Domestic NFT Market Coming to Light... Copyright and Transparency Issues Remain Obstacles

Domestic Cryptocurrency Exchanges Upbit and Korbit Enter NFT Market... Kakao Also Hosts NFT Auction
Persistent Negative Views... NFT Auction Canceled in June Due to Copyright Holder Opposition

[Asia Economy Reporter Gong Byung-sun] The domestic non-fungible token (NFT) market is gradually coming into the spotlight. Not only major cryptocurrency exchanges but also large corporations have begun to show interest in the NFT market. However, issues such as copyright problems and the opacity arising from anonymity are still considered weaknesses of the NFT market.

According to the cryptocurrency industry on the 5th, the domestic cryptocurrency exchange Upbit announced the day before that it will distribute NFTs featuring illustrations of famous pro gamer Jang Jae-ho to 2,051 people on a first-come, first-served basis. Those who deposit 0.0001 Bitcoin (about 4,500 KRW) into the wallet address provided by Upbit meet the conditions to receive the NFT. Upbit has already released its fourth NFT in less than a month, starting with the girl group Brave Girls NFT on the 17th of last month.

The Rapidly Growing NFT Market... Kakao Also Paying Attention

NFT literally refers to a non-fungible cryptocurrency that guarantees anonymity but, unlike conventional cryptocurrencies that are interchangeable and compatible, records only a unique identification value and cannot be exchanged. It falls within the category of cryptocurrency but has no monetary function and serves only as a record.

However, because of its characteristic of recording unique value, the art market has begun to focus on NFTs. It has started to serve as a kind of digital certificate of authenticity by recording ownership. As a result, an NFT craze has swept the world. According to the NFT data site NonFungible.com, total NFT sales in the first quarter of this year exceeded $2 billion (about 2.29 trillion KRW), increasing more than 20 times compared to the previous quarter.

Due to the closed structure and atmosphere surrounding cryptocurrencies, the domestic NFT market was once called a barren land, but it has recently begun to attract attention. First, exchanges are producing NFT-related content. All of Upbit’s NFTs were created by its blockchain subsidiary Lambda256, and it is expected to systematically enter the NFT market in cooperation with Lambda256 going forward. In May, Korbit became the first domestic exchange to open and operate an NFT trading platform, and as of 9 a.m. on the same day, nearly 200 works were being traded.

Domestic conglomerates are also paying attention to NFTs. On the 1st, Kakao sold works by famous actor Ha Jung-woo and artist Woo Guk-won through an NFT auction. Ha Jung-woo’s work was sold for about 56 million KRW worth of 47,000 Klaytn cryptocurrency tokens. Notably, this auction was conducted on Klip, KakaoTalk’s cryptocurrency wallet platform, raising expectations that the general public will soon be able to easily access the NFT market.

Negative Views on NFTs... Copyright Issues and Opacity as Obstacles

However, negative forecasts about the NFT market have also been raised. This is because even if one purchases an NFT, it may be impossible to utilize it due to copyright issues. Copyright is an exclusive right held only by the creator of an artwork, and without the copyright holder’s consent, reproduction, publication, or sale of the work is prohibited. Even if one purchases the NFT of the artwork, the buyer only owns the artwork’s ownership and cannot use it as they wish. In fact, in June, NFTs were created for paintings by Lee Jung-seop, Park Soo-keun, and Kim Whan-ki, but the auction was canceled due to opposition from the copyright holders.

Moreover, criticism has been raised that transactions are opaque due to anonymity. Since transactions are conducted through cryptocurrencies, it is difficult to identify the buyer’s identity and the source of funds. Professor Lee Byung-wook of Seoul School of Integrated Sciences and Technologies said, “Since this is a market where large amounts are traded, transparency is essential, but due to the nature of cryptocurrencies, it is not easy. Caution is needed as it can also lead to fraud using NFTs.”