Hidden risks behind the popularity of NFT on the Metaverse Express
At the beginning of 2022, Jay Chou added another fire to the fiery metaverse NFT (non-fungible token) market.
On January 1, 2022, a metaverse platform and the trendy brand PHANTACi under the name of Jay Chou jointly released the NFT project Phanta Bear (phantom bear) in limited quantities for the first time. The price exceeds 62 million yuan. With the blessing of Jay Chou’s influence, 3,000 pieces were sold in 5 minutes, and all of them were sold in about 40 minutes.
However, Jay Chou later stated in a statement: “This business practice has nothing to do with Jay Chou! Nor is Jay Chou launching NFT! Jay Chou has never participated in any planning and operation of the project, nor has he made any profits.”
Why did Jay Chou quickly clear the relationship with NFT? In this regard, Qu Yang (pseudonym), an investor in the NFT project, told a reporter from China Business News: “In China, NFT claims are affected by policies and are now called digital collections. The act of stardom itself may not be a commercial act, but it is true It may lead to a certain degree of guidance due to the flow of fans, so a statement must be issued to explain.”
Since 2021, with the support of the metaverse fever, NFT projects have ushered in explosive growth, and more and more ordinary people have been able to understand NFT. A few days ago, Vision China (24.290, -1.43, -5.56%) also began to cross the border and started an NFT digital collection platform, which caused the company’s stock price to rise sharply. Then Vision China said in the announcement that the platform is currently in the initial stage of launching, and it is still impossible to predict the degree of impact on business performance.
Regarding this wave of NFT boom, independent economist Wang Chikun believes: “At present, the real value support of NFTs is weak, most of them have no real value support, and there are multiple risks such as false risks in NFT-related trading activities. Ordinary investors should judge carefully, and non-professionals should Avoid deploying these risks to prevent harvesting.”
It is reported that the full name of NFT is Non Fungible Token (Non Fungible Token), which is a concept derived from blockchain technology, that is, to encrypt a certain picture, Electronic album and other digital works through blockchain technology, making it unique, irreplaceable. To put it simply, NFT is to use blockchain technology to mark a work with “anti-counterfeiting code”, making it itself a digital token.
It is worth noting that this is not the first time Jay Chou has been associated with the concept of “NFT”. In October 2021, Fang Wenshan cooperated with art agency Soka Art to launch the Fang Wenshan × Jay Chou joint limited edition “Punk Cat Sting” (blue and white porcelain) doll with NFT anti-counterfeiting certification.
Qu Yang said: “NFT is equivalent to turning artworks, game equipment, etc. into irreplaceable and unique tokens that can be held. Naturally, some people recognize that they have investment value.” With a playful attitude, he spent a few Ten thousand yuan purchased several NFT projects including NFT avatars. “NFTs that are usually referred to now are more on the Ethereum chain. In addition to artworks, NFTs can also be combined with game equipment, domain names, and equity certificates.”
Qu Yang also said that there is no handling fee for holding NFT, only miner fees for transactions, and other fees are related to the platform. OpenSea is the current mainstream NFT trading platform. In his opinion, the influence of NFT’s “touching porcelain” Jay Chou is not very big. “Now the popularity of NFT is very high, and there are actually not a few people who understand this.” Qu Yang said.
In fact, after NBA star Stephen Curry, singer Lin Junjie and other stars rushed to buy NFT avatars in 2021, the fire of NFT quickly burned from abroad to China, and Internet giants such as Ali and Tencent also followed suit.
As the first Internet giant to enter NFT in China, Ali launched the NFT trading platform Ant Chain Fan Granule (renamed “Whale Scout”) on the self-developed alliance chain “Ant Chain” in June 2021; in August 2021, Tencent launched the NFT trading platform Magic Core APP on its own alliance chain “Zhixin Chain”; in December 2021, JD’s NFT distribution platform “Lingxi” launched the JD APP applet, provided by the self-developed alliance chain “Zhizhen Chain” Technical Support.
Even though he is familiar with blockchain technology, Qu Yang does not recommend ordinary investors to enter the market. “NFT still depends on its own attributes, business background and value. I can’t give advice on what to buy and participate in it.” He said bluntly.
Hype and Risk
According to data, since the second half of 2021, NFT transactions have increased significantly. As of early December 2021, the cumulative transaction volume of OpenSea in 2021 has reached 12.91 billion US dollars.
However, as a controversial virtual asset, the NFT craze has also spawned some speculative hype. For example, a pair of Musk’s virtual sneakers of the same model sold for $110,000, a rainbow cat animation sold for $560,000, and there were pixel avatars up to $91.56 million for sale.
In the eyes of some ordinary people, these are inconceivable, why spend a lot of money to buy a avatar picture? Wang Chikun said: “Frying NFTs, like frying shoes and frying blind boxes, has exceeded the cognition of ordinary people. Jay Chou’s entry is just a means for merchants to use celebrities and harvest their traffic.”
At the same time, the Ouyi Research Institute also pointed out in the research report that the current NFT market is still in the early stage, there are many irregular and opaque operations, and there is a lack of unified valuation standards and fair pricing system. The recent popularity of its concept has also attracted the influx of some speculative teams. They seized the investor’s fear of missing out, and used various packaging and hype techniques to attract users to enter the market, which will undoubtedly magnify market risks and is not conducive to the NFT market. healthy development.
“Speculators formulate and master the NFT trading rules, and the bookmakers can easily control these NFT transactions, and control the prices of these NFT transactions and the entire network contract trading market. Whether it is a multi-order liquidation or a short-term liquidation, it is the bookmaker who controls the transaction. And a method of harvesting ordinary investors, a lot of buying and selling and speculation, prompting the prices of these NFTs to skyrocket and plummet.” Wang Chikun pointed out the potential risks that may exist in NFT transactions.
The reporter noticed that domestic technology platforms generally define NFTs as “digital collections”, and the layout of NFTs by Alibaba, Tencent and JD.com is also limited to digital collections. In this regard, Qu Yang explained: “Because NFT involves virtual currency, and our country’s law does not allow virtual currency transactions. Like the existing domestic digital collection platforms, they are basically issued based on private chains or alliance chains, which avoids the need to involve and Legal issues of virtual currency transactions related to public chains such as Ethereum.”
Qu Yang further pointed out that the digital collections entered by the domestic Internet giants are essentially private chains rather than public blockchain platforms, which cannot be hyped for secondary transactions, avoiding the policy risks of currency transactions.
Ride the Metaverse Express?
In addition, NFT is also considered to be one of the basic technologies necessary to confirm the rights of virtual items in the future metaverse, and is often bound to the concept of “metaverse”. On December 17, 2021, Adidas launched the first series of NFTs of its sports classic series Originals. The series is called “Into the Metaverse”, which was quickly sold out as soon as it hit the shelves.
Recently, due to the sharp rise in the share price of the digital collection trading platform “Metavision”, Vision China has blown up the hype of the “NFT concept” in the secondary market. On the evening of January 4, 2022, Vision China issued an announcement saying that the “Meta Vision” platform is currently in the initial stage of launching, and the company cannot yet predict the degree of impact on business performance. Investors are advised to pay attention to market risks.
Guotai Junan (17.590, 0.21, 1.21%) expressed the opinion that the digital assets supported by NFTs have certain circulation attributes, and the related trading platforms have nearly 500,000 active accounts and a single quarter of 6 billion US dollars in transaction volume. The innovation of NFT assets in various fields has continuously improved the structure of the industrial chain, and has been applied to various types of assets such as collectibles, artworks, and games. In the longer term, NFT makes the establishment of the metaverse economic system possible, which also directly promotes NFT to become the focus of attention of all parties in the early stage of the metaverse.
“The concept of Metaverse and NFT has been hotly hyped, and the price has also been pushed up. In this context, some merchants will do everything possible to smash the hot spots and traffic of Metaverse, trying to attract more capital and market attention.” Wang Chikun said that ordinary investors Careful judgment should be made to avoid configuration risks and prevent harvesting.