Big companies’ NFTs are renamed “digital collectibles”. Will Double Eleven give rise to alternative popularity?

Since the first half of 2021, the popularity of NFT has spread from overseas communities to various fields, with its application in the field of digital art being particularly prominent.

NFT (Non Fungible Token) is usually translated as "non-fungible token". NFT based on blockchain technology has the characteristics of being unique, indivisible, and impossible to forge, and is known as proof of the authenticity and ownership of digital assets. However, objectively speaking, due to the differences in relevant laws and regulations in different regions, NFT has developed in different paths in the layout of domestic large companies, thus showing different attributes.

Recently, major NFT-related product platforms such as the Alipay mini-program Ant Chain and Tencent's "Phantom Core" have successively modified the names of such products. Currently, they are mostly displayed with terms such as "digital collectibles" or "digital asset rights proof".

In this context, Internet giants have publicly expressed opposition to all forms of speculation in digital collections. But on the other hand, it can be observed that some businesses live-streamed the listing of "digital collections" during the Double Eleven shopping boom.

Big company NFT renamed "digital collectibles"

In the first half of 2021, major domestic companies have successively tried NFT. Alibaba, Tencent, ByteDance, and JD.com have all shown great interest in this concept.

As early as June, the Alipay mini program "Ant Chain Fans" launched the "NFT Payment Code Skin" earlier. This limited-edition NFT with the theme of Dunhuang Feitian quickly attracted widespread attention in the domestic market. This NFT payment code skin is only used for Alipay payment code skinning and is not allowed to be used for other commercial purposes. When it was released, Ant Chain also emphasized the difference between NFT and "virtual currency".

At that time, in terms of technology adoption, Ant Chain stated that NFT is an effective and reliable technical means to solve the problem of digital artwork ownership. It is unique and indivisible, does not have the characteristics of an equivalent exchange, and is fundamentally different from virtual currencies such as Bitcoin.

Subsequently, Internet giants joined in. Ant Chain has successively launched more than a dozen payment code skins and digital collectibles, all of which have been well received by the market; Tencent's PCG business group launched the digital collectibles trading platform "Huanhe" App, and the digital art collectibles such as "13 Invitations" and "Kaleidoscope Digital Ethnic Atlas" launched on the platform also sold out as soon as they were launched.

These products are closely related to the popularity of the NFT concept in the overseas blockchain field during the same period.

In the overseas blockchain native market, NFT is unique, exclusive, and indivisible compared to homogeneous tokens (Fungible Tokens, such as BTC, ETH, etc.). It represents digital ownership proof of purchased digital assets, can store and record unique information on the blockchain, and transfer ownership of assets securely, limitedly, and verifiably.

In theory, NFT buyers have ownership, disposal rights and income rights over the NFTs they hold. With relatively complete overseas NFT market infrastructure, NFT holders can transfer NFTs to personal wallets, transfer them, conduct secondary transactions, etc. on most overseas mainstream NFT trading platforms, and liquidity is currently improving. This approach also reflects the concept of "ownership economy" advocated by the overseas blockchain industry.

However, in the mainstream digital collection platforms and products of domestic large companies, many products have been publicly announced that the holders do not have ownership of the digital collections themselves, and do not support transfers and transactions between players. The holders enjoy certain rights, similar to the ownership of the "copy" of the digital artwork corresponding to the digital collection. In addition, the rights enjoyed by the holders are often incomplete, and the transaction and circulation of digital collections are not strong, but there are still some circulation scenarios in the market. On the second-hand trading market platform, there are still high-priced digital collections.

Take the Ant Chain announcement as an example: the copyright of digital works is owned by the issuer or the original creator, and NFT digital works may not be used for any commercial purpose without the written consent of the copyright owner. The announcement finally stated that the transfer of NFT digital works requires holding the work for at least 180 days, being a friend of the recipient on Alipay, and both the recipient and the recipient are over 14 years old, and both have passed Alipay real-name authentication and Alipay risk control review processes.

In addition, most digital collections in China cannot be returned or exchanged once they are redeemed.

(Tencent Huanhe: Digital products cannot be transferred)

These rules also weaken the original advantages and characteristics of NFT and greatly limit liquidity. Although it has triggered discussions in the blockchain technology industry on whether domestic NFTs have been castrated, major companies are still cautious about compliance in their exploration of digital collections.

In recent months, the central bank and ten other ministries and commissions have issued new regulations to regulate "virtual currency speculation" and listed virtual currency-related business activities as illegal financial activities. NFT itself is derived from blockchain technology and the token economy model, and it has certain financial attributes, which makes its development in China also face many problems.

In previous official public information, Ant Chain defined "NFT" as "non-fungible token" and stated that "NFT is fundamentally different from homogeneous tokens such as virtual currencies. It is supported by the actual value of digital goods and does not have any monetary attributes such as payment functions."

As the regulatory environment tightens, major companies have changed their descriptions of "NFT" and instead use terms such as "digital collectibles" or "proof of digital asset rights."

At the end of October, institutions including Ant Group, JD Technology, Tencent Cloud and others jointly issued China’s first digital cultural and creative self-discipline convention in Beijing. The convention aims to regulate the industry’s leading companies in the previous market hype of digital collections.

Ant Chain has publicly opposed the speculation of digital collections many times, and once stated in a statement: "We firmly oppose all forms of speculation in digital collections, and firmly resist any form of illegal and irregular activities in the name of digital collections that are actually virtual currency-related activities; firmly resist any form of malicious speculation in the prices of digital collections, and use technical means to ensure that commodity prices reflect reasonable market demand; firmly resist any form of illegal and irregular activities such as equity transactions and standardized contract transactions of digital collections, and oppose the financialization of digital collections."

Tencent Huanhe also stated last month that Huanhe has been committed to implementing the digital collectibles business under a compliance framework and resolutely resisting illegal and irregular activities related to virtual currency.

Overall, most of the digital collections in China are mainly for viewing, collection and other rights. At present, in the relevant public information, Ant Chain defines "digital collections" as "virtual digital products", and Tencent Huanhe defines "digital collections" as "virtual rights proof", and they all agree that such products do not have the attributes of "virtual currency".

Double Eleven, digital collectibles "increase value"?

However, after product name changes, rights restrictions, and added rules, digital collectibles from major domestic companies are still hot-selling. There is still a lot of room for discussion on how to define such "hype", "auction" and "promotion".

In September, Ant Chain sold the Hangzhou Asian Games digital torch NFT on FanLi. On Alibaba Auction, a user even bid about 3.15 million RMB. Although Alibaba Auction officially removed the auction, the speculation of NFTs continued in related domestic communities, and even attracted "scalpers" to join the rush to buy. At the same time, there are also platforms that list the price as high as ten times, and privately transfer it to bypass trading restrictions.

In the Double Eleven live broadcast room, with the help of concepts such as the metaverse, digital collectibles have been rapidly promoted in the live broadcasts of major manufacturers.

During this Double Eleven, limited-edition themed digital collections were frequently launched online and sold out every day. In addition, some brands’ digital collections were sold with low thresholds such as “one yuan lottery” and “buy physical goods and get a digital collection for free”, which is expected to stimulate more buyers to consume the brands and greatly speed up consumers’ entry into the digital collection market.

On the other hand, during the Double 11 shopping festival, Alibaba Auction Platform continued to promote digital collections. Alibaba Auction launched its first digital collection auction in May this year, and has sold tens of thousands of digital collections so far. On the Alibaba Auction Platform, a separate "digital auction" label entry has been listed, and its auction methods include "starting at one yuan", "X.9 yuan rush auction", "price reduction rush auction" and other methods, allowing users to purchase conveniently.

In addition, some third-party companies have settled in Alibaba auction stores and have begun to steadily list digital collectibles, which has once again boosted the popularity of digital collectibles. The Xianyu platform has also become a platform for many "scalpers" and speculators to communicate.

Hot discussion on digital collections

in the country, the popularity of digital collections is accompanied by controversy.

The underlying layer of domestic digital collections is often based on alliance chains rather than public chains. Tencent Research Institute once published an article stating that when issuing digital artworks on alliance chains, the payment method of alliance chains should be legal currency, and the trading platforms that cooperate on alliance chains should also be compliant.

At present, domestic financial stability is the focus of industry supervision. Whether the issuance of digital artworks on the alliance chain can truly remove the "monetary attributes" and "financial attributes" of digital collections, and how the financial attributes should be reduced, are also issues that domestic major manufacturers have been thinking about.

On the other hand, in the handling of digital collectibles, questions such as "Where are the limits on the circulation and trading of digital collectibles in the secondary market?", "What is the basis for the 180-day transfer period?", "Does the issuance of digital collectibles require qualifications?", "What rights and interests should the holders enjoy?", and "Are collectibles that are only used as digital skins worth the current selling price" are also being hotly debated in the domestic community.

There are still many acute questions for big companies in the direction of combining blockchain technology with the entertainment and art industries. How to define the scope and bottom line of speculation? Where are the limits of the rights and scope of transfer? How to deal with the financial attributes of digital collections? These may require attempts, time and patience to answer.