Land grabbing or creating hype? An article comparing my country's five major digital collectibles trading platforms

Xinhua News Agency launched digital collections of news, CCTV.com released 10,000 digital collections of the Year of the Tiger, and museums in Sichuan, Beijing, and Henan have flocked in. In recent times, digital collections based on blockchain have made a good start and pioneered a new trend in cultural and creative arts. As the Beijing Winter Olympics is grandly held, digital collections on the Winter Olympics are emerging in an endless stream. The International Olympic Committee is no exception and launched the Olympic Games Jam: Beijing 2022 multiplayer game and cooperated with the NFT platform nWayPlay to sell the "Bing Dwen Dwen" digital blind box.

In fact, digital collectibles are not unfamiliar to the general public. It is an application of NFT under the compliance background in my country. Due to its outstanding role in digital cultural creation, under the spillover effect of the hot NFT breaking the circle abroad, my country’s small and medium-sized enterprises, Internet giants, financial institutions, and even traditional listed companies and large organizations are also actively rushing to layout digital collectibles. For a time, large and small platforms for the purpose of digital collectible transactions such as Whale Tan, Huanhe, Lingxi, Red Hole, DAC, etc. have sprung up like mushrooms after a rain. The national blockchain service network BSN recently launched the NFT-specific infrastructure BSN-DDC, which has pushed this to a climax.

So, why do digital collectibles need a trading platform? What are the differences between the numerous digital collectible trading platforms? In this regard, this article will focus on typical companies such as Tencent, Ant, JD.com, QuChain, and Baidu, and compare the similarities and differences of the digital collectible trading platforms they launched.

What are digital collectibles? And what is their relationship with digital collectibles trading platforms?

Before making a comparison, let’s first clarify the concept. What is a digital collection? According to the Trusted Blockchain Promotion Plan, digital collections are digital works, artworks, and commodities that use blockchain technology to confirm the ownership of rights through unique identification. They can mark their owners in the blockchain network and trace the subsequent circulation, including but not limited to digital pictures, music, videos, electronic tickets, digital souvenirs, and other forms. In short, digital collections are works or commodities in digital form that use blockchain technology to confirm ownership and can achieve traceable circulation.

In terms of technical characteristics, digital collections are no different from the popular NFTs. They mostly use the ERC-721 standard and have the characteristics of uniqueness, indivisibility, non-tamperability, verifiability, scarcity, etc. The asset object is mapped through a unique identifier on a specific chain, and the on-chain evidence function is used to track transactions. All users on the chain can query the ownership of digital collections as nodes. However, unlike foreign NFTs that are mostly built on public chains, under the laws and regulations of my country, digital collections must be generated and issued based on alliance blockchain technology, and their hype attributes must be strictly controlled. Therefore, in order to distinguish NFTs, adhere to the principle of regulatory compliance, and promote the application of blockchain technology in digital copyright, cultural and creative fields, digital collections are separated from the financial attributes and circulation value of NFT digital assets, becoming the business application of NFT technology in digital copyright.

From the market perspective, although my country's digital collection market is still in its early stages, with the current boom in the Metaverse and IP operations, based on the current 7 million trading users overseas and potential users in my country, it is estimated that my country's digital collection trading market will reach 50 to 80 billion yuan in 2-3 years. This also involves digital collection trading platforms.

Compared with general commodities, digital collections have a higher dependence on trading venues. Unlike other physical assets, since digital collections are on-chain assets built on the blockchain, the issuance of digital collections requires a specific chain. In addition to the technical threshold of the blockchain, digital collections have the characteristics of virtuality, difficulty in circulation, and high dependence on the underlying layer. Digital collection trading platforms have also emerged. According to the traditional retail theory of "people, goods, and venues", the platform is the "venue" of digital collections, which gathers traffic and commodities to facilitate the transaction negotiation of digital collections. The digital collection trading platform basically runs through the entire life cycle of digital collectibles. It can directly provide the casting, issuance and circulation of digital collections. If large-scale transactions are to be achieved, the platform will be its key fulcrum.

As for blockchain applications, the current applications are all on the B-side or G-side. So far, there has been no large-scale blockchain C-side application. At this time, the emergence of digital collections can be said to be an urgent solution. Under the dual stimulation of the market and applications, it has naturally become a field that many blockchain companies are vying to deploy. Among them, Tencent, Alibaba, JD.com, QuChain, Baidu and other companies are the most typical. By analyzing the operating models of their platforms, we can also get a glimpse of the attitudes of mainstream Chinese companies towards digital collections.

Comparison of digital collection trading platforms of major companies

As mentioned above, companies that have launched digital collection trading platforms must have also made some arrangements in the direction of blockchain technology. From the following table, we can also see that companies such as Tencent, Alibaba, JD.com, QuChain, and Baidu have all laid a lot of groundwork in the blockchain field. In addition to digital collection platforms, companies have previously laid out products or solutions in the field of industrial blockchain, covering multiple fields such as privacy security, SaaS platforms, and evidence storage services.

In terms of the layout of digital collections, which is similar to the technical direction, these companies mostly use the alliance chain led by self-development as the bottom layer to complete the unique identification of digital collections and realize the ecological diversion of horse racing. As shown in the table below, Ant took the lead in launching the payment code skin of the Dunhuang series of digital collections for payment in the Ant Grain applet in June last year. Later, the applet was renamed Whale Exploration, and Ant Chain provided the bottom layer service for it. Tencent, JD.com, QuChain, Baidu, etc. have also successively launched digital collection trading platforms such as Huanhe, Lingxi, and Hongdong Digital Collection on Zhixin Chain (adapted to the bottom layer of Changan Chain), JD.com Zhizhen Chain, QuChain Blockchain, and Baidu Super Chain.

Underlying technology: All based on self-developed leading alliance chain, with more emphasis on ecological construction and user operation

In terms of technical strength, the core focus of the digital collection trading platform should be blockchain evidence storage, identity and privacy protection, and TPS that supports the completion of transactions. However, from the perspective of the current underlying blockchain, whether it is built behind closed doors or with the help of other alliance chains, the technology for building digital collections is basically mature and complete, but the focus is slightly different. For example, although all the above chains have blockchain evidence storage functions, Zhixin Chain has been widely used in the National Industrial Information Security Development Research Center, the Sichuan Higher People's Court, and the Shenzhen Intermediate People's Court credibility agency, and its evidence storage strength is the highest. JD Zhizhen Chain is more eye-catching in high-frequency use and application flexibility, and from the perspective of TPS, Ant Chain and Baidu Super Chain have higher transaction processing capabilities. In the field of digital identity, QuChain provides the application of distributed digital identity (DID), and is compatible with multiple identity and security guarantees such as key hosting, key soft management and key hard management.

It can be seen that although there are still problems with smart contracts or metadata centralization, its security is actually sufficiently guaranteed, and the TPS of the alliance chain is sufficient to meet transaction needs. The main difference at the bottom layer focuses more on ecological construction and user operations. For example, compared with Red Hole Digital Collection, Huanhe and Jingtan have relatively high popularity and stronger publicity and planning capabilities thanks to the strong ecological traffic behind Tencent and Ant, and therefore more prominent user awareness. However, Baidu Super Chain Digital Collection Trading Platform and Lingxi are still increasing their IP operation capabilities due to their late launch, and there is still a certain gap with the former two. Red Hole has diverted some of the heat from the technical side of Quchain, and will continue to work on the C-end in the future.

Distribution mode: Official cooperative distribution, private creation platform is not yet open

From the perspective of the distribution model, for compliance reasons, all digital collections launched on the platform are produced and distributed on-chain through official IP cooperation, and private creation platforms are not open. On the one hand, private creation is less controllable, and the platform may need to increase issuance review and transaction review. On the other hand, there is still a lot of uncertainty in supervision, and the opening of private creation is more likely to bring about speculation risks.

In terms of supported entrances, most platforms have opened access to APP and mini-programs, but the mini-programs are mostly single functions within the official APP. For example, Huanhe has a mini-program on WeChat, while Jingtan is set up in the Alipay mini-program. The Baidu Digital Collection mini-program is also located in the Baidu APP, but it is worth noting that Hongdong Digital Collection currently supports the PC official website and mini-programs, and has not yet launched an APP, while JD.com only supports the APP mini-program entrance within JD.com. It can also be seen from here that the digital collection business in large enterprises is mostly an innovation or extension of the platform's existing business, and does not reflect strategic positioning.

Trading rules: The first transaction is on the platform, and the second transaction attitude is cautious

At present, as mentioned above, the trading platform can directly provide the issuer with issuance and subsequent trading services. Therefore, the first transaction is launched on the platform, and the subsequent operations are also carried out by the platform. Currently, the mainstream trading platforms all adopt this model.

However, in terms of secondary transactions, most platforms adopt a cautious attitude and explicitly mention that they do not support the secondary circulation of collectibles, but some platforms have begun to explore in this direction. For example, in Whale Tan, although it is explicitly not supported for secondary transactions, there are certain rules for the transfer of digital collections. Users who have purchased and owned digital collections for 180 days can initiate transfers to other users. At the same time, the recipient should meet the purchase conditions of digital collections (mainland Chinese residents aged 14 or above) and pass the real-name authentication of the account. To prevent speculation, the recipient can only initiate a transfer again after receiving the digital collection for 2 years. Despite the strict requirements, transfers can be traded over the counter in a sense. However, the transfer and secondary sales functions of Huanhe, Hongdong Digital Collection, Lingxi, and Baidu Super Chain digital collections have not yet been mentioned. However, according to the letter from CEO Zhang Beilong to collectors on the Hongdong Digital Collection WeChat official account, they are exploring the collection exit mechanism based on a compliant path.

From the perspective of trading rules, domestic digital collectibles transactions are completely different from overseas. Digital collectibles transactions are all in RMB, and the collections are mainly for collection and self-appreciation purposes. Secondary market circulation is basically not allowed, and there is no virtual currency involved.

Collection issuance: outstanding features, each major platform has its own advantages

In terms of application, the digital collection platform involves cultural and creative fields, including animation, sports, public welfare, art and other types. This is also consistent with the current status of digital collections in the cultural and creative fields of many museums. In terms of rules, Whale Tank and Red Hole adopt a model of large circulation and low unit price, while Huanhe is the opposite. With a relatively high price due to a small circulation and high-quality production process, Red Hole Digital Collection starts from the concept of the metaverse and is full of creativity. Baidu Collection can be obtained through free collection and event redemption, and is in the early stage of the market.

In terms of release frequency and IP cooperation, Whale Tan is the most active, involving the most fields. Its IP cooperation includes many museums with strong cultural atmosphere, and it has outstanding advantages in cultural innovation. Since the release of Dunhuang Feitian and Nine-Colored Deer on June 23, Whale Tan has released more than dozens of digital collections such as Feng Zikai Comics, Zhenhun Street, Hangzhou Asian Games Digital Torch, Five Blessings Series, Aerospace Series, etc., and the number of mini program users exceeds 6 million. The design fields include animation, music, sports, collections, consumption and other fields. In its New Year series, Whale Tan and 24 museums (institutes) including the National Museum of China, Henan Museum, Anhui Museum, Gansu Provincial Museum, and Hebei Museum used digital technology for the first time to welcome the Five Blessings, and released 3D digital collections from "Tiger Cultural Relics", "Zodiac Cultural Relics" and "Treasures of the Town" with the help of Whale Tan.

Huanhe is relatively less frequent, but it is well made and of high quality. Currently, it mainly releases 6 series, including Thirteen Invitations, Kaleidoscope, Under One Person, and Inhumanity. In its New Year series, it has cooperated with the Shenyang Palace Museum to issue 8 digital collections. Recently, Huanhe and Rongbaozhai jointly issued a digital collection of Qi Baishi's paintings. But it is worth noting that although Huanhe has not launched many collections, its underlying Zhixin Chain has actually realized the casting of digital collections with many well-known companies. For example, the news collection previously issued by Xinhua News Agency is based on Zhixin Chain, and the first digital milk launched by Yili is also built on Zhixin Chain.

Red Hole Digital Collection has taken a different approach and has many creative ideas. It has released 27 digital collections. After releasing the first commemorative badge with LDG, it has successively released multiple series of digital collections, including Wuji Panda, Tongdao Uncle, "Caijing", China's first home appliance series, China's giant panda international image, and Tiger Year digital avatars. At the same time, it cooperated with Aily Gallery's contracted algorithm artist "Daolong" to launch the programmable digital collection art work "Metaverse Fireworks" series, which provides a very unique user experience through composable programmable art works. In addition, during the Winter Olympics, Red Hole also cooperated with four world champions of ice and snow sports to release digital collections with the theme of the Winter Olympics.

Among many companies, Baidu Digital Collection Platform was launched on January 21 this year, the latest among all major platforms, but it has made frequent moves. After launching the Museum Classics and Baidu Lucky Tiger series, Baidu Super Chain and art master Han Meilin created the Ice and Snow Colorful and Renyin Kangxiang series of collections, which not only congratulated the New Year but also added color to the Winter Olympics.

Compared with several other companies, the frequency of Lingxi's releases launched by JD.com is not very high. After it went online on December 17 last year, it has only released three series: JD.com "Joy", "The Four Talented Women's Ivory Carvings" and "Fantastic Beasts of Mountains and Seas", and its layout in this field is slightly conservative.

Conclusion

Through the comparison of digital collection trading platforms of cutting-edge enterprises in my country, in general, the technical differences of the five major trading platforms are relatively small, and most of the platforms are supplementary extensions of existing businesses. The differences are mainly reflected in the platform operation strategy and IP cooperation capabilities. Whale Exploration has strong IP bargaining power and the highest frequency. The phantom core has a small frequency and a high price. Red Hole is blessed with the metaverse and blind boxes, and the gameplay is diverse, while Baidu and Lingxi are actively exploring it. However, it can be seen that my country's digital collection trading has already taken shape, and digital collections have gradually begun to return from the initial curiosity to the real "cultural" collections. The cultural and artistic direction focused on by the collections is also stronger, and digital collections with high collection value have attracted attention. Despite this, many digital collections are still mostly built by large companies behind closed doors based on their own chains, and do not yet have cross-platform trading capabilities. At the same time, the secondary circulation and exit mechanism are still important problems restricting the development of the platform.

In this regard, some companies are already solving these problems. Some time ago, BSN launched the NFT public infrastructure BSN-DDC network. It is reported that the network is composed of more than a dozen open alliance chains with their own characteristics, including Tai'an Chain, Wuhan Chain, Wenchang Chain, Zhongyi Chain, Guangyuan Chain, Zunyi Chain, Tangshan Chain, etc., and will subsequently support the cross-chain circulation of NFTs between all open alliance chains. The Hainan International Cultural and Art Trading Center has also begun to issue digital art trading licenses to platforms such as Digital China and Hi Easy Shopping, which will greatly improve the circulation efficiency of digital collections.

However, it should also be noted that digital collections are an emerging thing and are still under exploration. There are still many risks, such as security loopholes in the technical direction of digital collections' smart contracts and the centralization of collection data. At the same time, due to the financial attributes of digital collections, they inevitably have problems such as price speculation. In addition, at present, my country's laws and regulations on digital collections are not perfect, and digital collections have not yet been defined in terms of property rights and copyright protection. There is also great uncertainty in supervision in the future. Both collectors and creators still need to treat it objectively.

References:

China Science Network: Analysis and summary of China’s digital collectibles (NFT) market in 2021;

The Paper: Digital collectibles are gaining popularity;

Dynamic point: 24 museums launched the Wufu Digital Cultural Year, and the Whale Exploration Mini Program helped them release 3D digital collections;

The official websites of major platforms, open technical documents and other public information.