How NFTs Are Transforming China’s Art Market
“Virtual Niche: Have You Ever Seen Memes in the Mirror?” had everything you’d expect from the world’s first major crypto art exhibition.
Entering a dimly lit gallery, visitors found collages of anarchic buzzwords; a selection of works by superstar artist Beeple; as well as a recreation of Robert Alice’s “Portrait of a Mind” — the first crypto artwork sold by British auction house Christie’s.
The only surprise was the location. The show, which ran from March 26 to April 4, didn’t take place in New York or London, but at the UCCA Center of Contemporary Art in central Beijing.
The hype surrounding crypto art — digital artworks stored on a blockchain as non-fungible tokens (NFTs) — has been exploding in the West this year.
In the past, digital art was hard to monetize, as it’s hard to establish ownership over items that are so easily reproducible. But by minting an NFT, creators can make their work fully traceable — and that has quickly turned all kinds of digital assets into collectibles.
Buyers are spending eye-watering sums to acquire NFTs of everything from cat memes to Beeple’s digital collage “5,000 Days,” which sold for $69 million at a Christie’s auction in March.
Now, China is jumping on the bandwagon. The country has been slower to embrace the brave new world of NFTs — not least because the Chinese government imposes tight restrictions on cryptocurrencies like Bitcoin, which are often used to buy the tokens. But the new market is starting to gain momentum.
Interest in crypto art is picking up among China-based investors, with “Virtual Niche” adding to the buzz. Meanwhile, a new generation of digital-savvy Chinese creators is emerging, and taking the nascent genre in new directions.
The fall and rise of Chinese crypto
The NFT concept first started to spread in China in 2018, during a breakout moment for the crypto movement. CryptoKitties — a game in which players breed and trade limited-edition virtual pets — had become wildly popular around the world, and Chinese netizens also started creating their own blockchain-based felines.
At the time, however, China’s own crypto community was still reeling from a sweeping crackdown on cryptocurrencies launched the previous year. Beijing had shut down China-based exchanges, banned fundraising through initial coin offerings, and begun restricting some cryptocurrency mining projects.
The bans were a huge setback for the movement. The Chinese share of Bitcoin transactions — which had previously been as high as 90% — plummeted, the talent pool of developers stagnated, and investors were spooked. Even now, pouring cash into NFTs appears a risky prospect to many in China, insiders caution.
“It’s still some way from becoming popular or mainstream,” says Celyn Bricker, a crypto artist who took part in “Virtual Niche.” “Regulations on crypto make the whole thing more complex in China, and raise questions about how popular it is possible for it to become.”
But in China, even a niche can become a large market. Though no longer dominant, Chinese traders still play a major role in the Bitcoin market by using foreign exchanges — and they’re increasingly excited about the potential for NFTs, Bricker says. There are also signs the hype is spreading beyond the cryptocurrency community.
“There’s a group of people with tech, finance, and art backgrounds all suddenly scrabbling to get involved,” says Bricker. “But it’s hard to put a figure on the growth of NFTs in China, since it’s all relatively new.”
One high-profile early backer of NFTs has been Jehan Chu, a Hong Kong-based art collector and blockchain investor. The former Sotheby’s adviser has acquired crypto artworks by Robert Alice, placed bids on works by Beeple, and has even purchased the domain extension .nft.
Building virtual bridges
The Chinese NFT market has already seen a series of breakthroughs in 2021. During the Lunar New Year holiday, luxury brand RTFKT made a splash by selling a pair of virtual sneakers for $28,000 on the Chinese digital marketplace Treasureland.
A month later, the crypto art firm Block Create Art (BCA) raised $2 million in an angel round investment, making it China’s best-funded NFT community.
Investors’ ears also perked up last month when Li Bo, deputy governor of the People’s Bank of China, unexpectedly described Bitcoin as an “investment alternative” — signaling the central bank’s attitude toward cryptocurrency assets is softening.
Then, there has been the impact of “Virtual Niche” — a landmark event that has helped spread awareness of NFTs beyond China’s hardcore crypto community. Hosted and curated by BCA, the Beijing-based crypto art agency, the exhibition showcased 60 digital artworks by 30 Chinese and international artists.
By hosting an event in a traditional gallery space, the organizers aimed to build bridges between the art and blockchain communities, and push China’s fine art collectors to pay more attention to NFTs.
“The emergence of digital art will profoundly change the landscape of contemporary art,” says Sun Bohan, CEO of BCA and the curator of “Virtual Niche.”
For Sun, there are huge opportunities for crypto art in China. The country accounted for 20% of the global art market in 2020, with sales totaling $10 billion. And a large number of Chinese buyers are wealthy millennials — digital natives who should be open to new trends, he adds.
“But the majority of the Chinese public is still very unfamiliar with blockchain technology compared with their Western counterparts,” says Sun. “This exhibition serves as a starting point.”
Although the concept of NFTs is still very new, things move fast in China. An exhibition like “Virtual Niche” can take up to three years to organize in the West. In Beijing, it took just a few months, an adviser on the project told Sixth Tone.
The organizers, however, insist they’re taking things slow. Though they admit the buzz around NFTs has been useful for promoting “Virtual Niche,” they’re also convinced the recent boom has been driven by hype and wild speculation — and the bubble will inevitably pop.
“The market will eventually deflate and NFTs will be reevaluated,” says Sun. “The future development of NFTs will depend on the collective efforts made by NFT platforms, artists, and collectors.”
That’s why “Virtual Niche” devoted so much space to showcasing the work of upcoming Chinese creators like Dabeiyuzhou. The Xiamen-based artist is known for creating 3D digital renderings of figures integrating elements of Buddhist philosophy and traditional Chinese culture, with themes exploring beauty and death.
For Sun, the exhibition’s main value lay in giving this new generation of local artists a platform and helping them boost their profile in the wider art world. They represent the future of China’s NFT market, he says.
“We’ve already seen many emerging Chinese crypto artists, such as Dabeiyuzhou, Ellwood, Fang Xianchen, and Sun Yitian,” says Sun. “As more and more high-quality crypto artworks flow into the market, high-profile NFT sales will occur naturally.”
Now, BCA aims to build a wider ecosystem to support Chinese crypto artists. The firm is currently talking to several galleries about potential projects, Sun says. Though many are interested in hosting NFT art exhibitions, they often don’t know where to start, which is where BCA comes in.
BCA is also set to open its own museum space to showcase digital art in Beijing this September. Later this month, it’s helping to organize an auction of NFT artworks at Yongle — one of the Chinese capital’s leading auction houses.
In the future, Sun feels confident China will become a global center for crypto art. On the one hand, many of the country’s best art schools are encouraging students to take on digital art projects. On the other, there’s China’s huge pool of tech talent, who are also starting to experiment with crypto art, he says.
“The definition of an artist has become broader and more inclusive,” says Sun. “It’s gone from traditional digital artists to designers and coders.”
Into the metaverse
Beyond Beijing’s galleries, there’s another hidden scene where Chinese creators are producing and sharing NFTs.
This is Decentraland — a virtual world akin to Second Life that’s based on the Ethereum blockchain.
Inside this digital realm, there is a small enclave named Dragon City. Set up in 2017, it’s a virtual community that has come together with a radical goal: to build a new China inside cyberspace.
“We’re devoted to building a real 3D world and bringing the essence of Chinese culture to Dragon City,” says Roy Zou, the community’s founder and leader. “We want to create a world linking past, present, and future.”
The community has been filling Dragon City with digital recreations of famous Chinese sights, each of which is built using NFTs. Users can now explore a Palace Museum filled with classical artifacts, dressed in a Peking opera costume. A digital Dunhuang Museum and a space based on the “Classic of Mountains and Seas” — a Chinese book of mythology — are also under construction.
Like other metaverse communities, Dragon City operates as a decentralized cooperative. It’s governed by a body called the Decentralized Autonomous Organization (DAO), which selects a leader through regular elections. Zou was voted leader in 2019.
“We believe the metaverse can be the next internet — web 3.0 — a decentralized, truly global network for everyone,” says Zou.
At present, Dragon City’s membership is entirely Chinese. Yet they hope by moving into virtual reality, they can transcend the political barriers that exist in the physical realm and integrate into the wider Decentraland community.
“Dragon City’s goal is to bring Chinese culture into the metaverse,” says Zou. “For me, it’s also about rebuilding Chinese culture, to reimagine a world where East Asian and Western culture can coexist in harmony.”
Virtual worlds like Dragon City will eventually develop vast new markets for NFTs, predicts crypto artist Bricker. As the virtual communities develop, people will be willing to spend real money to buy property inside the digital realm.
“What we’re seeing with art is just the beginning,” says Bricker. “You can imagine a future in which people’s online profiles — and consequently some aspect of their identity — are bound up with the NFTs they own and what those NFTs represent.”
For artists like Bricker, meanwhile, the rise of NFTs is opening up exciting new possibilities — not least the ability to monetize their work like never before.
Not only are NFTs making digital artworks more attractive to collectors, they also have the important advantage of being traceable. This means artists can ask for a cut of any secondary sales — and actually get it. In theory, it’ll bring an end to the era of artists selling paintings to collectors for a small amount, then seeing them sell at an auction for millions a few years later and receiving nothing.
“The use of smart contracts means in the sale of a crypto art, the artist can receive 10% of secondary sales — this is a significant change,” says Bricker.
Sun believes the integration of blockchain technology will ultimately benefit the whole industry, as the added traceability will bring a new level of transparency for all parties.
“The integration of art and blockchain technology could be the greatest art movement of the 21st century,” he says.
Editor: Dominic Morgan.
(Header image: A view of the installation “Future Fo” by the Chinese artist Dabeiyuzhou, at the “Virtual Niche” exhibition in Beijing, March 2021. Courtesy of BCA)