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Yomiuri Shimbun file photo LINE app installed in a smartphone
The Yomiuri Shimbun
13:17 JST, May 21, 2022
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 marketplace has expanded rapidly in other countries in the last year or so, with expensive digital works being traded apace. Keen to cash in on the trend, Japanese firms are looking to catch up on their overseas rivals and reap the benefits of NFT-related business, including commission revenues and settlement services.
In April, Line Corp. launched its own website-based digital marketplace, Line NFT. The site offers a wide variety of content, featuring over 40,000 NFTs from 19 companies, including, for example, videos of popular entertainers affiliated with Yoshimoto Kogyo Holdings Co. These videos were initially put on sale for ¥3,000.
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, Inc. and GMO Internet, Inc.
Operators receive sales commissions from creators when works are traded. The more digital works a firm can gather, the more they are traded, resulting in increased revenue.
Moves are also afoot to trade goods and services related to the sale of NFTs: Rakuten is considering selling tickets for sports events related to sales of NFTs that feature memorable game highlights.
The Yomiuri Shimbun
Prioritizing security
In March last year, a digital artwork sold for about $69 million (or about ¥9 billion) at a British auction house.
Jefferies, a leading U.S. financial group estimates that the NFT market will generate sales of around $35 billion (or about ¥4.6 trillion) this year, and exceed $80 billion (or about ¥10 trillion) 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 at 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 markets. “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.
