NFTs seem to have escaped Beijing’s ire for anything decentralized, and Sino Global Capital thinks there is more growth coming for NFTs in China. The asset class has been adopted by a number of wealthy Chinese people, and AliBaba has also set up an NFT exchange.
In addition to Alibaba, major Chinese companies like NetEase and ByteDance have entered the NFT space with NetEase selling its own tokens, which are being sold on Chinese mega platform Taobao.
China NFT Market Update —— SW
Driven by the wealth effect and leading domestic tech companies, China's NFT market is growing rapidly.
— Sino Global Capital (@SinoGlobalCap) September 6, 2021
Taobao is a very popular platform in China, and is in no way under the radar of the CCP. This must mean that for the moment, there is a tacit acceptance of NFTs in China, although for how long they will be tolerated is anyone’s guess.
NFTs Attract Wealthy Buyers
NFTs have also been attractive to wealthy Chinese buyers. Cai Wensheng, who is the founder of Meitu, Feng Bo, as well as Dragonfly Capital has invested in the Crypto Punks line of NFTs, which are trading for hundreds of thousands of dollars at the moment.
The Chinese aren’t alone in buying expensive NFTs. Justin Sun, the founder of TRON, recently bought one of the original EtherRocks, for an impressive $500,000 USD. While these NFTs have been on the market for years, 2021 has seen a massive surge in interest across the entire asset class.
Today, people are willing to pay millions of dollars for an NFT from a prominent artist, despite the fact that the entire asset class is less than a decade old. In many cases, these digital art pieces are selling for more than physical artwork, which may be a sign of things to come.
Over the past year or two – a lot of big returns have been created in the crypto markets. DeFi projects blasted higher in 2020, and now, NFTs are ramping. Many, many people have seen their assets explode in value, but locking in the gains isn’t straightforward.
As the popularity (and tolerance) of NFTs in China demonstrates, NFTs seem to fall into a category that is outside of where cryptos are, and aren’t subject to the same kind of opposition by governments. This also seems to be the case with NFT issuance, as many companies that aren’t interested in cryptos are issuing NFTs.
For buyers, NFTs allow profitable crypto positions to be spent into a market that isn’t fiat-based, and still lets them stay on the blockchain.
Whether or not NFTs will have enduring value, especially at present levels, remains to be seen. For the moment, they appear to be a very attractive asset class that draws buyers from all over the world.
The Metaverse Connection
One emerging area that may support NFTs in the long-term is the Metaverse – which is an online space that is developing quickly.
Much like the internet – defining what the Metaverse is won’t be possible in an exact sense, but it is an interactive online ecosystem that features interconnected platforms. The goods that exist in the Metaverse are NFTs, and they can move between users and platforms easily.
While this might sound like a 100% digital fantasy, real world items are being turned into NFTs, with legal ownership across both physical and digital formats included in the deal.
In other words, NFTs can act as a means of buying and owning physical goods, which opens up the space to even more investment.
As people are able to buy more and more things with crypto, it is likely that decentralized assets will become even more popular, with major tokens taking up a role as native currencies in the Metaverse.
When people were paying $1,000 USD for a Bitcoin, there were plenty of doubters out there. Now, whoever was doing the buying seems like a genius. One wonders if the same thing will be true for Crypto Punks NFTs.