Large factory NFT works skyrocketed to 10 times the issuance price, with trading platforms giving the green light to "scalpers."

Author: Xing Meng, Securities Daily reporter; Zhang Bo, intern reporter

"It's too hard to grab, I can't get it at all." Before the Mid-Autumn Festival, "scalper" Yu Jun (pseudonym) complained to the reporter. What Yu Jun was referring to was not train tickets, but the limited release of the Asian Games "digital torch" digital collectibles by a major internet company on that day. This is the first time in 70 years of the Asian Games that digital licensed works have been issued, and the use of blockchain technology has turned it into NFT art: each torch has a unique limited edition number, permanently recorded and immutable.

"Priced at 39 yuan, limited to 20,000 copies, NFT works…" This attracted a large number of collectors, as well as speculators like Yu Jun. Having failed to grab one, Yu Jun is still brooding: "This IP is definitely the pinnacle of NFT works released by major companies now; the theme is valuable, and it's a 3D display. The secondary market starts at least in the four digits, and good numbered ones are usually in the five digits."

NFT stands for "non-fungible token," and once a work is NFTized, it has a unique identity, and ownership can only be held by one buyer. Ownership is recorded on the blockchain, ensuring authenticity and verifiability, eliminating concerns about purchasing counterfeits and addressing piracy issues.

The emergence of NFTs has brought about crypto art, and the global NFT art market is very active. In contrast, domestically, before the "digital torch," this major internet company had successively launched multiple limited edition NFT works, with online purchases booming, and offline, a "speculation trend" has quietly emerged.

"Buyers care a lot about the number, just like a good phone number; a good number can fetch a good price." Yu Jun shared his "business insights" with the Securities Daily reporter, "Numbers like 0001 and 8888 will definitely become special collectibles, and there will be speculation. I previously sold an NFT item with a good number, and the buyer paid a high price for it."

However, the reporter's investigation found that this major internet company has not opened up NFT work trading, and second-hand e-commerce platforms also have strict reviews on NFT-related information. How exactly are domestic NFT works traded?

Listing Prices Up to Ten Times, Private Transfers to Bypass Trading Restrictions

The speculation began with the aforementioned internet company's introduction of a "transfer" operation for NFT works, which requires the giver to hold the work for at least 180 days. At the same time, the company has repeatedly emphasized not to speculate on NFT works or engage in off-market transactions.

Although the transfer conditions are strict, speculators believe that this is not far from fully opening up trading. They believe that one day trading will be opened, and "getting rich" is just around the corner.

"People in the circle are quite optimistic; grabbing one means profit." A participant in NFT investment, Zhang Qian (pseudonym), told the Securities Daily reporter, "The current model can be seen as selling 'futures,' mainly conducted on second-hand e-commerce platforms like Xianyu. Although the platform blocks NFT keywords, it can still be bypassed to list items and wait for buyers to trade."

The Securities Daily reporter directly searched for NFTs on Xianyu and found no results, but searching for related specific keywords would show NFT works, and compared to the tens of yuan issuance price, the listed prices are usually ten times or even over a hundred times higher.

However, the reporter also observed that second-hand e-commerce platforms strictly control such information; a certain "digital torch" NFT item was taken down about half an hour after its release.

"I check the release times of NFT works every day and prepare in advance; both internet speed and hand speed are essential." Zhang Qian admitted to the reporter, "Once I grab it, I can find buyers; in fact, there are quite a few people who want to buy, and generally, I can make over ten times profit. The resale price of an NFT work needs to consider the creator, producer, distribution channel, content theme, etc. In the transactions I handled, IPs from museums and research institutes are quite popular in the market and can sell for high prices."

As for how to trade specifically, Yu Jun revealed the "ins and outs" to the reporter: besides direct trading on second-hand e-commerce platforms, they also spread the word on social media, allowing interested buyers to join groups, negotiate, and then trade on the platform. They can also sign electronic contracts or transfer agreements to ensure both parties' interests. If special circumstances arise and the transfer cannot occur after 180 days, the seller will refund the full amount without compensation.

"People mainly rush to buy NFT works because most NFTs from major internet companies are launched in collaboration with well-known IPs, including anime or artists I like. This is very attractive to us enthusiasts. However, due to the limited nature and the involvement of NFT speculators, it's hard for us to grab them, and gradually, we lose interest," said art enthusiast Ms. Chen in an interview with the Securities Daily reporter.

Various NFT Trading Platforms, Some Even Encourage Scalper Speculation

Since the NFT works launched by major internet companies currently do not support trading, some more aggressive investors choose to purchase NFT works on smaller NFT trading platforms like iBox and UMX.

"I chose smaller NFT trading platforms because they provide quick returns and allow transactions in RMB." Wang Zhe (pseudonym), who invests on smaller NFT platforms, told the Securities Daily reporter that he has bought multiple NFT works on the platform, basically ensuring profits. "Just the other day, I sold an NFT item that originally cost 9.9 yuan for 68 yuan, making nearly five times profit after deducting fees. It's a pity that I previously grabbed a series of 'Havoc in Heaven' NFTs for 129 yuan, and now they're being speculated at over 1,000 yuan."

The reporter's investigation found that these smaller NFT trading platforms have diverse gameplay, using fixed pricing, blind box releases, auctions, and other models to sell different types of NFT works: ordinary NFT works mostly use fixed pricing; NFT art from major IPs often uses auction methods; blind boxes are a new play in the NFT market, where platforms release NFT blind boxes at fixed prices, and users can choose to list them at a price or auction them in the secondary market.

"Each blind box contains one or more NFT works." Wang Zhe stated that generally, the NFT works in blind boxes are divided into different levels, with hidden or SSR-level items being the hardest to obtain, while ordinary or N-level items are the easiest. The rarer the work, the higher the price.

Another investor, Dong Yan (pseudonym), told the Securities Daily reporter, "Recently, I also started playing with NFT blind boxes, but I quickly sold them at low prices because the market is volatile and it's easy to get stuck with them. I've noticed that there are many sellers but few buyers. In fact, there aren't many high-value IPs on these platforms; the prices are all inflated by merchants."

Speculation is rampant on these platforms, and investors could easily become "bag holders." Dong Yan admitted, "A friend told me that most of these platforms are knockoff platforms with risks of running away. Currently, there are no regulatory policies specifically for NFTs, which may have a significant impact in the future. But as of now, I've still made money from this."

The reporter observed that these platforms have different attitudes towards scalper speculation. Some trading platforms crack down on speculative behavior, stating that there are numerous projects listed in the NFT mall with multiple bids but no transactions, severely affecting the platform's ecological health, and must be regulated; while some platforms clearly state in their user agreements that "the price volatility of blockchain digital collectibles is significant, and we do not guarantee that any purchaser of blockchain digital collectibles will not incur losses."

Additionally, some peculiar platforms not only do not crack down on scalpers but openly declare that scalpers are "market makers." The UMX platform stated that the NFT secondary market is a free market; scalpers provide liquidity and act as "market makers," addressing the demand for buying and selling at any time; NFT scalpers pay fees to original creators through royalties, so we actually welcome scalpers to participate.

In the UMX platform's secondary market, the reporter noticed that the "Extreme Sketch 'Cameroon Black'" NFT item, originally priced at 36 yuan for 100 copies, is now listed for over 5,000 yuan, an increase of over 6,000% from the original transaction price, with the most recent transaction price reaching as high as 6,666 yuan.

The reporter found that the UMX trading platform appears to be operating without a license. It is understood that the main operating company of the platform is Shanghai Qianman Network Technology Co., Ltd. According to the Tianyancha App, this company does not have auction business qualifications.

"Auctions are a public bidding sales method, whether offline or online, and must obtain an auction business license." A person related to the auction industry told the reporter that a legitimate auction must first apply for an increase in business scope from the local industrial and commercial system, and then obtain a business license after approval from the local industrial and commercial department.

Industry insiders pointed out that the value of NFTs, especially NFT art, will appreciate or depreciate based on market demand. Once market enthusiasm decreases, the phenomenon of speculation will gradually cool down, and the asset value of NFTs will also be significantly discounted.

NFTs Urgently Need to "Deflate the Bubble," Long-term Value to Be Assessed

"Speculative behavior will bring multiple impacts on the development of NFTs in China." Lawyer Sun Xiaodong from Beijing Jingshi Law Firm told the Securities Daily reporter that speculation in the NFT market will intensify market competition, which is inherently unfair. This could cause losses to many related and derivative small and medium-sized enterprises; a large amount of hot money flowing into NFTs rather than the real economy may lead to hollowing out of the economic system, which is not conducive to long-term healthy development.

Lawyer Sun Xiaodong further stated that when an industry is speculated, there are often many speculators who may not have a deep understanding of the field or industry and lack investment analysis experience and capability. During significant market fluctuations, many investors will suffer economic losses and subsequently exit the market, damaging the underlying ecology that the market relies on for survival, making it difficult to develop and grow.

"Although NFTs have certain physical value compared to virtual currencies like Bitcoin, the financial attributes of NFTs also create market risks for NFT premiums." Lawyer Gao Peijie from Beijing Jingshi Law Firm told the Securities Daily reporter that the current domestic policy direction for NFTs is not clear, and NFTs need to develop under regulatory guidance.

Lawyer Gao Peijie suggested that, while adhering to market rules, first, relevant legal norms should be formulated and improved, strengthening market supervision and monitoring of capital flows. Secondly, ensure compliant operation management, promote transparency of NFT information, ensure clear ownership of NFT rights before going on-chain, avoid ownership disputes during the trading process, and guide investors to establish correct investment concepts to jointly build a healthy NFT market.

However, it should also be noted that it is not uncommon for speculative bubbles to appear in the early stages of the development of new things, and the long-term value of NFTs remains to be explored.

"The true value of NFTs lies in providing a secure, efficient, and low-cost on-chain channel for real-world items." Chen Xiaohua, an expert in major blockchain projects from the Ministry of Industry and Information Technology and chairman of the Blockchain Professional Committee of the China Mobile Communications Association, told the Securities Daily reporter that the emergence of NFTs will accelerate the on-chain and digitalization of physical assets, further improving the value internet system. With the storage and trading mechanisms of blockchain, NFTs have the physical characteristics of being non-reproducible, immutable, and fully traceable, which can further create unique digital assets.

"The value of NFTs lies in their ability to indicate ownership of digital items using blockchain technology in the digital age, which is of great significance for the construction of the infrastructure of the digital world." Zheng Dingxiang, president of the Shenzhen Information Service Industry Blockchain Association, told the Securities Daily reporter that NFTs redefine the concept of collecting art in the digital age, showcasing new possibilities for people's lifestyles in the digital world while also lowering the barriers to participation in building the digital world, which is an important reason why NFTs are viewed positively.