Cryptocurrencies were hugely popular in China circa 2017 but a series of industry crackdowns have since seen the burgeoning industry silenced in the Asian country. Following the Ji Xinping’s led government’s plans to cut down on the carbon emissions caused by the burning of fossil fuels, crypto mining was subsequently banned from Mainland China and the entire Chinese territory in mid-April, 2021.
Given the hard crackdown on everything crypto, NFTs seem to have gained an ability to survive. It’s complicated, but let’s investigate…
NFTs Banned But Not Forgotten
The domino effect led to the subsequent closure of all crypto trading platforms in China and the ban of crypto trading activities. Non-fungible tokens (NFTs), which represent real-world assets, were just finding their feet but the stringent ruling saw their growth in the country stifled. The country’s banking, internet finance, and securities organizations kicked against the exchange of NFTs with other cryptocurrencies. They also prohibited the use of NFTs in tokenizing security-driven products.
Although these industry groups lack regulatory oversight, they command a level of influence on the country’s policymakers. This hostile position was considered a death knell to the country’s hopes of competing with the global market in the NFT trading space.
However, this is no longer the case. China’s tech giants are becoming more attracted to the blockchain-based verifiable streams of real-world data, according to a recent report from TechCrunch.
To stay within the regulatory point of view, these companies are terming NFTs as ‘digital collectibles’ to stay clear of the financial and speculative nature of NFTs in the global market. These digital collectibles are focused on facilitating ownership verification and the authenticity of digitalised assets. We have already explored the technical side of NFTs but this time it is all about value.
By their very nature, these digital collectibles fall under the general definition of cryptographically-unique tokens but they differ vastly from their counterparts in other locations. For one, they are not hosted on open-source protocols or permissionless networks like the Ethereum blockchain. Instead, each digital collectible is minted on a permissioned network maintained by a local tech giant.
Also, all collectibles are sold through these permissioned networks instead of a crypto trading platform where they would be traded against other cryptocurrencies.
Time to embrace NFTs?
To stand a chance of getting their hands on these cultural-focused and history-preserving digital collectibles, interested users need to fulfill some criteria. For one, they must prove their real-world identities on the host websites and the purchase must be made using the country’s Yuan. Purchased digital collectibles are also not meant to be sold on secondary marketplaces.
Despite this, China’s blockchain-embracing companies are still rolling out their form of NFT tech. A few of them have stepped beyond the shores of their homeland, trying to replicate what Western companies utilise NFTs for.
Whaletalk is a premier digital collectible initiative from the Ant Group, a subsidiary of the Alibaba Group. The protocol’s artworks are stored on AntChain – a permissioned blockchain protocol that is maintained by both the Ant Group and their body of institutional partners.
Alibaba’s food delivery service Ele.me has also dabbled into the digital collectible space and now allows its app users to purchase food-themed digital collectibles from their mobile phones.
Tencent has also launched Magic Core on its close-sourced distributed ledger protocol Zhixin China. The protocol is more enterprise-driven and aims to eliminate physical ink seals and corporate stamps. To achieve this, Zhixin is designing a means for documents to be easily authenticated.
Still, others like Bilibili have taken their love for NFTs beyond the shores of China. The user-generated video streaming behemoth announced that it would be launching a set of 10,000 rare profile pictures on its third-party platform CryptoNatty – an NFT marketplace registered in Singapore. The platform is expected to mint these digital collectibles on the Ethereum network after the intellectual property was ‘licensed’ by Bilibili.
NFTs To Preserve Culture
The Chinese spirit has continued to carve an unusual path in the blockchain-driven era. While other regions see the nascent industry as a viable financial space, Chinese regulators and technocrats have publicly kicked against this idea and instead promoted the idea of using NFTs for more culture-driven initiatives.
In a recent report by local media outlet South China Morning Post, China’s Communist Youth League recently launched a set of 54,000 NFTs to mark the 100th anniversary of the Chinese Communist Movement. The NFTs were given out for free.
According to the political training hub for future Communist leaders, these NFTs are digital collectibles featuring the league’s official mascot. The NFTs are not to be traded, in line with the laid-down regulations of the country.
Following suit, one of China’s oldest universities, Peking University launched 20,000 digital collectibles in the format of alumni cards to celebrate the institution’s 124th anniversary.