Blockchain-backed art is not cryptocurrency, stresses Ant group amid crackdown

Ant Group Co. Ltd. released a statement explaining the differences between cryptocurrencies and non-fungible tokens (NFTs) after a successful sale of digital artwork on its Alipay platform raised questions about whether the company violated Chinese cryptocurrency rules.

“NFTs are not interchangeable, nor divisible, which makes them fundamentally different from cryptocurrencies such as Bitcoin,” according to A declaration (link in Chinese) posted Thursday by AntChain, a unit of the Ant Group focused on blockchain-based technology.

An NFT is a unique digital asset, the ownership and authenticity of which is tracked on a blockchain. For example, Twitter co-founder and CEO Jack Dorsey created an NFT of his very first tweet and sold it for $ 2.9 million earlier this year. While anyone can take a screenshot of this tweet online, the idea is that turning it into an NFT turns it into a unique item, like a book signed by its author, but with ownership history. and transaction verified and recorded on a blockchain.

NFTs became a problem for Ant Group when two NFT payment barcode skins, each limited to 8,000 copies, went on sale on Alipay. Both were sold within minutes on Wednesday, an Ant Group spokesperson told Caixin. The skins were designed by the Dunhuang Institute of the Arts (link in Chinese), with technology provided by AntChain.

Since NFTs are typically created, bought, and traded on public blockchains, the sale has prompted some on social media to question whether Ant Group has contradicted China’s increasingly stringent cryptocurrency regulations. .

” Does not have [Alipay] just release a statement that he was cracking down on crypto trading? Doesn’t this movement contradict that? a social media user request (link in Chinese).

In its statement, Ant Group pointed out that fungibility is the main difference between NFTs and cryptocurrencies. While one Bitcoin is interchangeable with another, the same is not true of NFTs. Even copies of the same NFT are unique digital items on the blockchain.

Because technology can turn just about anything that can be digitized into a collector’s item, NFTs allow artists to monetize, market, and protect their digital creations, although its uses may extend far beyond works of art. art. “NFTs can be associated with different types of digital assets, such as concert tickets, licenses and music,” AntChain said.

And because ownership can be tracked and verified, NFTs provide a way for creators to protect their intellectual property, an AntChain spokesperson told Caixin.

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Alipay’s adoption of NFTs could mean a new channel for Chinese users to purchase digital artwork with the yuan – and possibly the digital yuan in the future, industry insiders have said.

“Since blockchain initiatives and proof of concepts have been supported at the government level and NFTs are not cryptocurrencies, we are not surprised that companies with a strong digital presence and a large customer base are experimenting with NFT-like technology, ”said Matthew Graham, CEO of Sino Global Capital, a Beijing-based venture capital firm that invests in blockchain technology.

Alipay, with over a billion annual active users globally, is an attractive platform to bring blockchain-based products to the masses, he said, adding that the move could also spur other competitors and stakeholders to enter the space. .

Yet Ant Group’s response indicates that it wants to show that it is strictly adhering to China’s blockchain technology support protocol while staying away from virtual currencies.

Citing risks of criminal activity such as illegal cross-border asset transfers and money laundering, China has stepped up efforts against cryptocurrencies during the last years.

Authorities have ordered Bitcoin mining operations to shut down at major hubs, including the provinces of Sichuan and Qinghai, as well as Xinjiang and Inner Mongolia autonomous regions.

Contact reporter Kelsey Cheng ([email protected]) and editor-in-chief Michael Bellart ([email protected])

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