Embrace the cryptoart but beware of the bubbles
If cryptocurrencies have recently been on a rollercoaster ride, the devastation they have left behind has done nothing to dampen the enthusiasm for encrypted assets backed by cryptography technology.
Cryptoart, or virtual or digital art backed by blockchain, is the latest trend. There have been numerous reports of cryptoart pieces being purchased and quickly resold at exorbitant prices.
Major cultural institutions are attempting to ensure the health of such transactions by making them less speculative.
The Shanghai Museum, for example, has recently launched its own cryptoart trading platform based on blockchain, emphasizing the products' clearly defined intellectual property rights.
Although there have been calls for stricter oversight and regulation of cryptoart transactions, they are widely regarded as a harmless and innovative development worthy of government support.
Leading enterprises are encouraged to develop trading platforms based on NFT (Non-Fungible Tokens) in the city's latest blueprint for bolstering the digital economy. Because tokens in this context are not yet legally recognized, some experts believe that "digital art" or "digital collection" are more accurate descriptions of this new obsession.
Neither was encryption limited to museum exhibits. It appeared that all forms of art – paintings, videos, music, and museum pieces – are eager to jump on the cryptoart bandwagon.
For example, the technique was recently used for illustrations of some symbolic buildings at the site of the First CPC National Congress. The iconic Shudeli (Shude Lane shikumen complex) was crafted into three digital art products, rated R (Rare), SR (Super Rare), and SSR (Super Super Rare).
The SSR product, for example, depicts a complex gate and a distant view of the neighborhood. Although digital duplication is simple, the SSR product is only available in a limited edition of 106 copies. Interestingly, this complex was located on No. 106 Rue Wantz in the former French concession.
This new art fever, among other things, could help make Chinese cultural heritage more appealing to Generation Z, who are more adept at navigating cyberspace. Nonetheless, there is an element of speculation at work in this frenzy.
On July 15, at a certain platform, a digital copy of an artwork (in a limited edition of 500 copies), purchased for 299 yuan (US$45), was resold for 15,500 yuan 40 minutes later, and then for 16,666 yuan.
Some scholars warn that some degree of speculation is unavoidable in the early stages of cryptoart development, but the Shanghai Museum's independently developed trading platform and blockchain system should help deflate the bubbles.
When big sums of money are involved, there are also risks of illicit funding, money laundering, financial security, or personal information leaks.
While enthusiasm for digital art, reflecting a popular appetite for cultural consumption, would instill new vigor in the cultural creation scene, Jin Peng, secretary general of the China Cultural Industries Association, warned about frauds, risks, and pitfalls.
The risks are easily visible in four areas: The false claim that blockchain technology is being used in some platforms; the lack of a clear definition of property rights (it would be so simple to encrypt a product that does not belong to you); the lack of measures to discourage speculation; and the failure to live up to the promise of protecting juvenile rights.
According to Jin, while rampant speculation could generate massive revenues for platforms in a very short period of time, the risks involved render the entire scheme unsustainable.
Jin stated that in order to ensure the industry's healthy development, a concerted effort must be made to prevent digital exhibits from degenerating into another shady financial product.
The Chinese Cyberspace Administration has recently launched a rectification campaign to combat cryptocurrency speculation, and simple reflection reveals that the hot cryptoart sector would likely benefit from more timely and effective regulation and supervision.