Comprehensive understanding of NFT market, technology and cases

1. Origin – What is NFT? 【Process event】

1.1 What is NFT?

The full name of NFT in English is Non-Fungible Token, which is translated into Chinese as: non-fungible token, which is indivisible, irreplaceable, and unique. Non-homogeneous tokens, namely NFTs, are unique and indivisible tokens, such as encrypted cats, tokenized digital tickets, etc.

It is equivalent to RMB with a number. There will not be two RMB with the same number in this world, nor will there be two NFTs with the same number. The familiar Bitcoin, Ethereum, etc., have their own main chain, and use the transactions on the chain to maintain the ledger data, which is the native currency.

Therefore, compared to FT, the key innovation of NFT is to provide a way to mark the ownership of native digital assets (that is, assets that exist in the digital world, or originate in the digital world), and this ownership can exist in centralized services. or outside of a centralized library. The ownership of an NFT does not prevent others from viewing it or reading it, NFTs are not capturing information and hiding it, but capturing information and discovering the relationship and value of that information to all other information on the chain.

1.2  Major events in the development of NFT

The first NFT can be traced back to colored coins , which were designed on the Bitcoin network as early as 2012, and colored coins were an experimental project. In 2014, New York artist Kevin McCoy launched an NFT on the Nanocoin blockchain, which is generally considered to be the first NFT in history. However, although he is one of the oldest NFTs, technically he is not Not the first NFT in existence.

In 2017, many projects appeared on the market, such as cypherpunks, mooncats and cryptocats, etc. are now widely known, and it is also at this time that appropriate NFT development standards began to be formed.

Comprehensive understanding of NFT market, technology and cases

In September 2017, Github contributor Dieter Shirley proposed ERC-721 to standardize the token standard of unique tokens. In 2018, a replacement for the general NFT standard called ERC-1155 appeared. The principle of ERC-1155 is very simple. In merging the functions of ERC-20 and ERC-721, the functions of ERC-20 and ERC-721 are combined into one NFT standard, which solves some inherent defects of ERC-721, such as higher fees, so ERC-1155 has great High fees, especially for bulk transactions.

2018-2019, the ecological development period of NFT

The birth of pixel avatars and encrypted cats has made people in the industry see more possibilities. NFT projects have sprung up, and the market size is also expanding. There have been many supporting channels to assist the circulation of NFTs. Such as: OpenSea, Foundation, etc.

In 2021, NFTs will come out of the circle

Digital artist Beeple’s NFT work “Every Day: The First 5,000 Days” was officially auctioned. The author of this painting took a total of 13 years and 6 months to complete. The huge time cost and the unique scarcity of NFT finally made it 69.34 million US dollars. The price was successfully auctioned! Such a high price shocked the world in an instant! At the same time, it has also made NFT out of the circle quickly, and more people have begun to pour into the NFT industry. Since then, NFT has ushered in a golden period of development.

Comprehensive understanding of NFT market, technology and cases

A picture to understand the development of NFT

Comprehensive understanding of NFT market, technology and cases

Data source: Tianfeng Securities 2021 NFT Industry Analysis

2. Market Chapter – NFT domestic and foreign market analysis

2.1 Foreign NFT Market

Comprehensive understanding of NFT market, technology and cases

According to statistics, as of September 7, 2021, the three NFT trading platforms with the highest sales are OpenSea (comprehensive trading platform), Axie Infinity (game platform) and CryptoPunks (art image trading platform). $ 5.57 billion, $1.91 billion, and $1.24 billion.

According to statistics, as of September 7, 2021, the three NFT projects with the highest sales are the blockchain game Axie Infinity, the virtual image collection Cryptopunk, and the NBA player card collection NBA Top Shot, which are traded in major NFTs. The sales in the platform reached 1.842 billion US dollars, 1.244 billion US dollars and 742 million US dollars respectively.

Comprehensive understanding of NFT market, technology and cases

A picture to understand the foreign NFT market

Comprehensive understanding of NFT market, technology and cases

This picture is easier to understand

Comprehensive understanding of NFT market, technology and cases

Data source: Tianfeng Securities 2021 NFT Industry Analysis

The global and domestic NFT industry chain is divided into three links: the upstream provides infrastructure support for NFT minting and trading, the midstream mints NFTs according to the minting agreement and issues them in the primary market, and the downstream mints NFTs around the primary market to derive NFT secondary markets, Data platform and social platform, etc.

2.2 Domestic NFT Market

Comprehensive understanding of NFT market, technology and cases

Data source: GF Securities Development Research Center

[This picture is very useful for starting a business and can be used for market positioning and analysis]

From November 2021 to March 2022 (data update in April), the number of platforms for sale has increased significantly, from 26 to 100+ , and the growth momentum is still strong.

Comprehensive understanding of NFT market, technology and cases

The transfer of collections on domestic digital collection sales platforms is currently mostly realized through the transfer function. Most platforms do not dare to open the secondary market easily, and the secondary opening will face many legal issues that need to be considered.

At present, the whale scout with the largest number of users in China has only opened the transfer function, and the transfer is very strict. After the digital collection has been purchased for 180 days or received for 2 years, it can be transferred to real-name users who have reached the age of 14.

From the regulations of Whale Scout, it can be seen that Dachang is very cautious in the compliance of digital collections. After all, many platforms use Whale Scout as a benchmark and use the business model of Whale Scout to hedge against unknown policy risks.

At present, among the more than 100 digital collection sales platforms, 48% have the transfer function, 51% have no transfer function, 29% have a secondary market, and 71% have no secondary market. There are few open secondary markets, mainly some early non-big factory platforms. Restricted by mainstream payment methods, most platforms are now looking for third-party payment companies for cooperation.

The underlying blockchain classification of domestic digital collection platforms

Comprehensive understanding of NFT market, technology and cases

Internationally, public chains are generally dominated. As the name suggests, public chains are public blockchains, such as Ethereum, Matic/Polygon, etc. Users can develop their own products based on these blockchains.

In China, the alliance chain is the main , semi-open blockchain. Basically, every major factory has its own blockchain, such as Alibaba’s Ant Chain, Tencent’s Zhixin Chain, Baidu’s Super Chain, and JD.com’s Zhizhen chain, etc., enterprises or individuals cannot use it directly, and can join these blockchain ecosystems by application.

The main domestic sales platforms are also developed based on the blockchain ecology of these domestic manufacturers. There are relatively few platforms using the public chain. The use of the public chain is generally to store the works, rather than to build an ecosystem on the chain.

Use Alibaba Ant Chain: Whale Scout (original Ant Chain Fans), Encrypted Space, Hyperdimensional Space, Level 7 Universe, Magic Collection, etc.; Use Tencent Zhixin Chain with Magic Core, Xiaohongshu R-Digital Collection , TME digital collections, etc.

Those who use Baidu Super Chain include: Baidu Super Chain Wallet, Dongyi Yuandian, Pill Card, etc.

Those who use the Jingdong Zhizhen chain include: Lingxi, Hongguo Shuzang, etc.

Those who use the BSN chain include: Mytrol Digital Collection, Qianxun Digital Collection, Jiji Cultural Creation, Qiankun Digital Collection, etc.

In addition, there are Mango TV digital collection platform of Guangxi Chain under Hunan Radio and Television, Hongdong Digital Collection of Qu Chain and Yuan Vision (Visual China) using Changan Chain.

3. Technology – Is it difficult to develop an NFT platform?

At present, many brands and enterprises are building their own NFT platforms. Generally, they build their own platforms as follows:

1. Adopt the saas model, use the mature system of the third party, and use it. At present, there are not many saas digital collection platforms in China. As far as I know, Yulian and Tongduba have some such services, mainly out of the box. However, you still need to apply for your qualifications yourself. This method is fast, but can only achieve some primary functions. Personally, I don’t think it’s necessary. Instead, it is better to directly use a third-party distribution platform. This is generally around 80,000 a year.

2. Privatization and customization are generally based on mature products for secondary development. There are some development companies in China that specialize in this development. They are basically based on mature domestic alliance chains, not as good as bsn, Baidu Superchain, Ant, etc. Domestic such as Aiju (capital investment, mainly providing mature products, developed by php), Huike (private domain + NFT development, one-stop operation + technical services, emphasizing customized application scenarios, java as service architecture, back-end part Golang is also used) These have mature technologies. This kind of development delivers source code, and the development cost is generally around 200,000 (covering h5 and small programs)

So if you set up a team to develop an NFT digital collection platform, what kind of technical personnel should you have?

Standard technical positions such as product manager, back-end development, front-end development, ui, and testing must still be available. At the same time, there must be technical personnel who know how to call blockchain smart contracts (there are currently about 20,000 such technical personnel in China, but they are all concentrated in In terms of the underlying technology of blockchain, to develop various blockchain projects of large central state-owned enterprises, people who do not understand generally need 2-3 weeks of training, but experience is insufficient) Basically, there must be a team of 7 people. Overall, it is a long-term cost investment. If your business application scenario is complex, or you need to connect with your other systems, this is also a good way. (In addition, to provide a good way, there are many such engineers you can rent on Ape Rental)

The functional design of the digital collection trading platform is as follows (for reference)

Comprehensive understanding of NFT market, technology and cases

hint:

1. If your technicians have good smart contract capabilities and can write their own, you can save a lot of gas costs. Our nft system is based on the underlying consortium chain, and you have to pay the cost of issuing NFT, such as big factories The fee is 5-10 yuan, the second-level echelon is 2-5 yuan, and some, such as cic, charge a fixed fee every year, and there is no limit to the number of calls.

2. There are some restrictions on docking payment in China, so it is generally docking with third-party payment companies, such as Huifu, PayEase, Yibao, and Lianlian. If you make an app, Android is faster, and iOS has to go to Apple Pay.

3. The digital collection platform suggests that the initial h5 is the most suitable.

4. The most important scenario in platform development and the development of marketing gameplay are technically focused on marketing functions, so the development team must have product managers who understand marketing, e-commerce, and the establishment of membership systems.

5. System concurrency needs to be considered, most sales are in seconds.

6. If the system has a lot of users, it is necessary to consider security. This kind of platform is usually a hacker’s paradise.

7. If the front-end issuance is also on a third-party issuance platform, this involves aggregation, and the technology of the side chain can be used to aggregate an account.

In short, technology development is a long-term thing. In the initial stage, an h5 is built to sell or have some gameplay. The subsequent scene application and combination of its own business are the focus of development. The NBA’s NFT application is currently the best I feel.

4. Application Chapter – Cases of NFT Application Scenarios at Home and Abroad

4.1 NBA case

In October 2020, NBA Top Shot, an NBA digital collectible project based on the Flow blockchain developed by Dapper Labs, officially launched its public beta.

This is an NBA star’s goal highlight moment made into an NFT version of the star card, users can view the video or GIF animation of the goal represented by the NFT star card. According to the data of the beta version, the user retention has reached 90%, and it has reached a fan economic income of nearly 1 billion US dollars in one year after its launch, and has more than 1.5 million users.

Comprehensive understanding of NFT market, technology and cases

The impressive results are due to the innovation at the business model level. The original physical football card is offline, the sales speed will be very slow, and when buying and selling cards, there will be a need to identify the authenticity of the card. These problems are no longer a problem when they are put on the blockchain. The blockchain can transfer value and cannot be tampered with, so it reduces trust costs and lowers transaction thresholds.

4.2 Pizza Hut’s pixelated pizza

Pizza Hut Canada (the parent company of Yum Brands!, which is also the parent company of Taco Bell) has unveiled a “pixelated pizza” artwork and listed it for 0.0001 ETH (~$0.18) On the NFT trading platform Rarible.

According to Megan Farquhar, executive creative director of Ogilvy, which oversees the campaign, Pizza Hut’s idea for a low-priced pixelated pizza is to make it affordable for everyone, just as a bite of pizza doesn’t cost much.

Comprehensive understanding of NFT market, technology and cases

This NFT also created a marketing opportunity for Pizza Hut, where they introduced four new recipes to Canadian restaurants through the campaign, and then every week Pizza Hut released an NFT of a slice of the new pizza. It is reported that the first NFT of the new flavor pizza has been sold this week, but the price of new NFTs on the shelves has reached 5 ETH (about 9,000 US dollars). Megan Farquhar enthused: “Now, Pizza Hut’s delicious pizza digital world can be preserved.”

4.3 P&G’s toilet paper brand Charmin launches NFT

Charmin, a toilet paper brand owned by Procter & Gamble, has launched its own NFT. A total of five Charmin NFT encrypted artworks are currently being auctioned on Rarible.

Comprehensive understanding of NFT market, technology and cases

NFTP is an acronym for “Non-Fungible Toilet Paper”, which means non-fungible toilet paper, and this novel idea immediately caught the attention of many people. Charmin’s toilet paper NFTs sell for up to 0.15 ETH (~$264.72), with proceeds going to humanitarian aid charity Direct Relief.

Nicolas Pouard, director of blockchain initiatives at Ubisoft, said: “We wanted to do something crazy and be different, we really wanted to create our own NFT and see how far we could go in the programmable space.”

4.4 Nike draws on CryptoKitties to launch CryptoKicks patent

Comprehensive understanding of NFT market, technology and cases

Sports brand Nike has seen the NFT trend as early as two years ago, when they applied for a patent for an NFT sneaker called “CryptoKicks”. Nike’s idea is that sneaker designs can actually “reproduce” continuously , but the essence is to create new, customized shoes in the real world.

The concept of “CryptoKicks” is actually a tribute to “CryptoKitties”, because “CryptoKitties” themselves can also enable owners to breed virtual cats.

4.5 “Wonder Woman” NFT sales totaled $1.85 million

Comprehensive understanding of NFT market, technology and cases

Crypto art marketplace MakersPlace announced on March 9 that the total sales of encrypted artwork NFTs featuring the DC Comics virtual superhero “Wonder Woman” reached $1.85 million. These NFTs were created by veteran cartoonist José Delbo and crypto artist Hackatao.

4.6 Mengniu’s Metaverse Marketing

Not long ago, a Metaverse platform called ODin META launched Mengniu’s digital collection, called “Three Mavericks · Sleep Freedom BOX”, with a total of 2,000 places. One digital collection costs 90 yuan, and it takes a few minutes to complete the collection. null!

Let me show you the appearance of the digital collection launched by Mengniu, as shown in the picture below.

Comprehensive understanding of NFT market, technology and cases

5. Policy Chapter – Domestic NFT Policy

China Internet Finance Association, China Banking Association, and China Securities Association released an initiative on April 13 to prevent financial risks related to NFT (Non-Fungible Token). The initiative proposes toresolutely curb the tendency of NFT financialization and securitization . Do not include securities, insurance, credit, precious metals and other financial assets in the underlying commodities of NFT, and issue and trade financial products in disguised form. As early as March 29, WeChat has stepped up its efforts to review and supervise, and closed the official accounts of several digital collection platforms, including Art Meta Yuanyishu, Yuanben Space, Shendashuzang, One Meta, and Zero. Earth etc. Except for Earth Zero, which was closed for suspected fraud, the others are “the account has been stopped for use by users who have complained and have been reviewed by the platform, have not obtained statutory licenses or licenses, published, disseminated, or engaged in related business activities.” .

Sorting out relevant national policies

Comprehensive understanding of NFT market, technology and cases

Comprehensive understanding of NFT market, technology and cases

What qualifications are required for the digital collection platform?

Generally, it includes blockchain filing, ICP license, EDI license, online text, publication business license, guarantee certification, public security filing, auction qualification (other qualifications can be handled as appropriate according to needs), etc. The more the better, the more the better. It is important to note that the blockchain filing should be as much as possible. The NFT platform must use the underlying blockchain technology as support. According to the “Regulations on the Management of Blockchain Information Services” issued by the Cyberspace Administration of China, blockchain information is provided. The service provider shall go through the filing procedures within ten working days from the date of providing the service.

To sum up: Personal recommendation digital collection platform recommendation qualification:

1. Blockchain information service filing (required, this is usually completed within 6 months after going online)

2. Website information service security assessment:

3. Apply for the “Value-added Telecommunications Business License” (required, this is required)

4. Obtain the “Internet Publishing Service License”

5. Network culture business license

6. Filing of artwork business units:

6. Prospect – Should we do NFT?

The positive development of NFT We believe that in how to empower brand customer marketing and combine with physical objects, we propose NFT + private domain digital marketing plan

Huike – Deep Combination of Digital Collections and Private Domain Membership Marketing

Brand digital collections are sold in the private domain mall, creating a brand IP image, and in-depth operation helps brand communication.

Comprehensive understanding of NFT market, technology and cases

Scenario application in private domain community

Comprehensive understanding of NFT market, technology and cases

Huike Priverse digital collection issuance and trading platform

Comprehensive understanding of NFT market, technology and cases

The brand’s self-built distribution platform can distribute physical collections and digital collections implanted with NFT chips. In the transaction link, it can be sold as a commodity to make IP profits; digital collections can also be used as a marketing method and used as a member’s rights to spread the brand’s voice. The traffic pool of the self-built platform has grown, and as an independent distribution platform, it can earn other brand promotion fees.

Huike Priverse digital collection system architecture

Comprehensive understanding of NFT market, technology and cases

On the basis of NFT, digital collections have both de-financing and compliance, which is a compliant development path for their Chineseization. As a typical representative of the application of blockchain technology, it has created a new form of digital cultural consumption that can be confirmed and traced by virtue of its traceable, verifiable, and collaborative features. The use cases of digital collections continue to increase. Representative well-known applications have emerged in the fields of IP creation, Metaverse, etc., and the industrial chain is also being built at an accelerated pace. It plays a key role in brand marketing, cultural communication, and asset digitization.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/comprehensive-understanding-of-nft-market-technology-and-cases/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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