This week I had one of those analytical discussions with a rabbi who lives near me and is interested in art and creativity.
Just a few weeks earlier, he complained to me that his brothers and cousins are all a bastion of absolute success on Wall Street and that he regrets studying so long just to spend his weekends through ours wonderful capital to stroll on the British side of the Atlantic, visit galleries and art fairs which are his passion but don’t make money.
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It has been known that many artists either never regain the tremendous effort and talent they put into creating masterpieces that enthusiasts have enjoyed for generations, or they become rich and famous posthumously, which is perhaps an abomination for their hard work and enviable skills.
This may just stretch things a little, but something the learned rabbi told me hit a chord which then led to a very in-depth debate between us about cryptocurrency investing and blockchain distributed ledger technology.
What does cryptocurrency, a digital, non-physical concept that is all about who can win financially over others, have to do with art, which is the exact opposite? Art is subjective, analog and creative. Far from the breakneck world of commerce.
Or is it?
My hard-working friend mentioned that he had heard from a man who had managed to use graphic design to encrypt art into a cryptocurrency-centric digital token and then sell it at a Christie auction for over £ 50 million.
That’s true. 50 million pounds.
The Mona Lisa, one of the most famous works of art by artist and scientist Leonardo Da Vinci, took an era to reach its current insurance value of $ 850 million. However, this crypto work of art is brand new and has a tremendous price tag from a reputable auction house.
Mike Winkelmann, known as Beeple, is the man behind the concept. The huge collage of images titled Everydays: The First 5000 Days was sold as a computerized asset and downloaded into the winning bidder’s digital wallet. It was the first time Christie’s sold an entirely digital work of art in its 250-year history.
The auction house also accepted payments in Ethereum, the second most popular digital currency after Bitcoin.
So we are not only witnessing the tokenization of art, but also the method of buying it and converting it into cryptocurrency.
The art is in a digital wallet, as is the means of purchase.
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My learned friend was amazed at what he learned when an art collector told him this last week. He said, “How can a reputable auction house like Christie’s get involved? It’s very risky, but hats off to Beeple, he’s a genius and maybe this is the future.”
May be. We all know how risky it is to invest in cryptocurrency using good old fashioned fiat currency. There’s a story of chancellors running dubious unsupported exchanges by simply harvesting real money, trading it for virtual money, and running away. Another unfortunate example of this was today when Turkish crypto exchange Thodex broke in, taking away $ 2 billion in customer funds.
There is no recourse for this.
However, the cryptocurrency as the underlying asset is a different matter.
Perhaps Beeple is showing the way into a new digital market for art via so-called non-fungible tokens or NFTs.
Twitter founder Jack Dorsey sold an NFT of the very first tweet for £ 2.1 million, while others featured the latest Kings of Leon album and a variety of artwork on the online marketplace Opensea.
In the past week alone, a single piece of pixelated work that is part of a series called Cryptopunks – one of the most popular NFTs – has sold for more than $ 1 million.
There are some who think differently, and rightly so. Robert Norton, CEO of digital art verification company, Verisart, has called the NFT madness a “moment of collective hysteria.” After Christie’s auction, Beeple converted his amount of Ethereum into cash himself and later said in an interview: “I think it’s a bubble.
Maybe. However, this has created disruption, and disruption and diversification are two factors that create volatility and interest in new markets.
The next time you see a creative guy with sandals and an easel, you might see him differently as a market driver and innovator as well as a creator of beauty.
Andrew Saks is Head of Research and Analysis at ETX Capital.