behind the "digital collection" were quite different from the NFT he understood. He didn't bother to study deeply and regarded all domestic digital collection platforms as "leek platforms" for "harvesting" speculators.
 
        However, in "618" this year, tmall, jd.com and other e-commerce platforms have jointly launched digital collections with brands and built momentum for their marketing. Ma Le was puzzled by the strong popularity of digital collections. He found that as early as June 2021, ant group released the "ant chain vermicelli" applet, and soon joined hands with Dunhuang Academy of fine arts to launch a limited 8000 copies of NFT payment code skin, priced at 9.9 yuan plus 10 Alipay points. Two months later, Tencent launched the first digital collection trading platform "magic core" in China. In December 2021, ant also upgraded the applet to the digital collection app "whale probe". Since then, Netease, jd.com, BiliBili and tmall have laid out the industry by issuing NFT or launching trading platforms.
 
        What surprised Ma Le even more was the tightness of these digital collections in the market. The price of the first-time collection sold by big factories is not high, coupled with the social excitement driven by marketing, it is understandable that it has been sold out. On the Ibox chain box of the domestic digital collection e-commerce platform, unknown collections or cultural and creative series can also be priced between 10000 yuan and 30000 yuan, some even more than 60000 yuan, and almost all collections are "first sold out" on the homepage of the platform. On May 9, 2021, the great Pythagoras — — NFT encryption art exhibition was held in Beijing Su San cultural and creative park. The exhibition aims to convey the idea of involving daily life into conscious time, space and digital fields for in-depth exploration by displaying the works of 12 NFT artists.
 
        Photographer / our reporter Hou Yu. Unlike NFT, which uses public chain and cryptocurrency transactions, domestic digital collection platforms emphasize the use of alliance chain and legal currency transactions for compliance reasons. On April 13, 2022, the China Internet Finance Association, the China Banking Association and the China Securities Association issued the initiative on preventing financial risks related to NFT, and put forward six norms to curb the "tendency of NFT to finance and securitize", including that financial products should not be NFT, should not weaken the characteristics of non homogeneity, should not provide centralized transactions for NFT transactions, set up trading venues, should not use virtual currency, real name authentication Do not invest in NFT directly or indirectly.
 
        Ma Le has limited knowledge of blockchain technology, but in his opinion, the reason why NFT has attracted attention is precisely because it is based on the tamper proof, traceable and decentralized characteristics of public chain distribution. But now, he couldn't understand, "even this premise is not tenable, how much value does the digital collection have?". "Traditional artworks are highly heterogeneous, and there are great differences between different artworks, which cannot be replaced each other, and it is easy to form a seller monopoly. In addition, the liquidity is also relatively poor, the transaction frequency is low, the transaction rate is general, and the transaction cost is high. The emergence of NFT and digital collections provides a safe and effective way of ownership confirmation and circulation for areas with low liquidity.
 
        ”Yu Jianing, executive director of the yuan universe Industry Committee of China Mobile Communications Federation, told China Newsweek that the value of digital collections produced after localization by NFT can be reflected by comparison with traditional art transactions. It is difficult to identify the authenticity of traditional collections and the process is complex, but NFT and digital collections have tamper proof chain vouchers since their birth, which greatly reduces the identification and transaction costs and greatly improves the liquidity. Yu Jianing believes that although the digital collection "has certain Chinese characteristics", due to the use of blockchain technology, the psychological characteristics do not affect its uniqueness, authenticity and permanence as the NFT on the public chain, which can effectively protect the rights and interests of creators and holders.
 
        Player Wang Zijian is very clear about the difference between domestic digital collections and NFT based on public chain distribution, but he is not worried. "We play digital collections just to make money." Wang Zijian told China Newsweek. Compared with the technology behind it, he pays more attention to selecting those platforms that can make the collection appreciate and realize from more than 500 collection platforms. "A friend of mine bought a collection of tens of thousands of yuan on ‘ phantom core ’, and he can only enjoy it by himself. It can't be changed at all, which is equivalent to the loss of investment." Magic core is an NFT distribution platform based on Tencent Zhixin chain. Compared with the "magic core", the "whale detective", which can be transferred after 180 days of collection, is a better platform in Wang Zijian's eyes, "equivalent to opening a deal".
 
        Ibox, unique art and other platforms are favored by many players because they are "more mature in the secondary market" and can sell collections at high prices. Wang Zijian felt that the high price of domestic digital collections could not withstand scrutiny, but it was a helpless move forced by reality to move from the international market to China. "Playing digital collections is because it is still early in China and has value-added space. NFT has been very mature overseas, and the industry has been a little cold". Cryptopunks, the world's first NFT project, was born in June 2017. Two Canadian software developers brought 10000 pixel avatars generated by the program to Ethereum, so that they can be verified, transferred and owned by others.
 
        In 2020, the digital artist beeple will insist on splicing 5000 pictures created every day into a JPG file since 2007. The NFT named "everydays:thefirst5000days" was traded at Christie's on March 11 of that year for $69.34 million. NFT has thus become the focus of the public and ushered in the market explosion. Player Xiaoxue first bought NFT in August 2021. She worked for a domestic blockchain content platform. She bought a little penguin with sunglasses with 0.014 Eth and replaced it with a avatar.
 
        In many Web3.0 communities, discussions about NFT projects continued from 2021 to the beginning of this year. "Skyrocketing is the simplest and rude way to attract everyone's attention. Everyone will talk only when the price is high." Xiaoxue told China Newsweek. According to nftgo data, as of June 2022, there were 2910 collections and more than 29.76 million collections worldwide. The total market value of NFT reached its highest point on January 20, 2022, about US $35.05 billion, equivalent to the market value of Ferrari. On March 12, 2021, cryptopunks#3100 traded at a sky high price of 4200 ether coins (about $7.42 million), once again pushing the market to a climax.
 
        Xiaoxue found that the value of the little penguin NFT she bought has increased by more than 100 times. As a non homogenous token, uniqueness and indivisibility are the biggest characteristics that distinguish NFT from cryptocurrencies such as bitcoin and Ethereum. In the last round of cryptocurrency bull market, when the prices of bitcoin and Ethereum were too high to be timely, many underfunded speculators began to buy 0.01 or even 0.001 tokens, so that they could catch the wealth express. However, the indivisibility of NFT determines that once its price is high, underfunded speculators will be blocked out of blue chip NFT, and the liquidity of the market will be greatly reduced. "The popularity of blue chip NFT is a carnival of a small group of people.
 
        ”Xiao Xue summed up China Newsweek. In China, considering the compliance risk and insufficient funds, many players and speculators turn their attention to the domestic digital collection market as a "flat replacement" because they cannot squeeze into the blue chip project circle with high value-added space. Many young speculators increase their probability of getting the "airdrop" from the project party by participating in the project and forwarding twitter. "Airdrop" is also one of many "slang" in NFT market, which refers to the project distributing gifts or red envelopes to specific personnel. Players expect to hold NFT collections infinitely ahead of time through "airdrop". After all, the lower the price of the collection at the beginning, the greater the space for value-added, and the greater the possibility of obtaining the ultimate input-output ratio.
 
        In January 2022, after the trading volume and market value reached their peak, the trading volume of NFT began to decline sharply, and the collection began to face the dilemma of having a price but no market. As of press time, the nftgo market sentiment index with a full score of 100 shows that the current NFT market heat is only 30 points. In the 24-hour trading number, there are nearly 17000 buyers and nearly 20000 sellers. The overall market supply exceeds demand. In the trading within 30 days, nearly 280000 people made profits and more than 450000 people lost money. "The sharp decline in the prices of various NFTs is affected by the fluctuations in the overall financial market and encryption market. In fact, this is the foam cleaning stage that is bound to appear in the development of an emerging industry.
 
        ”Yu Jianing told China Newsweek. At the doublefat encryption art exhibition in March 2021, the painting Hsinchu by artist Leng Jun was burned and made into NFT uplink. In this case, NFT corresponds to the ownership of Hsinchu. In order to make the ownership indisputable, the artist chose to let the original painting disappear. The artwork only exists in the digital world, and the holder of NFT then has the full value of the work. "If the physical object and NFT belong to different owners, there may be property rights disputes in the future, and there may also be problems similar to ‘ double payment ’, that is, the same asset is sold twice, causing a series of potential problems.
 
        ”Yu Jianing told China Newsweek. NFT data analysis platforms nftgo and messariresearch show that as of February 2022, 44% of NFT transactions came from avatars, 45% from games, art and collections, and the remaining 11% from practical assets, metauniverse, land and social networking. Ens series sells secure domain names in decentralized world, and thesandboxland sells 166464 lands in metauniverse, Gen Artmembership sells 5100 memberships. Of course, NFT can also be an audio, a painting by Cai Guoqiang, and a column by the New York Times.
 
        "From the perspective of development prospects, digital collections are one of the most suitable development directions for the meta universe." Yu Jianing believes that everything can become a "value machine" that empowers everything through the "chain". NFT related technologies will realize the capitalization and economic protection for digital culture IP, and even build a bridge connecting physical world assets and digital world assets. Today, cryptopunk#3100 is the rarest collection on the trading platform, with a price of 35000 Ethereum, about $43 million. To the onlookers, cryptopunk#3100 is just a small alien pixel avatar.
 
        Why are people willing to spend sky high prices to buy a avatar, a picture?. "Cryptopunks can be regarded as ‘ digital antiques ’ that have witnessed the development of the meta universe. Now anyone can draw a batch of pixel avatars and publish NFTs on the blockchain, but no one can go back to 2017 and publish a similar NFT." Yu Jianing believes that the scarcity and value consensus of cryptopunks lies in its guiding role in the development of NFT market. In addition, due to the public chain, cryptopunks, as a digital commodity, has been confirmed on the chain, and the scarcity and ownership have been clarified, so that it can be circulated and traded.
 
        "In opensea (the world's largest NFT trading market), the NFT you buy is a number. You don't buy pictures or anything you can see. What you really buy is just a number." After dismantling the NFT contract code and the issuance process, blockchain entrepreneur Lin Tao came to a conclusion. After working in Alibaba and Sequoia Capital for one year respectively, he entered the blockchain industry to start a business. "We all believe that NFT runs on the blockchain and cannot be tampered with, but in fact, a large number of NFTs only store numbers on the blockchain, and the corresponding presentation layers are pushed in using external interfaces.
 
        ”Lin Tao wrote in a technical analysis article. "That means that the NFT in your hand can be changed into another look you don't know at any time. Maybe you still held 0.01% rare NFT worth 1million yesterday. As long as the project party is willing, he can change it into a piece of shit for you today." Lin Tao said. "The storage and trading of counterparts still need a third party, which has nothing to do with decentralization. In fact, they don't buy anything." Cryptocurrency speculator Han Tian sniffed at NFT. The technical accident of Ali NFT's "blind box" to "open box" sale soon confirmed Lin Tao's analysis.
 
        In this accident, the project team wrote the string that locates the real situation inside the blind box into the front-end public folder. After the code was picked out, the real content of NFT "blind box" was completely exposed, so that players who know the inside story can buy a large number of highly rare collections at a low price. After the incident, the project party urgently disrupted and replaced the original string corresponding to the content, and announced this remedial measure. "This is equal to announcing that as a project party, you have the right to modify your NFT at will. Not only does it devalue your project, but also morally, it does not follow the consensus that Web3.0 cannot be tampered with and decentralized.
 
        ”Lin Tao was quite angry. "In general, the information on the chain is difficult to be tampered with. If the NFT counterpart is modified by the project party at will, it is likely that ‘ back door ’ is left in the smart contract. We must pay attention to whether there is an audit company to conduct security audit on the project code." Yu Jianing said. "The current digital collection and NFT is not a commodity, but a financial product, which has great hype. Whether practitioners or players, most of us want to buy NFT for value-added purposes." Lin Tao told China Newsweek. Since the birth of blockchain, players and practitioners have experienced the boom of ICO, the sharp rise and fall of cryptocurrency, and the boom of de fi technology.
 
        Facing the NFT on the tuyere, many people will mention the "tulip mania" of the 17th century. The blown bubble burst, leaving only pain. "The entry threshold of NFT is very low. Ordinary people can buy a picture simply because it looks good, and buying it is equivalent to adding value to it." Lin Tao compared NFT with the blockchain lending technology de fi, which attracted much attention last year. "De fi involves complex financial knowledge, and NFT only needs to register a wallet. As soon as the threshold is lowered, many people will rush in. Once the price is raised, the probability of being cut into leeks is very high.". The most common way of "cutting leeks" is rug.
 
        "Web3.0 Survival Guide: fraud prevention" released by "NFT vanguard"
 
        
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