NFT "invades" University Campus

Published on 1 Months ago   181 views   0 Comments  

Source:Qi view of Finance and Economics

Author: Jia Qi

It seems that we just like her for a very short time for a summer—— A fan talks about the once popular idol

Is NFT getting cold?

Recently, two opposite messages have hit me one after another.

On May 4, a report in the Wall Street Journal said that the NFT market was collapsing.

Nonfungible data showed that the average daily sales of NFT fell to about 19000 in that week, down 92% from the peak of about 225000 in September last year.

On the other hand, both the popularity of relevant information reports and the discussion of the topic in the surrounding circles honestly reflect this trend. Indeed, there are fewer and fewer reports, and the frequency of mentioning this in our chat has also decreased significantly.

However, in an accidental conversation with young people, I learned that there seems to be a rush to buy NFT among college students and young people.

For a long time, "unable to understand young people" has been the most feared thing for middle-aged investors.

Similarly, people who sit at home for a long time and read reports are also very afraid of being blinded and inundated by a large number of seemingly objective data, and then ignore everything that happens in the real world.

First of all, we never think that the data itself and intuitive perception (i.e. significant cooling) are wrong.

But the more likely truth may be that NFT is at the end of a curve and the beginning of another new band.

The data reflect the objective present.

The attention of second and third tier cities and young people to NFT may reflect the future of NFT.

01 From a distance, it is a trough 

As usual, let's start with a short section of quick science popularization.

NFT。 The full name is non fungible tokens, which is translated as "non homogenous tokens".

This "non fungible" is mainly used to distinguish it from "bitcoin".

You have a bitcoin and I have a bitcoin. We can exchange it directly.

But I have an NFT and you have an NFT. We can't exchange it directly. We have to exchange it for legal currency or other equivalents first, because "works of art are non-homogeneous".

In real life, I have a dollar and you have a dollar. We can exchange (bitcoin) directly.

But I have a Saiga Altman gold card and you have a diga Altman flash card. Then we have to calculate the account carefully. Finally, you may exchange three cards for one card, but I have to buy you a bottle of soda (NFT).

"Tokens" here mainly refers to "encrypted" tokens.

This thing is highly related to blockchain.

In brief, blockchain is a storage technology and a special database.

All "products" using this technology, whether bitcoin or NFT, basically have the high trust characteristics of "non forgery, collective maintenance, decentralization, traceability, openness and transparency".

This "100% liberalism" technical means can easily be first applied to the financial field.

The regulatory difficulties brought by "decentralization" have directly led to a series of speculation, wealth making stories and the derivation of systemic financial risks.

Progressiveness is true, and so are the risks everywhere.

Since the beginning of this year, under the huge inflationary pressure, the Federal Reserve has frequently raised interest rates and reduced the table. The rise of interest rates and changes in expectations have completely crushed the high-risk targets of the whole financial market.

NFT, as one of the investment categories with high speculation, is just one of the "crushed" by the big stick of raising interest rates.

On the day we wrote the manuscript, the cryptocurrency market was on the run. Represented by the sharp decline of 98% of Luna currency known as "currency circle Maotai", more than 370000 overseas users broke their positions within 24 hours, with a value of US $938 million and about 6.36 billion yuan evaporated directly.

On the other hand, China continues to follow its consistent attitude towards NFT.

Last May, China Internet Finance Association, China Banking Association and China payment and clearing Association jointly issued the notice on preventing bitcoin risk and the notice on preventing the risk of speculation in virtual currency transactions, saying that speculation in virtual currency is strictly prohibited.

On April 13 this year, the China Internet Finance Association, the China Banking Association and the China Securities Association once again issued the initiative on preventing NFT related financial risks, which made it clear that they would not provide centralized trading, continuous listing trading, standardized contract trading and other services for NFT trading, and set up trading places in violation of regulations in disguised form.

Under the double superposition of market factors and policy factors, we have sufficient reasons to believe that NFT has now reached a relatively low period.

The relevant data of google trends also clearly shows that the number of people searching for NFT words has decreased significantly since January this year.

But is that the whole truth?

02 A closer look is a new student 

"It doesn't have much money. It's fun."

Xiao Ning is a sophomore in school. When asked why he participated in NFT bidding and investment, Xiao Ning's tone is very relaxed.

It is understood that in the way these student groups participate in NFT, metropolis chooses to focus on "small amount and high frequency". Each investment amount is mostly 9.9 yuan or 19.9 yuan, and the maximum will not exceed 100 yuan.

At the same time, the preference for transaction frequency is also relatively high.

"At the beginning, Alipay was contacted. However, the restrictions on transactions there were too strict. It seemed that it would take 180 days to circulate, and it only supported resale."

"180 days. I'll have forgotten that by then."

In conclusion, NFT has three main attractions for this group of generation Z young people.

First, fresh fashion.

"It's really a kind of conversation. It's still awesome to hear them get together to talk about this. Isn't that why they run into the investment circle?"

Zhang Wei said that for most students, "investment" is still a relatively tall and distant concept.

On the one hand, the threshold of NFT is very low, on the other hand, it is also quite cutting-edge, so it greatly meets the vanity psychology of some groups.

Second, reward temptation.

"To be honest, it's very similar to the wave of fried shoes two years ago."

Li Weijie claims to be a fashion lover, who has fully participated in and experienced the rise and fall of fried shoes from the end of 2019 to 2021.

In his opinion, NFT is nothing special and belongs to "high-risk investment project".

"Frying shoes, gambling on stones and NFT are all the same in essence. It's still exciting to make a big profit when you catch them."

Third, the embodiment of personality.

Different from pure "gambling", NFT mostly appears in art forms such as "Paintings", "avatars", "digital collections" and so on.

Although the popularity of each work depends more on its luck, investors often feel that their "vision" has also played a decisive role.

Compared with other "gambling projects", NFT has a higher sense of participation, a heavier personal mark, and a stronger sense of achievement after the final profit.

Personalization, excitement, freshness and low threshold can be said to be tailored for generation Z.

As aborigines in the digital age, it is effortless for them to accept all the imaginations related to NFT and the meta universe.

03 In the long run, it is a detour 

We have always welcomed new things, especially the business changes brought about by technological development.

But at the same time, we also insist that all the so-called new business models should be able to find corresponding prototypes in the old world.

Since the birth of blockchain technology, people have been exploring how this technology can help promote our real life?

Inspired by the technical characteristics of "non forgeable, highly reliable and traceable", the application of content copyright registration and protection has been put forward for a long time.

Under the guidance of this idea, NFT came into being as the product of further application and refinement of blockchain technology.

In terms of business objectives and business ideals, we fully agree with the progressiveness of NFT. However, on the specific business path, we are worried about the current situation.

At present, the main forms of NFT track include avatars, collectibles, works of art, games, metauniverse, land assets, public utilities, social networking, etc.

Among them, avatars and collectibles are the dominant form at present. By the beginning of 2022, the total value of avatar NFT accounted for 49.4% of the industry, followed by collectibles, accounting for 23.05%.

However, from the perspective of practical application, digital content, especially the image content with pixels as the carrier, such as avatars and paintings, is highly reproducible in daily life, and there is no significant difference between the original and pirated works.

In the old world we are familiar with (Web2.0), for ordinary users, whether they have the original copyright in the so-called avatars and paintings has little impact on their use.

In other words, the use value of this "Avatar copyright" itself cannot be reflected in real network applications.

Then, corresponding to the new world, its real social significance or use value is likely to be a source of nothing.

There is a common sense that everyone knows: the premise of any product / service or business model is that a group of real consumers need to pay for it.

Only when Gandhi is willing to pay a certain amount of money for the service in the industry itself, can it maintain a real and effective income from the service in the long term.

However, if in a business model, we can't find the final consumer group to pay, and almost every participant expects the latecomers to take over the offer for their own investment behavior and firmly bet that they won't be the last batch of takers, then this is a typical Ponzi scheme or MLM, and its essence is a game of beating drums and passing flowers.

We believe that NFT is an industrial model with great potential. It is used as a financial investment project to gather money. It is not only abandoning the basics, but also killing the goose that lays the egg for the whole industry.

"Unforgettable and unique" is its technical advantage suitable for financial play. Over amplifying this point is to "chase the end".

The "traceability" with clear path and very fine granularity is the technical advantage of NFT highly suitable for content copyright, but at present, there are few technical teams working in this field, which is "sacrificing the capital".

In this matter, the decent way of playing should be like this.

First, find the "copyright protection" track that is really suitable for commercialization, and at least find several tracks that can accept copyright payment in the minds of market consumers. Such as music, novels, stand-alone games, etc.

According to the data of TME's 2021 annual White Paper on Chinese digital music, the global NFT transaction amount in 2021 was about US $25 billion (the sum of primary market and secondary market), but the market share of music NFT transaction was only 0.42%.

Secondly, study the token encryption technology, truly bind the secret key, use and account, and greatly reduce the supervision cost of copyright. Therefore, we only need to focus on the coverage and access of public chain or alliance chain.

In addition, make full use of the "traceability" technical characteristics of NFT to greatly improve the statistical efficiency of content in the dissemination, and then force to improve the existing pattern of top-level benefit distribution, so as to truly trigger the bottom revolution of relevant industries.

Take music as an example. At present, the interest transmission among content creators, record companies and playback platforms is obviously too extensive. Everyone adopts the buyout strategy to make a rough valuation.

As a result, there are not only high-quality creators who do not get the corresponding remuneration, but also the premium of the so-called "B-side authors".

However, if blockchain technology is really popularized in this field, each playback of each song and the corresponding playback duration can be fully counted and corresponding to the charge adjustment, so as to make the benefit distribution of the industry more reasonable, so as to further promote the benign development of the industry.

It is not difficult to see that what we advocate is the exploration of copyright on the consumer side, but at present, the mainstream idea of NFT is the direct occupation of copyright, and tries to infinitely enlarge the uniqueness of token to focus on its collection value, but deliberately ignores the payment cognition of the market and the fact that everything is easy to copy one-to-one in the digital world.

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