China Is Building Its Own NFT Behind the Great Firewall

China Building Its Own NFT Behind Great Firewall

Nonfungible tokens (NFTs) are so hot, China can’t ignore them anymore. So, it’s building a more controllable platform for digital collectables. And only the digital yuan is welcome.

NFTs are platforms for media like art and videos, which allow the creator to make an immutable — unchangeable — token that can prove its own provenance. Like Mike “Beeple” Winklemann’s $69 million collage, collectable avatars like CryptoPunks, and the NBA’s Top Shots — short video highlight reels that are basically digital trading cards.

See also: What Are NFTs and Why Are They Crypto’s Newest ‘Next Big Thing?

With the total ban on cryptocurrencies fresh in developers’ minds, the NFT craze sweeping the crypto world has made its way behind China’s Great Firewall, but cautiously, with large tech firms and developers rebranding them “Digital Certificates,” according to the South China Morning Post (SCMP).

With public blockchains like bitcoin and Ethereum illegal in China, the country is building a new version of the NFT on its state-run Blockchain Services Network (BSN), which runs what amounts to private, permissioned blockchains that are open to developers but centralized, so the companies operating on them can collect users’ identity data and the government can control what’s on them. It has a private, adapted version of Ethereum and Corda, for example.

Still Hot

The NFTs built on that chain will be called BSN-DDCs — for distributed digital certificates — and will only allow payments and fees to be paid in digital yuan, the central bank digital currency (CBDC) China is expected to launch by February, according to the report. As NFTs are technically not cryptocurrencies (except in the broadest definition of the word) but tokens, they are not illegal in China.

“NFTs in China will see annual output in the billions in the future,” He Yifan, CEO of Red Date Technology, a BSN infrastructure, firm told the paper Thursday (Jan. 13).

That’s not a wild guess. Even with the concerns, top tech firms including Alibaba’s Ant Group, Tencent and Baidu launched NFTs over the summer, and they have sold out or been claimed in seconds. Even the state-run Xinhua News Agency got in on the action, giving away 100,000 digital collectables on Christmas Eve.

“You have to be fast enough to get a digital collectible,” Felix Huang, a who owns 10 digital collectibles told the SCMP earlier this week. “If you fail to nail the NFT product 10 seconds after it’s released, you’ve almost lost it.”

That said, DDCs minted by Chinese tech firms cannot be sold for a profit. NFT markets do not allow resales, and Ant Group has asked owners to report any reselling.

Read also: Gaming NFTs Don’t Just Have Value, They Have an Economy

So, while they are not investments, getting ones you want could be substantially harder. A black market has already emerged, of course.

Beyond art and collectables, Chinese DDC firms are already looking into commercial uses of NFTs that are being discussed by blockchain developers beyond the Great Firewall, such as digital certificate management. DDCs might be used to record car ownership, licensing, proof of insurance, even repair history, said Red Date’s He.

See also: Tokenizing Assets Is NFTs’ Next Frontier

On the other side of the Great Firewall, using NFTs to make diplomas and school records portable, secure and accurate has been discussed — although many companies are working on blockchain credential standards using regular cryptocurrency tokens.

But they could also be used to record ownership of property ranging from real estate to shares of stock. Another widely discussed use is tokenization — breaking an asset’s ownership into many pieces recorded onto NFTs, making it easier for small investors to access certain high-dollar investments.

Read also: Can NFTs Be Securities? The SEC Says Yes