In late December I wrote a column about investing in art. As always, I must and I want to clarify that I am in no position to give any investment advice to anyone.
The content of my articles are for pure informative purpose and the reader shall always seek professional advice before investing on anything found on the internet or in a newspaper.
Having said so, I could not miss the crazy — and I use this word with purpose — volatility of the crypto art market.
Let us move one step back and see what is all about.
First of all, almost everything that is preceded by the prefix crypto implies that what follows is based on some sort of blockchain and as such is believed to be immutable.
This last sentence alone would deserve an entire article on its own, but let us — as usual — oversimplify the concept to make it accessible to every reader, regardless of their background.
Technically speaking, in order for anything to be on a blockchain, there should be a token.
The reason why this happens is because blockchain transactions are validated by a collectivity acknowledging — thus permanently write on the blockchain — that the ownership of a digital asset moved from one owner to another.
When it comes to art — in its traditional form — it moves as a physical asset, therefore it is clear who owns a painting: the one that has it on the wall, in simple terms.
Similarly with digital art — let us say a digital picture for example — the file can be moved at will from one device to another, but because duplication is a matter of a simple copy and paste, anyone can have the same digital painting in virtually infinite copies.
But when it comes to crypto art things are substantially different. Because the blockchain is able to state without a doubt who is the owner of any digital asset, the ownership is absolutely unique.
And so the latest craze is to stock up crypto-paintings that are bought and sold at light speed. Through digital auctions or making direct offers to the owner, anyone can buy and sell art in minutes.
Artists are now creating pieces that are sold in limited editions, so that the supply is scarce. For instance, the first crypto-painting that I have ever bought from a fellow Italian artist, was number 18 of 51 available in the world.
Right now, as the cryptocurrency market is precipitating after one of the fastest “bull run” in history, many are exchanging their crypto-currencies into crypto art. A crypto-painting is called NFT, Non Fungible Token.
In other words, the painting and the token are the same think. To simplify this to its maximum, imagine someone who buys an ancient coin. That coin is not spendable in the market, yet it is a coin and it has its own value.
That value of crypto art is skyrocketing as I am writing this column.
On January 7, 2021, world famous auction house Christie’s sold for $3.5m a digital collage made by Mike Winkelmann, aka Beeple. The painting contained 5,000 pictures that the artist created every day since May 1, 2007.
“The sky is the limit” said the confident investor, while others fall on the floor. [The writer is a member of the International Press Association]
STEFANO VIRGILLI
stefano@virgilli.com
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