NFT has seen an extraordinary boom in the trading of various art collectibles in the primary and secondary markets since 2020. According to the data, in the first three months of 2021, the value of the NFT market grew by 1,785%, with sales of over US$2 billion in the first quarter, a 20-fold increase from the previous quarter. This article is taken from the Economic Daily No. 13808, where the author will reveal how NFT works, whether it will be sustainable in the future, and the potential of NFT?
The recent trade about NFT collectibles has been unusually hot. American artist Mike Winkelman’s (nicknamed “Beeple”) digital artwork “Everyday – The First 5,000 Days” was sold for nearly $70 million. Indian cryptocurrency exchange WazirX announced that it has established an NFT trading marketplace for Indian artists and creators. The reporter noted that a large NFT gallery with academic support from the Central Academy of Fine Arts also opened in May in China.
NFT is the abbreviation of Non-Fungible Token, which is a non-homogeneous digital asset based on blockchain background, similar to and different from bitcoin and ethereum. Based on blockchain technology, NFTs are able to prove their originality and ownership, and each has a unique identity and uniqueness, and are extremely difficult to be stolen. NFT in the form of digital artwork is therefore favored by the market.
“NFT is essentially a smart contract used to mark digital assets, relying on the blockchain to create a technology-based, distributed, spontaneous formation of peer-to-peer transactions of trust system. People hope to achieve value transfer through blockchain technology trust.”
Pan He Lin, executive director and professor of Digital Economy Research Institute of Zhongnan University of Economics and Law
Right now, the development of NFT can be described as soaring: from digital houses, music paintings to collection tide play, as if everything can be NFT. data show that in the first three months of 2021, the value of the NFT market grew by 1,785%, with sales of more than $2 billion in the first quarter, a 20-fold increase from the previous quarter. Growth slowed in April, but is still substantially higher than it will be through 2021. Information seen in the press shows that institutions and individuals continue to enter.
“The openness and transparency of circulation time, flow traces, transaction prices and even the works themselves contribute to a more efficient borderless circulation, opening up a precedent for digital art.”
Li Zhen, founder and CEO of investment firm CRYPTOYC
Li Zhen said that there is no doubt about the prospect and vitality of NFT, but the current NFT market is still at a very early stage with a low threshold, speculative nature and wide audience.
The reporter learned that the NFT distribution method and tide play combined more and more closely, there are similarities in the cultural popularity. For example, NFT artwork and trendy play distribution platform FM Gallery in the distribution of a variety of ways to play.
One is in the form of a blind box, users open the blind box, will likely randomly harvest a piece of NFT works from a well-known artist; another main art fragmentation model: the use of blockchain technology, a piece of art into a number of fragments, each fragment is bound to a unique NFT, contains a unique background story, the user collects all the fragments, you can spell out the complete art NFT, and exchange the physical art.
FM Gallery founder and CEO Peng Fei-ming believes that the traditional art model, whether for artists or galleries, auction houses, etc., has many pain points that cannot be solved, and NFT is a bridge between the real world and the on-chain world. Nowadays, the combination of blind box, limited time sale and tide play, artwork and so on is getting closer and closer. FM Gallery hopes to interpret art distribution in an innovative way and promote the development of the industry through the form of blind box and art fragments.
Pan and Lin believe that from the perspective of economics, NFT is a kind of property right creation and clear ownership relationship. Especially in the era of the explosion of virtual goods on the Internet, the ownership of virtual goods cannot be defined, and NFT provides a way to facilitate the development of the Internet from the perspective of property rights. The creation of property rights is good for the economy itself. When property rights are clear, human creativity and innovation become more active, and when property rights can be traded in some way and can be guaranteed against copying and tampering, then the efficiency of human society’s transactions will be enhanced. However, Pan and Lin pointed out that there are also some behind NFT that are not motivated by technical aspects, but are similar to the hype of virtual coins. “For example, the use of NFT is called token issuance, but actually financing. But the NFT technology itself should still be supported.”
Virtual goods property rights will not be because of the NFT form once and for all, there will still be problems. Cao Jianfeng, a senior researcher at Tencent Research Institute, pointed out that NFT solves the problems of asset creators, asset owners, and asset quantities, connecting the real and virtual worlds together and bringing a more realistic experience like offline physical assets. But NFT also has some problems that cannot be ignored. First, the digital objects pointed by NFT may be pirated and counterfeited. In this regard, some platforms have adopted disclaimers and verification of creator identity information to avoid the risk. Second, it is sometimes unclear whether and what kind of intellectual property rights can be acquired by NFT purchasers when they purchase NFTs. If the NFT purchaser uses the NFT for purposes such as exhibition, production of derivatives, etc., there may be infringement issues. Third, the digital objects to which NFTs point are generally stored off-chain, and the question of who has the obligation to store and maintain the relevant content to prevent the relevant content from being taken offline or deleted is also of concern.
“CryptoKitties (crypto cats) used to be particularly hot a few years ago, but now few people pay attention to them.” Liu Fang (a pseudonym), a cryptocurrency circle member, believes that with the wide fluctuation of cryptocurrency coins and the emergence of new blockchain applications, it is better to observe more before jumping to conclusions.
How long does NFT’s spring have left? On the one hand, it depends on the value of NFT itself, but it also needs to be answered by the industry eco-participants together. The Japan Crypto Asset Business Association has studied the business opportunities and risks related to NFT, and at the end of April this year the association formulated the NFT business guidelines, aiming to regulate the sales and issuance to ensure the smooth operation of NFT business, thus providing a safe and secure environment for users to use and promoting the healthy development of the market.
Pan and Lin believe that blockchain will eventually connect all the virtual and real items in our world, thus enabling these items to be traded spontaneously and distributed peer-to-peer, without the need for a third party. However, technology advancement needs to be gradual.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/with-a-1785-increase-in-market-value-in-the-first-quarter-how-long-is-nfts-spring-ahead/
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