The surface and the inside of NFT under the high light

In 2021, the global blockchain investment and financing market is hot, and NFT is out of the circle with absolute popularity. As of August 19, Coingecko data shows that the total market value of the top 100 NFT tokens by market value has exceeded 25 billion U.S. dollars, which is approximately 25.03 billion U.S. dollars. Although NFT is not a brand-new invention, it does attract a huge crowd in 2021, and this is destined to be an irreversible wave.

What is NFT

NFT (non-homogeneous tokens) usually refers to the tokens issued by developers on the Ethereum platform according to the ERC721 standard protocol. It is different from the homogenized tokens issued according to the ERC20 standard protocol. The NFT issued according to the ERC721 standard is indivisible, irreplaceable and unique. Simply put, tokens issued using the ERC721 standard/protocol are called NFTs. (Note: The ERC721 protocol was born from CryptoKitties. It is an NFT protocol that has long been recognized by the Ethereum community and is currently the most widely used standard. ERC721 defines an indivisible and unique Token interaction and circulation in the Ethereum ecosystem. Interface specification. This specification is essentially a smart contract on Ethereum and relies on EVM to run.)

Of course, well more than Ether Square chain, other well-chain, such as Boca the like, are also included in the protocol is similar to the Ethernet Square ERC721 protocol.

Therefore, from the above perspective, NFT can be applied to any field that requires unique authentication, such as property rights authentication, physical assets, and financial instruments.

The way out of NFT

Looking back on the way out of the NFT circle, as early as 2014, digital artists had created and distributed millions of pure digital art works, and then uploaded them to microblog sites such as Tumblr. Many works began to be widely reprinted in the community. But these works basically have no signature or background information such as the author. Frankly speaking, these artists are very loyal to the spirit of the times, and they do not really expect to be compensated through these works. However, New York University professor Kevin McCoy and technical expert Anil Dash believe that this approach is inappropriate. They believe that artists should claim the ownership of their own works. If there is no other reason, the ownership of the works created by artists should belong to them.

Immediately afterwards, Anil Dash and Kevin McCoy devised a solution called the NFT prototype—generating a token representing the ownership of digital assets, and then attaching the token to a freely tradable blockchain. This creates a powerful digital ownership trajectory. However, because this set of solutions is not perfect, coupled with the technical limitations at the time, it is impossible to attach actual digital artifacts to the blockchain. As a result, the tokens they created can only be loosely linked to the underlying assets and used only as Digital representation of actual artifacts.

In 2017, the Crypto Punks project was launched. It issued tokens through the transformation of the ERC20 contract, allowing users to receive NFTs for free, and completed the initial distribution; a few months later, the game Crypto Kitties (encrypted) developed using the ERC721 token standard Cats have exploded on the Internet-people are frantically buying, breeding and trading virtual cats, allowing many people to see the value brought by the combination of blockchain and art.

At the beginning of 2018, the general goods platform Open Sea was established. At that time, Open Sea was not a platform for the art field, and trading was not active at the time. With the establishment of encrypted art platforms Super Rare and Known Origin, the platform began to assist artists in the on-chain authentication and distribution of their works. Under the guidance of major trading platforms, creators from all walks of life have come to the stage for “pilgrimage”, and the NFT market has gradually grown.

Of course, to make more people pay attention to NFT, it is Twitter CEO Jack Dorsey who wants to sell his first tweet published in 2006 as a non-homogeneous token NFT. Subsequently, in the art circle, more and more mainstream artists have also bound their works with NFT.

According to data released by Nonfungible, a mainstream foreign NFT trading community, from 2018 to 2020, the size of the NFT market has increased by 825%. In just 3 years, the number of active addresses has increased by 201%, and buyers and sellers have increased by 144% and 113% respectively.

In the international market, industry giants Christie’s, Sotheby’s and Phillips have successively launched special NFT art auctions; in the domestic market, China Guardian, Yongle and Beijing Poly followed closely and organized online and offline auctions during the 2021 spring auction. Special auction.

NFT avatar is on fire

It is worth noting that with the fermentation of the NFT boom.

At the end of July, the volume and price of CryptoPunks once again hit a new high, and the NFT track of avatars exploded, and a large number of similar projects emerged. Once there was a “sky price” avatar. At the same time, many users in the circle have replaced their WeChat avatars with their own NFTs, and this trend has become a social business card in the encryption industry.

Analyzing the reasons for the explosion of NFT avatars, Vincent, a senior researcher at OKEx, pointed out that the popularity of NFT avatars is inseparable from the popularity of the entire NFT market. Since the beginning of the year, the NFT market has achieved explosive growth. Take OpenSea , the largest NFT trading market in the industry, as an example. Since August alone, its cumulative transaction volume has reached 1.06 billion US dollars, which is 132 times that of January. From this point of view, the emergence of the NFT avatar craze has a certain inevitability.

From the perspective of the NFT avatar itself, as a subdivision of the NFT market, in addition to inherent attributes such as uniqueness and scarcity, it also has strong social attributes. For example, when you buy an NFT avatar, you can use it as an avatar for various social channels, which can not only show your identity in the digital field, but also have a good sharing and dissemination effect. Normally, the rarer and more expensive NFTs are, the more pride you can get from them.

In addition, many big V platforms have also accelerated the prosperity of NFT avatars. Take the recently popular Penguin NFT avatar as an example. It was little known at first, but when the founder of AAVE , co-founder of Reddit, etc. “endorsed” it, more and more players flocked in, and the NFT transaction price followed The tide is rising.

At the same time, Vincent, a senior researcher at OKEx, also analyzed that the problem of internal differentiation should also be seen behind the boom of NFT avatars. As more and more NFT avatars are released, if there is no behind-the-scenes promoter, it is difficult for new projects to stand out from the vast ocean of NFT, and the liquidity is extremely poor. Even in OpenSea, which has the largest NFT trading volume, the bottom-ranked NFT avatar views are very bleak, not to mention the trading volume.

Right confirmation and infringement? NFT’s balance technique

In addition to artistic creation, NFT can also be used in many fields. For example, in the field of intellectual property. NFT can represent a painting, a song, a patent, a film, a photo, or other intellectual property rights. There are also physical assets. Real estate such as houses and other physical assets can also be tokenized by NFT. It can also be used for records and identification. NFT is unique, so it can also be used to verify identity and birth certificates, driver’s licenses, academic certificates, etc. In addition, there are financial bills. Various types of financial bills carry a large amount of information in the circulation and transaction process. If combined with NFT, it can not only confirm rights, but also facilitate tracking. Finally, ticketing. For example, concert tickets, movie tickets, drama tickets, etc., can all be marked with NFT.

With the popularity of NFT. We have noticed that some large institutions and companies are already actively deploying NFTs. However, with the popularity of NFTs, such emerging markets inevitably have problems, such as infringement incidents such as marking artworks and even counterfeiting works without the consent of the copyright owner.

Vincent, a senior researcher at OKEx, pointed out that such problems are inevitable because the blockchain itself is borderless and decentralized. It is difficult for artists or platforms to directly contact infringers, let alone prosecute them. . Nevertheless, we should still be tolerant of NFTs, because from a technical perspective, the emergence of NFTs can actually make up for some of the shortcomings of traditional intellectual property protection. For example, NFTs can well confirm rights through smart contracts and support creators to track rights in real time. Circulation situation. In addition, NFT can bring continuous benefits to creators, which is difficult to achieve in traditional intellectual property protection.

In short, intellectual property protection is not an emerging topic, and it is not a problem that the NFT field will face. Responding to related infringement incidents requires both technical progress and regulatory constraints. It requires the joint efforts of platform parties, creators, collectors and other market participants to increase the cost of infringement and create a better environment for intellectual property protection.


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