TOKYO - A number of leading IT firms in Japan have this year launched online marketplaces for trading digital works through the use of non-fungible tokens, or NFTs.
An NFT is a digital asset that represents a digital work, such as an image, animation or sports video. NFTs allows the authenticity of digital works to be verified via blockchain technology, which is also used to authenticate cryptocurrency transactions.
The NFT market has expanded rapidly in other countries in the last year or so, with expensive digital works being traded. Keen to cash in on the trend, Japanese firms are looking to catch up with overseas rivals and reap the benefits of NFT-related business, including commission revenues and settlement services.
In April, Line Corp. launched the online digital marketplace, Line NFT. The site offers a wide variety of content, featuring over 40,000 NFTs from 19 companies, including videos of popular entertainers affiliated with Yoshimoto Kogyo Holdings. These videos were initially put on sale for 3,000 yen.
Users in Japan registered with the free Line communication app can purchase NFTs and trade them with other users. Payment is made using Line Pay, a smartphone payment platform. However, Line NFT users cannot trade NFTs with users of marketplaces operated by other firms.
"Line facilitates the trading of NFTs, free of complicated procedures and expensive commission fees," said Daisuke Kadoono, who heads the blockchain businesses department operated by Line subsidiary LVC Corp.
Other major firms have also recently dipped their toes into NFT waters, including Rakuten Group, Inc., which launched an NFT marketplace in February, SBI Holdings, and GMO Internet.
Operators receive sales commissions from creators when works are traded. The more popular the works are, the more actively they are traded, resulting in increased commission revenue.
Moves are also afoot to link NFTs to the sales of related products and services. Rakuten is considering selling tickets to soccer and baseball games that come with NFTs featuring clips from famous events.
In March last year, a digital artwork sold for about 69 million dollars (or about 9 billion yen) at a British auction house.
Jefferies, a leading U.S. financial group estimates that the NFT market will generate sales of around 35 billion dollars (or about 4.6 trillion yen) this year, and exceed 80 billion dollars (or about 10 trillion yen) in 2025.
However, there have been overseas instances in which individuals have marketed forged works. Furthermore, NFT payments are primarily conducted using cryptocurrency, which has been associated with money laundering.
However, most Japan-based NFT marketplaces are aimed at "beginners," and companies put NFTs up for sale in the markets rather than individuals. These domestic sites allow NFTs to be traded using yen, too, thus offering a certain amount of security and peace of mind for users.
Foreign marketplaces dominate the NFT market, offering a diverse array of works, including those created by individual artists.
As yet, there are no Japanese laws directly pertaining to ownership of digital "property," which presents a challenge for the domestic marketplaces. "In order to develop an environment where business operators and consumers can buy and sell NFTs with a sense of safety, the interpretation of relevant laws need to be clarified," said Masashi Masuda, a lawyer with knowledge of NFTs.
WASHINGTON POST