The singer A Duo, who rose to fame through the talent show Sisters Who Makes Waves, on May 25 became one of the first Chinese artists to sell a song as a non-fungible token. Her single “Water Know” was purchased for $47,000 at an auction, with all proceeds going to a charity that provides music education to children in rural areas.
NFTs are one of blockchain’s many applications aside from cryptocurrencies. It is important to remark, though, that NFTs are not crypto currencies (even though many people who purchase NFTs do so by using crypto currencies as a means of payment, but it is not compulsory to use cryptos to acquire NFTs).
A fungible asset is an item that consists of many identical parts that can be readily interchanged, like money. Nevertheless, if something is non-fungible, it is impossible to interchange it for something else since it has unique properties.
NFTs, which are supported by the Ethereum blockchain, are unique assets in the digital world that can be bought and sold like any other piece of property. The digital tokens can be thought of as certificates of ownership for virtual or physical assets.
What are the differences between NFTs (for example , music, artworks, and digital collectibles) and crypto currencies? Crypto currencies are fungible (it is possible to trade, for example, one bitcoin for another bitcoin), whereas NFTs are non-fungible (each NFT is unique and cannot be traded at equivalence).
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In this sense, since NFTs are not cryptocurrencies, NFTs are not affected by the crypto cryptocurrency crackdown dictated by Chinese regulators in May and June, as I explained in my article “Cryptocurrency crackdown in line with China’s carbon goals” (China Daily HK Edition, June 18).
In the music world, NFTs offer hope of a valuable new revenue stream. For example, earlier in March, the US band Kings of Leon raised more than $2 million by auctioning off NFT versions of their new album
In that article, I explained that the ban on bitcoin mining is, to me, perfectly in line with China’s current goals. Under the 14th Five-Year Plan (2021-25) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035, China aims to reach its carbon emissions peak before 2030 and become carbon neutral before 2060.
However, NFTs are simply one of many of blockchain’s applications other than cryptos, and we must bear in mind that China is actually promoting and encouraging the use of blockchain technology. In this sense, in October 2019, President Xi Jinping gave a speech saying China needs to “seize the opportunities” presented by blockchain, in what was one of the first instances of a major world leader backing the tech.
Most of the media interest worldwide for NFTs began in early March this year, when a digital-only artwork was sold at Christie’s auction house for $69 million. The winning bidder did not receive any physical painting or print, but a unique digital token, the NFT.
Since NFTs provide or transfer ownership of a digital asset, preventing others from claiming ownership by just copying it online, they can offer many opportunities to the arts and music industry.
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In the music world, NFTs offer hope of a valuable new revenue stream. For example, earlier in March, the US band Kings of Leon raised more than $2 million by auctioning off NFT versions of their new album, of which a quarter went to a solidarity fund for live-event workers, according to Rolling Stone magazine.
To me, NFTs are one more step towards blockchain becoming a leading technology in China.
In this sense, blockchain is the technology likely to have the greatest impact on the future of the world economy. Just as an example, China Central Television defined blockchain’s economic value in 2018 as “10 times more valuable than the internet”.
Considered for long a new technology, blockchain is developing fast, and is quickly becoming a key player in many industries, like the financial one.
If there was no doubt of the importance of blockchain technology a few years ago, the ongoing COVID-19 pandemic, which has certainly confronted the whole world with an unprecedented challenge, has turbocharged a financial technology (fintech) revolution worldwide in general, and also a blockchain revolution in particular.
READ MORE: Digital-only artwork fetches nearly US$70m at Christie's
Even though blockchain is best known for underpinning the operation of cryptocurrencies such as Bitcoin, this technology can be used in countless other areas, such as smart contracts, financial services, supply chain management, insurance, the internet of things, video games…
NFTs, which are one of many applications of blockchain technology (a technology whose use is being encouraged and promoted by mainland authorities), may offer many opportunities to the SAR and the Chinese mainland, especially now that Hong Kong is so eager to promote its West Kowloon Cultural District and other art art-related projects. The integration of art and blockchain technology could be one of the greatest art movements of this 21st century, and Hong Kong and the Chinese mainland are in a perfect position to tap into these opportunities.
The author is a fintech adviser, a researcher, and a former business analyst for a Hong Kong publicly listed company.