A Token of Youth

Digital collectibles set new consumption trend among young Chinese By Tao Zihui

Once upon a time, not too long ago,people would collect ancient porcelain vases, out-of-print stamps, or build a wine collection. They would spend their weekends scoping out Panjiayuan, Beijing’s largest and best-known arts, crafts and antiques market.Today, collectors roam the digital realm looking for virtual art, joining multiple digital collection groups or platforms as they eagerly await the latest release.

And at the drop, they can’t stop…

The digital blind box of Beijing 2022’s panda mascot Bing Dwen Dwen, officially authorized by the International Olympic Committee, sold out at $99 a pop in the blink of an eye. Chinese painting master Qi Baishi’s first social digital collectionraked in 300,000 yuan($44,252.36) at the Shanghai Jiahe auction.

Non-fungible token (NFT) artworks are all the rage among Chinese youth. Last year on November 24, Collins Dictionary announced“NFT” as 2021’s Word of the Year. NFT art is a collectible digital asset that can be traded in the digital world and it is changing the ways artists can sell their art. They function as crypto tokens connected to a digital asset, such as a song or a video or a piece of digital art, which artists can sell directly without depending on galleries.

The digital collectibles use blockchain technology as the primary mode of authentication by creating a unique digital signature permanently attached to the work. This creates a sense of“scarcity” which in turn fuels both collector and investor momentum.

Perhaps the most well-known example of an NFT is, a digital artwork created by graphic designer Mike Winkelmann, known professionally as Beeple.

Online energy

In March 2021, Christie’s became the first major auction house to sell an NFT. The winning bid acquired the associated token of Beeple’s digital collage of 5,000 images for a cool$69.3 million.

“We are on the precipice of a market that is completely new to most of the international art collecting community, and there is no way of predicting what the outcome will be.However, as with any medium, the sale comes down to the quality of the work and the demand for the artist. As witnessed with our most recent digital artwork sale, masterworks command significant prices regardless of the medium,” a Christie’s spokesperson said following the historic sale.

A growing community of celebrities, enterprises and artists has since stimulated NFT sales. And Chinese enthusiasts, too, have joined in,often referring to NFTs as “digital collectibles.”

When Zhang Congcong, a Beijing-based engineer, decided to get herself one of these newly trending collectibles, she was surprised to find these collections to be more “flexible.”

“The digital collectible market is a complicated one, but it does allow us to uncover more collections that better match our personal taste, as well as collections deemed more ‘valuable’,”she told.

“You can take your pick: different themes, different price ranges,and different styles—from avatars to cultural relics,” Zhang added.

A visitor checks out an NFT artwork at the Metavision exhibition in Hong Kong Special Administrative Region on April 29

A league of their own

China’s Gen Zs are in pursuit of the nonconformist and just want to express their “unique” selves.

The immutability of blockchain technology and the uniqueness of digital collectibles can grant online profile pictures or emojis, among others, rare features that lift these items of daily use to limited edition level.

“‘Have you bought a digital collectible yet?’ was the question my friends kept asking me, so I just gave it a try,”Zhang said.

More and more businesses consider integrating these new collectibles into their social media, gaming, or marketing strategies. “This also shows that in today’s commercial marketing, these latest digital assets can empower a brand and help enhance its value,” Xiao Sa, a senior partner at Beijing-based law firm Dentons China, told. Gen Zs have gradually become the driving force of consumption in China and digital collections, if they interact well with brands,can attract young people’s attention.

In addition, some tourist spots and museums now use digital collectibles to execute the online marketing of their iconic landscapes and collections, promoting their business and protecting traditional culture, Xiao added.

A number of leading Chinese companies, too, have jumped on the bandwagon,including big tech, blockchain startups,art auction houses, and retail brands, and their participation has further encouraged the existing NFT passion. In June 2021,Alibaba’s omnipresent payment app and e-wallet Alipay launched 8,000 limitededition interface skin digital collectibles in China, based on two pieces of ancient artworks from the Mogao Grottoes located in Dunhuang, Gansu Province.The caves house some of the finest specimens of Buddhist art dating back one millennium, and their associated tokens sold out quickly.

In August 2021, Tencent, China’s largest social media and gaming company, launched the first domestic digital collectible trading app:Huanhe. Other online giants including ByteDance(owner of Douyin, China’s TikTok), e-commerce giant JD.com, and the popular video sharing platform Bilibili have already cashed in on the craze by designing and selling collectibles based on cartoons for people to attach to their online profile pictures.

Data show that in 2021, some 4.56 million digital collectibles had been sold in China, with a total issuance value of about 150 million yuan($22.08 million). According to the calculations of Taobao Research Institute, a research platform in the data field, the scale of China’s digital collection market will reach 30 billion yuan ($4.42 billion) in 2026.

What’s next?

The soaring popularity of the collectibles offers investors a wealth of opportunities, but also brings along a plethora of risks.

“The U.S. Securities and Exchange Commission right now still insists NFTs are‘securities’ products and tries to convince the market to accept their financial attributes,” Liu Tianjiao, Director of the Blockchain Copyright Center of the National Press and Publication Administration, told. “On the contrary, ‘de-financialization’ is the bottom-line for the development of the domestic digital collection market,” he added.

Foreign NFTs tokenize a work or a virtual thing, according to Liu. “What they transfer is not the value of real digital cultural works.”China’s digital collections circulate cultural elements through the use of blockchain traceable,tamper-resistant, and transparent technical means,anchoring the value of digital cultural products and copyright works, and conveying the value of digital cultural elements—emojis included. BR