China's NFT market in 2022:  The most comprehensive analysis guide

China's NFT market in 2022: The most comprehensive analysis guide


08 March 2022 |  Andy S & Tian Z | 6 min read

Intro

 According to information compiled from Google Trends, looking at how people globally search for “NFT (Non-Fungible Tokens)” in 2021,  China is the number one country for NFT searches.

China expects its NFT market to grow at a rate of 150% and reach 29.52 billion yuan by 2026. This reflects the great potential for future development, development, suggesting that many opportunities are untouched or explored.

 As the popularity and demand for NFT items(NFT art, NFT games, NFT projects, etc.) continues to grow, many Chinese internet companies have released their own NFT trading platforms, which will function as an exchange and marketplace where users can buy or sell different types of digital assets.

With an increasing number of investors looking to get involved, there are more opportunities than ever before. This article will give a comprehensive analysis of China’s NFT market.

What is NFT

NFTs or Non-Fungible Tokens are digital collectibles that can be uniquely identified by encrypting an image, electronic album, or other digital work through blockchain technology.

 In simple terms, NFT is a blockchain technology that gives a work a “security code”, turning it into a digital token with a uniqueness, so you can trace the digital works back to their origins, see the copyright clarification, and trade.

According to the global market report, the global Non-fungible Token (NFT) market size reached USD 50.10 Billion in 2021. The introduction of Non-fungible tokens is a revolutionary change in the art world because of secure authenticity and originality for blockchain representations.

American digital artist Beeple’s work, Everydays: The First 5000 Days, sold at Christie’s, the world’s leading auction house, for $69,346,250; the third-highest price ever paid for a work by a living artist at auction.

Supporters of NFT believe the NFT artworks, auctioned off as works of art at world-renowned auction houses, means that the artistic value of NFT is recognizable by the mainstream art world.

However, in the eyes of some ordinary investors who have experienced the bursting of the cryptocurrency bubble, it is nothing more than a new form of hype.

 It is undeniable that many of those who snapped up NFT were cryptocurrency enthusiasts who entered the game with speculative purposes.

The First 5000 Days

The core value of NFT

First, it allows digital content to be asset-based. Under the current Internet, we only have the right to use digital content, but we cannot make it an asset. The emergence of NFTs has broadened the boundaries of digital assets.

Digital assets no longer only refer to digital currency. Any unique asset can be NFTs, whether they are physical assets or various digital content, such as pictures, audio, video, game props, etc., which increased the ability to trade digital content.

Secondly, blockchain technology guarantees the uniqueness, authenticity, and permanence of assets. Decentralized storage ensures that the assets are permanent and will not disappear when the centralized platform ceases to operate, which will also enhance the liquidity of the assets and attract more buyers for trading activities.

Thirdly, the decentralised trading model will, to a certain extent, improve the business position of content creators and reduce the commission share of centralised platforms.  

China’s NFT market 

Enlybee Guide Form

 In China, they use the term “digital collectible” to describe describe non-fungible tokens or cryptocurrency because of the government’s opposition towards cryptocurrencies, which encourages speculation and can lead to money laundering and capital outflows. 

Despite this,  leading technology companies continue investing heavily into this new area and hope for its success. The Chinese government is not planning to hinder the booming NFT market as long as it does not lead cryptocurrency traders away from conventional finance methods.

The popularity of some of China’s NFT marketplaces is on fire. For example, as one of the most popular of China’s NFT art marketplaces, NFTCN is currently working with more than 80 thousand artists and you can find them on this decentralized digital asset trading platform.

On top of that, the rise of China’s NFT projects. China’s popular NFT project,  ‘Phanta Bear’, was initiated by Taiwan-based singer Jay Chou’s brand Phantaci and the digital entertainment platform Ezek. China’s NFT project Phanta Bear was all sold out within 40 minutes after its release with revenue somewhere around 10 million dollars.

NFT trading platforms are another major player in China’s NFT market. The following article will introduce some basic information about these intriguing new markets.

Phanta Bear

Chinas NFT trading platforms

China’s NFT market is booming, and many NFT trading platforms are springing up one after another. These platforms have comprehensive functions. The artists could issue their NFT and regular users could trade NFT collectibles on those platforms.

According to incomplete statistics, there were thirty-eight NFT platforms in 2021, which you can divide into three echelons according to their quality. There are eight platforms in the first tier, six in the second tier, and twenty-five in the third tier..

Different types of Chinas NFT

There is a wide range of NFTs  on the major platforms, which you can divide into three levels according to market popularity:

1、Top-tier: Artefact 3D models, Aerospace 3D models, Music, Avatars.

2、Middle-tier: Anime, Games, Sports, DCCG.

3、Third-tier:  Painting, Photography, E-sports, Film.

The Market value of China’s NFT 

In 2021, the number of NFT collections issued by each trading platform was about 4.56 million, with a total issue market value of about 150 million and an average selling price of about $33.33. Take two platforms with a large circulation:

As of December 28, 2021, there were 266,872 pieces of NFT collections released by Wow Whale , with a total market value of $51,119,115.81 and an average selling price of about $19.15.

As of December 30, 2021, there were 20450 pieces of NFT collections released by Magic Core, with a total market value of $1545,46 and an average selling price of approximately $102.14.

Distribution modes of Chinas NFT

The NFT trading platform has created a variety of distribution models to attract domestic users, which can be divided into three basic models:

Collection Model

Low issuance and high price.

Some platforms, represented by “Magic Core”, issue NFT with strong IP traffic, allowing consumers who like them to buy and collect. However, the platform is not open to secondary market trading of NFTs.

Magic Core

Transfer model 

High issuance and low price.

With the power of their traffic, some platforms represented by Wow Whale choose to take a civilian route with 6-10 thousand NFT issues per issue and pricing that ranges from 9.9 yuan for general collections all way up to at 29.9 yuan for high-end items.

Users can transfer the collection after 180 days of holding it and only make a second transfer after holding it for two years, which reduces the risk of speculation by limiting circulation.

Wow Whale

 Secondary market model

Low issuance and high price.

iBOX was one of the first platforms to issue NFTs, with the number of issues ranging from 100-2000 per issue and pricing ranging from 69.9-999, opening up the secondary market and allowing real-time trading.

Ibox

In addition, one of the most popular ways to sell NFTs is by putting different levels in blind boxes. Some platforms, represented by OneMeta, put NFTs with multiple levels with increasing empowerment into blind boxes. Also, you can purchase them at different prices, depending on how empowered users want their items to be.

There are various forms of empowerment: physical empowerment, the right to buy other digital collections first, to enter Metaverse, offline art show tickets, etc. At the same time, the secondary market opens to allow real-time trading and circulation.

Potential risks with NFTs

As China’s NFT market has recently emerged, various rules and regulations are not yet perfect, and market supervision responsibilities are unclear. Some platforms or individuals take the opportunity to open the NFT secondary market to speculation.

In addition, the consumers of NFTs are mainly young people between eighteen-thirty. Most of these people are school students and have no source of income; some are consumers who have recently entered the workplace, and they believe that digital collectibles (NFT) will be the next shortcut to riches, like Bitcoin. They may blindly buy NFTs without considering whether it is worthwhile or not.

Most of the offering platforms do not have blockchain technology, so they partner with companies that do, which can be risky. When both companies stop working together for some reason, it is a question of how NFT purchased by consumers will be appreciated and circulated.

Blockchain

The Future direction of China’s NFT market

China is a different market than other countries in terms of crypto activities, so NFTs will need to develop differently to avoid appearing to associate with cryptocurrencies.

The majority of NFT transactions in China are decoupled from cryptocurrencies. All crypto-based counterparties choose to denominate their purchases directly through RMB, using traditional non-crypto means, such as bank cards, Alipay, and WeChat Pay for payment processing instead.

The creators of NFTs in China have not yet opened an official or unofficial secondary market for such tokens due to a series of government regulations. But according to analysts, a pilot digital art trading secondary market to be opened by the government is predicted to be approved to go live in 2022.

After laws and regulations regarding NFT become clearer, you will freely trade NFTs in China, so buyers receive their investment value back. Soon, China’s NFT market will see a new explosion under compliance conditions.

Conclusion

At the moment, NFTs are mainly used for digital artwork in China. But a larger market is still yet to be created for NFT games and NFT projects, etc.  In the future, brands will also enter China’s NFT market via the metaverse as blockchain technology expands.

 China’s NFT market has rapidly become one of the most advanced and sophisticated markets around.  If you are interested in entering China’s NFT industry but do not know where to start or desire help with your venture, feel free to contact us!

FAQ