To know what NFT is, you must first understand some basic knowledge about blocks and blockchain certificates. For those who are not interested in this process for now, please refer to the following:
The introduction of a Non-Fungible Token (NFT) is relatively simple. It’s a new kind of digital currency used on the blockchain platform. It can be achieved when we input data into the public ledger and use it as a substitute for money.
For example, you can use a certain token to buy a house and then use the same token to trade with someone else. It is different from conventional currency, which only has fungibility (i.e., two units of the same currency are equal to each other).
NFTs are generally used in the context of real estate. For example, you can use a specific token to buy a house and later use the same token to trade with someone else.
The public ledger that holds NFTs is called a blockchain. It allows users to store, trade, and transfer assets from one user to another. It’s also the first project on this blockchain platform.
Each user is referred to as a node in blockchains for the time being. They are all equal in status. All of them can store and trade on the blockchain through a virtual identity.
Although NFTs are widely used in the context of real estate, they can also be used to denote any other tangible or intangible properties such as artworks, loyalty points, collectibles, and even data. It is also a common practice for issuing blockchain certificates for entities that would like to issue specific tokens for their customers or members, such as universities and organizations.
What is an NFT?
An NFT is an identifier of a token that can be used to represent real-world items or concepts in a wider digital context. Non-fungible tokens, also known as NFTs, are one-of-a-kind cryptographic tokens, reside on a blockchain, and cannot be copied since each token has its unique identifying code and metadata. NFTs are also widely referred to as NFTs.
NFTs perform the same functions as communicators or information tokens. In contrast to cryptocurrencies like Bitcoin or Ethereum, NFTs cannot be exchanged for one another and do not exhibit fungibility.
The proponent of non-fungible tokens (NFTs) asserts that NFTs offer a public certificate of authenticity or proof of ownership; moreover, the legal rights that NFT transfers are only sometimes clear.
According to the blockchain’s definition, the request for an NFT does not have any intrinsic legal meaning and does not grant any additional legal rights over the digital files that are linked with it.
In 2021, the volume of sales of NFTs came close to the $25 billion threshold. Large global corporations such as Facebook and Nike, in addition to many startup companies, are placing their bets on NFTs.
A non-fungible token, also known as an NFT, is essentially a digital asset or what some people refer to as a cryptographic asset. It possesses a one-of-a-kind identifying code and metadata, both of which distinguish it from fungible tokens.
They are not able to be traded or swapped for values that are similar to one another, just like cryptocurrencies. Cryptocurrencies are identical to one another, unlike fungible tokens; as a result, they can be utilized for economic transactions. This is the primary distinction between the two.
Tokenizing tangible assets leads to a reduction in instances of fraud as well as the development of a more effective system for buying, selling, and trading tokenized assets. In addition, non-fungible tokens can represent persons’ rights to their property and identities.
Is there a market for NFT in China?
For those people who purchase NFTs, there are many opportunities in China. At the moment, our country has the largest cryptocurrency trading market. However, thanks to a lack of legal regulations, China will need some time to develop a formal trading system and prevent illegal fundraising behavior.
NFT’s partnership with blockchain is irrelevant; they have different names but have the same principle. They are both based on the public ledger with decentralized verification.
NFTs, also known as “non-fungible tokens,” has received a great deal of attention in the media as of late, first for their spectacular increase in popularity and diversification and then for their similarly precipitous collapse.
However, the market and regulatory environment for NFTs in China have developed considerably different than in many other areas. Legislative activity and regulatory probes have followed NFTs every possible step of the way, including in China.
The creation of cryptocurrencies and their exchange will be fully outlawed in China beginning in 2021. Many people had the assumption that non-fungible tokens (NFTs), which employ the same blockchain technology as cryptocurrencies and are frequently connected with them, would be included in this prohibition.
However, this has yet to be the case thus far. NFTs are still in circulation in China, and there are several prominent systems for minting and buying.
However, they are always referred to as “digital collectibles” rather than “tokens” to highlight that they cannot be traded and are not a form of currency.
Therefore, although the long-term legal status of NFTs in China is still unclear, this has not prevented businesses from successfully utilizing NFTs in marketing efforts, evidently without any legal concerns.
The regulatory framework in China for virtual assets is still in the process of being developed. On the one hand, virtual assets are protected as civil property underneath the Civil Code, which represents the lawful foundation for a resident of China to own digital assets, such as digital coins and tokens.
On the other hand, the Civil Code does not explicitly protect virtual assets as civil property. On the other hand, according to the Circular on Further Preventing and Handling the Risk of Speculation in Virtual Currency Transactions that was issued on September 15, 2021, by the People’s Bank of China (PBOC), together along with 9 other government agencies, virtual coin and cryptos initial options, trading, and speculation are all specifically forbidden.
This circular was issued by the People’s Bank of China (PBOC). This notice prohibits the circulation of virtual currencies inside the market as a form of currency, in addition to nearly all transactions using virtual currencies.
Additionally, it states that it is against the law for cryptocurrency exchanges outside of China to offer their services to people in China.
NFT Market Activity in China
Due to the above-mentioned regulatory environment, non-financial transactions (NFTs) in China are formed and managed differently than everywhere else. Because they cannot be bought or sold and are not a form of currency, they are almost always referred to as “digital collectibles” rather than “tokens.”
This is done to underline the non-tradable and non-monetary nature of the items. In addition, these NFTs do not take place on a public blockchain but on the private blockchain maintained by the platform that issued them. Last but not least, these platforms make it clear that trading or reselling the NFTs they issue is not permitted, with a few limited circumstances.
Some of the NFT platforms in China have encountered difficulties due to these limitations. Huanhe, the NFT platform owned and operated by Tencent, recently announced that it will no longer be producing any new digital collectibles and would instead continue to function solely as a legacy storage platform for the NFTs of its existing users.
It was also stated that current users had the option of continuing to hold and show their existing NFTs and requesting a refund from Huanhe.
Despite the widespread prohibition on trading, some alternative exchanges are still in operation and working hard to satisfy the needs of their customers for liquidity. For instance, the Jingtan app, which Alibaba runs, now enables users to “exchange” items in their collection by “re-gifting” digital collectibles after they have owned them for 180 days.
However, the recipient of the re-gift is subject to a two-year lock up (no sale agreement), during which time they cannot sell the item. This creates obvious opportunities for back-channel payments for such “re-gifting.”
Hence, Jingtian says that if its sensors detect any proof of payment for such exchanges, it will halt or close the user’s account, which assumedly also results in the disgorgement of any NFTs held in this kind of account (since, as was mentioned previously, such NFTs would be held on Jingtian’s blockchain, and not directly held by the user). Jingtian asserts that if it finds any evidence of payment.
Utilization of NFTs in Marketing
Even though the long-term legal status of non-fungible tokens (NFTs) in China is still unclear, this has not stopped businesses from successfully utilizing NFTs in advertising campaigns, evidently without any legal concerns.
Tmall recently held an online event named the Metaverse Environmental Protection Auto Show. The event promoted the introduction of eight electric vehicle brands. As part of the promotion, users were allowed to win NFTs of those brands using a lottery system.
Customers were able to use points earned from the purchase of the Maimaikazi Crispy Chicken Thigh Burger () to redeem a relevant NFT through the McDonald’s app, WeChat, and Alipay as part of a promotion that McDonald’s also launched involving free food tokens (NFTs).
What is the relationship between NFT and blockchain certificates?
While the use of NFTs for secure data storage is nothing new, the fact that they can be used to secure digital assets gives them a new dimension. The blockchain certificates featured in this article are the physical representations of digital assets, but they are not those assets themselves.
They represent the right to access and use those digital assets (usually referred to as tokens), which are stored on a specific blockchain. This is a physical representation of an agreement between two people.
If one party fails to perform, the other party can take action, such as suing the first party. The outcome of this is that not only does it deliver security but also a financial return.
NFTs are often used for advertisements and promotional campaigns. For instance, restaurants and brands in China have started using NFTs to advertise their products and services. NFTs are also used for online games, sports, and movies.
NFT has many definitions. NFT can be “smart cards,” “physical, the digital asset,” or any other physical representation of a digital asset on the blockchain or any other technology platform. The physical representations of NFTs can be transferred like ordinary property or sold at the market price via websites that buy, sell and exchange NFTs.
Conclusion:
NFTs are constantly evolving and enhancing the possibilities for their use in society, especially in China, where their uses have been restricted. As the digital assets market continues to grow, so will their importance.
There are many people involved in the NFT ecosystem; some of them are investors, and some of them are everyday users.
Besides, as a technology, NFT is likely to make blockchain more effective because it makes blockchain applications easier to understand by everyday users without knowing what blockchain is. More importantly, it will make the blockchain more “open” and diverse.
Blockchain applications could be created in other crypto worlds as well without having to worry about whether they would work or not. The “public chain” model of NFT will not only provide the foundation for a democratic form of governance, but it will also help businesses to determine how to leverage blockchain technology (and its synergy with the Internet of Things) and other technologies in various industries.
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