Latest news on NFT market in Korea
The growth of the global Non-Fungible Token (NFT) market has been quite impressive in the first semester of this year. In particular, the global NFT market transactions amount has more than quadrupled from $62 million in 2019 to about $250 million last year. In this context, the number of Korean companies developing NFT-related applications is constantly increasing.
NFT marketplaces as the main NFT-related application
Among the major stakeholders of this infant industry in Korea, there is a cryptocurrency exchange as well as blockchain development companies that are mainly entering the NFT market by launching NFT marketplaces. Following the CoinDesk’s definition, NFT marketplaces are platforms where NFTs can be stored, displayed, traded and in some cases minted (created).
The first NFT marketplace in Korea has been introduced by a local cryptocurrency exchange that, until now, only allows the sale of NFTs minted by selected creators. In this regard, from July 21st, lighter with the ‘Casano’ pattern (cf. image below) that appeared in a TV drama called ‘Vincenzo’ have been sold in a limited quantity of 100 as NFTs at 300,000 won (0.13 ETH) per piece. Starting with this sale, the exchange plans to continue introducing NFTs related to other popular dramas in Korea. The exchange introduced a NFT marketplace as it considers NFT as a future source of revenue enabling it to discover new business models other than existing transaction fees-based business model.
In addition to the cryptocurrency exchange, a variety of blockchain development companies are also developing applications related to NFT.
A blockchain development company G., which is the subsidiary of a leading internet company, has recently entered the NFT market. In May, based on its own blockchain platform, the company launched a service that allows anyone to easily issue NFTs. The company also provides a digital wallet that can store NFTs. The NFT created on the platform can also be distributed and traded through OpenSea, one of the world’s largest NFT marketplaces.
Among the NFT industry’s stakeholders that are worth quoting, a blockchain company C. has recently opened a NFT marketplace. In this marketplace, only selected creators can sell their art works or items through auctions. Users can access the marketplace by using a DID-based wallet where they can store their NFTs. The use of DID in this use case may solve NFT copyright issues that will arise in the future.
In addition, last month, the blockchain subsidiary of a Korean game company opened an “NFT Market” where blockchain game items can be converted into NFTs. Another blockchain company D. also initiated its NFT’s journey by working with an auction company.
Source: https://www.sedaily.com/NewsView/22OTKYFE5N
A national cultural heritage converted to NFT
While the number of NFT marketplaces is growing in Korea, the NFT industry is enticing new players, including national museums that start digitizing their collections.
In particular, NFT is being considered by some national museums as a means for preserving the national cultural heritage as reflected by the sale in NFT forms of the National Treasure ‘Hunminjeongeum’ (cf. image above) provided by the Kansong Art and Culture Foundation.
On July 22nd, the Kansong Museum of Art has issued 100 copies (limited edition) of the National Treasure №70 Hunminjeongeum Haerye version in the form of NFT. The promotion of the NFT version of the Haerye version aims at permanently preserving it as a digital asset and to raise funds for the preservation of cultural heritage and the operation and management of the museum. The selling price disclosed by the foundation is 100 million won per piece.
Combining NFT and Metaverse Platform
The growth of the NFT market is being fueled by the development of the Korean metaverse ecosystem as NFTs are considered to be a means to enable economic activities in metaverse.
In particular, provided that NFTs allow for online assets to have verifiable scarcity, it provides metaverse’s users with a means that can be used to represent ownership of the content created.
In this regard, the cryptocurrency exchange above-mentioned is developing a metaverse platform that will leverage the NFT technology. A blockchain developing company is also combining both technology by linking its NFT marketplace with a WebXR-based art gallery (cf. image below). In this use case, the user can access the gallery via a link that allows him/her to observe the art works like in museum. When clicking on a specific art work, the user can purchase it by clicking on the NFT marketplace’s link that appears on the art work’s description.
Copyright infringement concerns arise over the growth of NFT market
Concerns over copyright infringement are considered as a challenge to be addressed in the infant NFT industry.
There are few elements of copyright infringement in the NFT itself since in most of the cases, NFT contains only metadata such as the title of the work, contract terms, details of the work, and image links. The actual work is accessible through the link listed in the metadata. However, problems may arise in the ‘transaction process’ such as during the ‘mining’ (NFT creation process).
In a recent research paper, three types of copyright infringement that can occur during NFT transactions have been flagged:
(1) Infringement of transmission rights if a person other than the copyright holder uploads to the NFT market
(2) Infringement of reproduction rights if an offline work is digitized without permission
(3) Infringement of copyright rights if the author’s name is listed as another person other than the copyright holder in the NFT Market, etc.
Above-mentioned challenged have already occurred in Korea. Recently, an auction agency had to cancel the sale of 3 art works at a NFT auction after planning it. The artists related foundations explained afterwards that they had never given copyright consent to the NFT version of the work while mentioning that the authenticity of the work was questionable. The auction company’s position was that it had consulted with the owner of the work, but copyright and ownership are different matters.
Source: https://www.nocutnews.co.kr/news/5594509
Our View: looking at the different use cases mentioned above, the marketplace appears to be the most common application of NFTs in Korea. The main stakeholders of this market are striving to create attractive marketplaces that are easy to use for the end-users while partnering with popular content creators (such as drama production studios) to sell popular NFTs. These early entrants are also looking for surfing on the Metaverse wave by developing new applications enabling users to create NFTs on metaverse and sell these items on the existing marketplaces. In this regard the development of connection between metaverse-based art gallery and exchanges will provide another opportunity for marketplaces and NTFs creators to gain visibility. That said, it remains to be seen how the Korean government will consider this growing business. In particular, some experts pointed out that NFT could be considered as a digital asset, meaning that any company providing NFT marketplaces could have to comply with the existing law that currently impacts the cryptocurrency exchanges, which could potentially hinder the NFT market.
