Multi-Perspective In-Depth Analysis of Market Differentiation Between Digital Collectibles and NFTs
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Multi-Perspective In-Depth Analysis of Market Differentiation Between Digital Collectibles and NFTs
Compare and analyze the similarities and differences between NFTs and digital collectibles from policy, technology, and operations perspectives.
Navigating Web3 tides with focused insightsAuthor: Liu Ye Jinghong, chief writer at Weisman Notes
Due to certain circumstances, I’ve recently been researching the fields of digital collectibles and NFTs, engaging in extensive conversations with many industry insiders, seasoned players, and platform operators—gaining substantial insights. As such, I intend to write an article exploring digital collectibles and NFTs, focusing primarily on the differences between their respective markets, hoping it can help those who are following these two domains.
The article will analyze both markets from macro perspectives, including technology, operations, and other angles. Much of the content comes from information gathered through discussions rather than rigorous data analysis; therefore, all points made here should be considered for reference only. (Also, I've recently become passionate about broader industry analyses—if readers have quality resources or news, feel free to share them with me.)
Main Text
Digital collectibles and NFTs are essentially part of the same family, but due to policy constraints, they've been artificially divided into two separate markets. Over time, the development directions of these two markets have diverged significantly, ultimately forming two independent ecosystems.
Strictly speaking, digital collectibles are a subset of NFTs—a single category built upon NFT technology. So what caused this market separation? Below is a detailed analysis.
Policy Guidance Drives Market Segmentation
Digital collectibles first entered mainstream awareness domestically around early last year when Alipay launched its payment code skins. These were digital collectibles issued on AntChain featuring Dunhuang IPs, usable as Alipay payment code backgrounds. However, there was no secondary trading at the time, so it didn’t become a phenomenon-level product.
Fast forward to 2022, state media began frequently publishing articles promoting the concept of digital collectibles, encouraging their issuance and growth, which led to an unusually thriving domestic market. (Meanwhile, overseas was deep into NFTs.)
Because the digital collectible market was still in its nascent, wild phase, most rules weren’t formalized and instead circulated informally as unwritten norms. I’ll illustrate this using several typical cases.
China Promotes Digital Collectibles but Avoids Using "NFT"
This unwritten rule is widely known among digital collectible platforms. While there’s no explicit legal prohibition or official notice confirming this, it's universally observed during marketing and operations.
When promoting digital collectibles, platforms generally avoid mentioning that they are NFTs. Especially among leading platforms, although some used terms like “NFT” early on, they later uniformly removed all references to NFTs, opting solely for the term “digital collectibles” in promotions.
Smaller platforms also deliberately distance themselves from the term NFT. From conversations with various digital collectible platforms, feedback indicates: first, user education costs would be too high if using the term NFT; second, promotional content containing “NFT” often gets restricted or throttled, and apps including NFT-related keywords may struggle to pass app store reviews.
Therefore, current digital collectibles represent a subtle process of localized, compliant adaptation and application of NFT technology.
Secondary Trading Is Not Allowed in China’s Digital Collectible Market
There is no explicit regulation stating that secondary trading of digital collectibles is prohibited, but regulatory crackdowns occurred earlier against existing secondary markets. Additionally, WeChat has recently begun banning accounts involved in secondary trading or sharing related information—leading to this becoming another widespread unwritten rule.
As a result, domestic digital collectible platforms fall into two categories: those supporting secondary trading, and those without a secondary market or with transfer restrictions. Regardless of approach, until formal policies are released, regulatory oversight looms like the sword of Damocles.
In contrast, the NFT market faces no such concerns. Precisely because of the freedom in NFT transactions, Chinese policy intentionally separates digital collectibles from NFTs, retaining only the controllable, regulated aspects.
Domestic Digital Collectibles Emphasize IP Copyright
Again, while not formally codified, state media promotion materials clearly indicate that domestically promoted digital collectibles must involve legitimate IP rights—meaning legally compliant licensing at the legal level.
This creates a significant divide from the NFT space. While IP authorization is preferred in NFT issuance, it isn't mandatory. One can issue and freely trade NFTs even without IP rights. It's precisely this excessive freedom in the NFT market that prompted China to use policy levers to sever the link between digital collectibles and NFTs, resulting in two distinct, independent markets today.
Technological Direction Leads to Market Isolation
This point is rarely mentioned in online articles or public materials. After speaking with friends working in product and tech roles, I found that technological advancement in the digital collectible space is nearly stagnant.
First, the market shows extremely low sensitivity toward technology—even advanced tech cannot serve as a marketing advantage. This eventually manifests in two types of digital collectible platforms.
One type uses consortium chains such as AntChain, Zhixin Chain, Zhizhen Chain, BSN, etc.; the other doesn’t use any blockchain at all, relying entirely on centralized systems to issue digital collectibles.
Based on my research, below are several reasons explaining why the digital collectible market is technologically insensitive.
Consortium Chains Don’t Serve End Users (C-End)
This might seem confusing to some—after all, isn’t it normal for consortium chains to serve enterprises (B-end) rather than individuals? But upon deeper inspection, the lack of C-end support is extreme—even basic query services aren’t provided.
In other words, after purchasing a digital collectible on a consortium chain, you may receive a hash value, but you can’t verify it. Unlike Ethereum explorers, consortium chains don’t offer similar tools to end users. Individuals cannot check whether they truly own a corresponding wallet on the chain, whether the transaction was actually recorded, or view any on-chain details about their collectible.
What users actually receive is just an image file and a non-verifiable hash value.
Inadequate Technical Infrastructure for Digital Collectibles
From a coding perspective, major consortium chains are far less developer-friendly compared to Ethereum or Polygon, forcing platforms to implement many features independently. However, the digital collectible market heavily depends on timing—an unfriendly technical environment stifles innovation and progress.
To put it simply, based on my understanding, many digital collectible platforms using consortium chains do not actually employ standard NFT technologies—such as ERC721 or ERC1155. Most treat the consortium chain merely as cloud storage: uploading images and returning unique hash values completes the issuance.
Although most consortium chains technically support X721/X1155 standards, their implementation logic is puzzling. Take BSN as an example: X721 and X1155 are renamed DDC721 and DDC1155. Yet regardless of how many companies issue how many different series, all tokens originate from the exact same contract.
For instance, suppose 10 digital collectible companies want to launch 20 different collections using the DDC721 standard. All 20 collections from these 10 companies would be minted via one shared DDC721 smart contract. Across the entire BSN network, there is only one universal DDC721 contract.
Normally, minting under a 721 contract requires paying gas + optional mint fee (possibly free). In BSN’s case, users pay energy points + service fees, and only registered merchants can invoke the contract.
Logically, BSN’s DDC721 does not allow users to deploy their own contracts—it only allows paid access to the official DDC721 contract. Thus, in addition to gas fees (called “energy” in BSN), users must pay extra service charges—for example, issuing 10,000 items incurs an additional 10,000 RMB in business fees.
Data Cannot Flow Between Consortium Chains
Behind digital collectibles lies a serious underlying issue: different consortium chains are incompatible—neither data nor assets can move between them.
Unlike the flourishing public chains today, which have long overcome data silos, solutions like cross-chain bridges, Layer2, Layer3, and Layer0 now exist to enable interoperability. Consortium chains remain primitive—data exchange between them is commercially unrealistic. For example, expecting Alibaba’s AntChain to interoperate with Tencent’s Zhixin Chain is like expecting WeChat Pay to work on Taobao.
Overall, due to technological shortcomings, many NFT functionalities simply cannot function within the digital collectible ecosystem. The current digital collectible market isn’t one where importing NFT mechanics guarantees success.
Digital collectible tech is too weak—there’s no foundational infrastructure to support technically complex NFT features. Developers would need to build everything from scratch. But speed is paramount in digital collectibles, so technical aspects are selectively ignored in marketing. Over time, this has turned users into those indifferent to technology.
Notably, current digital collectible platforms either use consortium chains or are fully centralized—with very few building on public chains. The fundamental reason is clear: launching public chain-based collectibles would mean full open circulation, which would essentially be suicidal under current regulations.
Different Operating Strategies Lead to Distinct User Profiles
The operational differences are stark. Thanks to high degrees of freedom, the NFT market offers endless innovative strategies, and revenue models go well beyond simple sales.
At a macro level, NFT projects—especially blue-chip ones—typically focus on running just one project at a time. Digital collectible issuance differs significantly—in ideal conditions, a platform could release three drops per day.
User Differences Between Digital Collectibles and NFTs
The user base for digital collectibles shares broadly similar motivations with NFT users—primarily driven by speculative interests. However, key distinctions exist in detail.
Compared to NFTs, the entry barrier for digital collectibles is extremely low—users need only register via phone number and complete real-name verification to start buying. In contrast, entering the NFT world involves installing MetaMask, making initial cryptocurrency deposits/withdrawals, and learning to use platforms like OpenSea or LooksRare. To become an NFT OG, one often needs to volunteer in a project’s Discord server and participate in whitelist campaigns.
More importantly, language proficiency presents a major hurdle for aspiring NFT natives. Digital collectibles thus offer a speculative opportunity for users unable to cross these barriers.
Divergent Operational Priorities: Digital Collectibles vs. NFTs
Operational approaches differ greatly between digital collectible platforms and NFT projects. Digital collectible operations center around promotion and sales—increasing volume and boosting platform revenue is the core goal. In contrast, NFT operations prioritize wider utility and greater reach.
The root cause of divergence lies in differing revenue models.
In the NFT space, primary sale profits are usually minimal. Many new projects launch at 0.1 ETH or 0.05 ETH—or even offer free mints. With low prices and frequent giveaways, direct sales revenue is limited.
Most NFT teams aim to turn their project into a blue-chip NFT, profiting mainly from secondary market royalties. Take BAYC as an example: with a 2.5% royalty rate and a floor price of ~91 ETH, each sale generates ~2.25 ETH in royalty income. Compared to its original mint price of 0.08 ETH—which once struggled to find buyers—royalties now constitute the bulk of earnings.
Digital collectibles operate differently. Although secondary market royalties exist, strict regulatory enforcement prevents individual pieces from selling for tens of thousands of dollars. More commonly, prices range from hundreds to a few thousand yuan. With lower unit prices, royalty income remains negligible. Hence, platform revenues rely predominantly on issuance fees.
In practice, observation reveals that regardless of activity type, digital collectible promotions fundamentally revolve around purchase incentives—discount coupons, priority access, etc.—all designed to boost sales volume.
Thus, I personally define digital collectibles as resembling e-commerce platforms. Sales—not community or utility—is the core. All added features serve higher sales targets.
In contrast, NFT operations emphasize creativity, design, and technology—NFT passes, fractionalization, liquidity mechanisms, lending protocols, and more. The NFT space is broader and more comprehensive—an open, free market where technology and marketing intersect, speculation blends with passion.
Digital collectibles, meanwhile, represent a virtual collectible e-commerce market shaped by specific local conditions. Therefore, I believe future talent for digital collectible operations should come from e-commerce, not NFT backgrounds.
Summary: Digital Collectibles vs. NFT Markets
I’m glad I approached digital collectibles without prejudice, allowing me to conduct relatively in-depth research. Here then is my subjective conclusion—applicable specifically to the Chinese market.
The Digital Collectible Market Will Be Larger Than the NFT Market (within mainland China)
As previously described, the entry barrier for digital collectibles is frighteningly low. Beyond technical usage, user education barriers are also minimal. The digital collectible market is already deeply localized—including target demographics and terminology. For example:
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NFT users primarily use Twitter and Discord; digital collectible users use WeChat and QQ;
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NFT users install and back up MetaMask, navigate English-only sites like OpenSea or LooksRare; digital collectible users download apps from stores or use H5 mini-programs;
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NFT users undergo KYC on DEXs/CEXs for crypto deposits/withdrawals; digital collectible users pay via WeChat Pay or Alipay;
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NFTs have whitelists; digital collectibles call them priority purchases;
Such localization examples are countless. Within China, I believe the digital collectible market will grow significantly larger than the NFT market. Even if only 5% of 1.4 billion people hold digital collectibles, that’s still 70 million users (counting ownership, not transactions). And with younger generations increasingly embracing digital trends and collectibles, I expect this ratio to rise steadily over the next five years.
The Digital Collectible Market Has a Natural Moat (within mainland China)
Broadly speaking, digital collectibles align with national development directives—even if currently speculative and chaotic. It’s foreseeable that regulators will eventually introduce formal oversight and licensing systems.
At that point, the digital collectible market will gain a natural moat—protected by law, with licenses acting as ultimate authority. Put bluntly, once regulated, platforms backed by institutional or governmental power will possess the strongest competitive advantage possible—one that surpasses any technical or operational edge.
As for the global NFT market—there’s nothing to debate: NFTs dominate globally.
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