Introduction:

Have you ever thought that you could become an NFT yourself? Recently, the popular platforms Friend.tech and Time Store have adopted this approach. KOLs issue their own NFTs on the platform, and fans can interact and communicate with the KOLs after purchasing. Is this approach feasible in China? This article provides an introduction and analysis.

01. Friend.tech Platform Approach

Friend.tech is a decentralized social platform built on the second-layer network Base chain launched by Coinbase. It binds users' Web2 identities with Twitter and has the potential to profit based on this identity[1].

The more popular the user, the higher the price of their NFT. Friend.tech has clearly mastered the art of fan economy.

The specific approach is to bind the platform with users' Twitter social accounts. For example, a KOL (Key Opinion Leader, i.e., internet celebrity, influencer) as a new user activates their account by filling in someone else's invitation code and paying 0.01 ETH. After registration, the KOL's account will generate tradable keys (tokens representing the user's ownership and access rights on the platform). If other users purchase these keys later, the price of the KOL's keys will increase. If they are subsequently sold by other users, the price of the KOL's keys will decrease. KOLs are priced by the market based on their influence, and their value is tokenized in the form of NFTs.

Real-time prices of relevant accounts can be viewed on the official website:

According to the Keys holding data, as of August 25th, the latest data on the "Keys" price ranking of Friend.tech shows that the founder, Racer, is temporarily ranked first with 2.91 ETH, with profits estimated at around 90 ETH[2].

02. Earning Methods of Friend.tech

FRIEND.TECH, as a decentralized social platform, has financial attributes. Its core mechanism is to convert Twitter into tradable keys. After users purchase a KOL's keys, they can obtain a friend position and chat directly with the group owner in the group chat. This is a good way for ordinary users to communicate directly with industry leaders. For example, if you want to find a good job, you can directly send your resume in the group; if you want to understand the latest developments in the industry, you can follow the opinions and ideas expressed by KOLs in the group chat; or if you simply believe in a certain KOL and think that there will be many buyers after them, you can also buy the group keys to join.

After payment, users can enter the group chat and chat with the KOL. Each person can only see the chat content between the KOL and themselves and cannot see the conversations of others in the group:

As a KOL, during the operation of their chat room, they can earn transaction fees through the buying and selling of their keys by others. As ordinary users, they can obtain price difference profits by finding potential stocks and buying low and selling high.

03. KOL Time Trading Platform Time Store

Similar to Friend.tech, there is the recently launched Time Store (the predecessor of the product was the 2017 platform "Miao A" - the platform claims to be the first national time trading platform), where users can purchase a KOL's time through buying the tokens issued by the KOL to interact and communicate with them.

After users purchase a KOL's time, both parties will have online and offline interaction and communication opportunities:

04. Personal Coin Issuance, Is it Legal?

First, we need to clarify a few concepts.

What is an NFT? NFT (Non-Fungible Token) refers to non-fungible tokens built on blockchain technology. The opposite concept is fungible tokens, such as Bitcoin, Ethereum, and other cryptocurrencies. Fungible tokens have the characteristic that each token has the same function and value and can be exchanged. In contrast, only one NFT can be generated on each contract address and cannot be exchanged. NFTs can serve as a carrier for storing real assets such as artwork and can also function as virtual currency.

According to the 2017 "Announcement on Preventing the Risks of Token Issuance Financing," no organization or individual may engage in illegal token issuance financing activities. In the April 2022 "Initiative on Preventing Financial Risks Related to NFTs," it also mentions "resolutely curbing the financial and securitization tendencies of NFTs and strictly preventing the risks of illegal financial activities" and "not directly or indirectly investing in NFTs."

The approaches of the Friend.tech and Time Store platforms are quite common in the Web2 world, such as Liu Run's Evolution Island and other paid Q&A communities, where membership fees allow entry into the community to observe the remarks of industry leaders.

However, in the Web3 domain, these two platforms tokenize the social value by allowing users/KOLs to issue coins for fans to purchase.

But relevant policies in China do not allow any organization or individual to issue tokens. As a domestic product of NFT, digital collectibles mainly emphasize their value as digital artworks and aim to prevent their financial attributes.

During platform operation, if the market experiences false statements that lead to public opinion manipulation and cause user panic, the prices of certain KOLs may rapidly decline, leading to a collapse. Early buyers may take the opportunity to sell at high values, while later users may be trapped, resulting in significant financial losses.

If certain KOLs use hype, deception, price manipulation, and other methods to guide a large number of users to purchase their NFTs but are unable to provide sustained and stable high-quality services to users, and then sell the NFTs at high prices to obtain high profits, it will also lead to significant financial losses for many users.

In this type of trading model, if it triggers a large number of user complaints, both KOLs and platforms may be involved in criminal risks such as illegal fundraising, pyramid schemes, and fraud.

05. Is the development team safe overseas?

It is understood that Time Store claims that all staff members are going overseas. So the question is, even if the project and personnel are overseas, but mainly targeting Chinese users for registration and use, can it evade the jurisdiction of China's criminal law? The answer is no.

According to China's criminal law, jurisdiction includes territorial jurisdiction and personal jurisdiction. Territorial jurisdiction means that as long as the criminal act or result occurs within the territory of China, China has jurisdiction; personal jurisdiction means that as long as it is a Chinese person committing a crime outside the territory of China, China also has jurisdiction.

Therefore, as long as a Chinese person commits a crime, or the criminal act or result occurs domestically, China has the right to jurisdiction.

06. Legal Advice:

In the world of Web3, there can be a lot of innovation, which is why more and more people are starting to pay attention to blockchain, metaverse, and other related topics. From the joint issuance of the "Guiding Opinions on Accelerating the Application and Industrial Development of Blockchain Technology" by the Ministry of Industry and Information Technology and the Cyberspace Administration of China in 2021, it can be seen that China also holds an encouraging and supportive attitude towards this. However, since the "Notice on the Prevention of Bitcoin Risks" issued in 2013, relevant regulatory authorities have continued to issue documents expressing a negative attitude towards the issuance and trading of virtual currencies, mining, and other related activities. Therefore, while Web3 entrepreneurs engage in various content innovations, they must remember not to cross the regulatory red line, otherwise they may end up in trouble.

[1] Friend.tech: An Analysis of the New Leader in the SocialFi Track - LD Capital - Medium

https://ld-capital.medium.com/friend-tech-%E6%B5%85%E6%9E%90socialfi%E8%B5%9B%E9%81%93%E6%96%B0%E8%B4%B5-203d43b61acb

[2] Friend.tech Research Report: Investment Logic, Value Assessment, and Potential Risks - Foresight News

https://foresightnews.pro/article/detail/41588

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