- Posted December 19, 2013 by
Why the rise of Bitcoin could be bad news for Sotheby's
In November 2009, Andy Warhol's work "200 one dollar bills" sold for $43.48 million at Sotheby's New York auction house. That's more than three times its $12 million high estimate. The price included the buyers premium, the additional fee on the hammer price which is charged by the auction house. This fee is how auction houses like Sotheby's make money. The buyer of the 1962 silkscreen painting remained unnamed. This anonymity is characteristic for the high-end art market. There can be transactions where both the seller and the buyer are listed as „private collections“. Because of this lack of transparency the art market has been, and continues to be, a target for money launderers. Art has the additional advantage of being portable and it can be bought and sold in different parts of the world.
These properties (anonymity, portability) are exclusive to the art market. Or they were. Now Bitcoin can do the same. And it can do it even faster and cheaper. Although art is per se portable, transporting art around the globe can be very time and cost intensive. Bitcoin transactions are done anonymous in a matter of seconds and the transaction fees are negligible. Bitcoin seems to be custom-made for transferring ill-gotten gains around the world.
But what would happen if money launderers exclusively used Bitcoin and therefore neglect the art market? Would prices for fine art go down? Would auction houses and art dealers lose business. Or is money laundering just a small part of the market and collectors buying for passion or investment are the vast majority?
It will be very interesting to observe the price development of high-end art (and Bitcoin for that matter) in the coming months and years.
But it's unfair to reduce bitcoin to money laundering. Bitcoin has potential to revolutionize banking and with it many other industries. That includes the art world where people slowly start to learn about Bitcoin and its abilities.
A proof that Bitcoin has arrived in the art world is that it recently received the same treatment Warhol gave to the dollar in 1962.
Inspired by Warhol young German artist Kuno Goda has created an art work called "200 Bitcoins". It remains to be seen if this work will one day reach a price like its predecessor and if it will be paid for in Dollar or Bitcoin.