Chinese tech giants use FOMO for NFTs

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In mid-April, a group of industry associations in China issued a warning about the potential financial risks associated with non-fungible tokens, digital assets that are real-world objects, or intangible goods like a song. NFT cannot be traded with cryptocurrencies, said associations of banking, Internet finance and securities of the country, and they should not be used to create securitized products.

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While industry associations do not have regulatory power, they do have influence and take politicians seriously. Many in the crypto industry see this announcement as the death knell for NFT development in China. Curiously, however, the Chinese tech giants are showing a growing interest in — or, as some say, FOMO — in space.

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With Cryptocurrency trading banned in China, NFCs exist in the country to a limited extent. Instead of NFTs, tech companies refer to them as “digital collectibles” to distance their initiatives from the financial and speculative nature of many NFTs, emphasizing the technology’s function in proof of ownership and authenticity. Thus, many items minted in China are works of art, such as an ancient Chinese Buddhist statue, or objects of historical or cultural significance, such as the famous Chinese spaceship.

The value of NFTs lies in their ability to promote the growth of creative and cultural industries, the financial associations said in a statement.

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Unlike NFTs, which are minted on Ethereum or other public networks and traded for cryptocurrencies on open markets, China-issued digital collectibles are minted on permissioned blockchains operated by local tech giants and are often sold through those companies’ own channels. Users must first verify their true identity on these platforms before purchasing collectibles using RMB, and are prohibited from reselling works in secondary markets.

The rules mean that digital collectibles in China are separate from the global NFT market and highly illiquid. Some platforms allow owners to give away their assets, but only for free and a few months after purchase.

However, Chinese tech giants have been quick to release digital collectibles, with some even taking the risk of selling NFTs overseas. Below we have summarized some of the major players in this field to date:

  • Whale Talk (鲸探) is a flagship digital collection service launched by Ant Group, a financial technology subsidiary of Alibaba, in mid-2021. The works are minted on ant chaina permission-required distributed ledger (also called a consortium/alliance chain) jointly operated by Ant and its institutional partners.

Screenshots of the Whaletalk app

  • In April, Alibaba’s food delivery service launched a digital collectible service on its app, which is a comprehensive platform for Chinese users to order on-demand services and now buy food-themed digital collectibles.
  • Last August, Tencent launched Magic Core (幻核) on Zhixin chain, a network of consortiums created by Tencent and its partners. The most notable use of Zhixin Chain has been the replacement of physical ink seals or corporate stamps for document authentication using blockchain.
  • Online trading giant has unveiled its own Lingxi (灵稀) platform, which runs on Zhizhen chainthe network of consortiums he manages in December.
  • Baidu, the country’s search engine and autonomous driving giant, launched a Cosmonautics Day collection on its Xuperchain consortium in April.

Trip abroad

Some Chinese tech giants have taken their NFT ambitions overseas – or at least are showing a lot of interest.

  • Bilibili, a popular user-generated video streaming site in China, said this week that it is releasing a collection of 10,000 unique profile pictures through its third-party partner. CryptoNettia company that has recently been registered in Singapore. The company has “licensed” its intellectual property to CryptoNatty, which will mint illustrative avatars on Ethereum. It’s unclear how the two parties share revenue or who the target audience is, given that the majority of Bilibili’s users are in China. We contacted Bilibili for more details.
  • Huawei this week tweeted about Caked Ape collection, causing the floor price of NFTs to skyrocket. The vaguely worded tweet does not indicate what connection the Chinese telecommunications giant has with Caked Apes.
  • TikTok, the short video giant owned by ByteDance, has distributed its first NFT collection on Ethereum. in October featuring Detroit rapper Curtis Roach. The company’s efforts were described as “insufficient”. supposedly did not fulfill his promises work with famous artists such as Lil Nas X and Grimes.
  • Cai Wensheng, founder of Chinese selfie app Meitu, is probably the biggest crypto bull in China’s tech industry. Not only was he one of the first bitcoin investors, but he also made the decision to let Meitu own up to $100 million the value of the cryptocurrency. Meitu bought the first tranche of bitcoin and ether for a total of $40 million in March 2021.

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