It’s no secret that cryptocurrency, especially Bitcoin, is changing how society pays for things. More mainstream U.S. businesses are beginning to accept Bitcoin payments. Internationally, Australia-based energy firm On The Run has started letting customers pay for gas with Bitcoin, and Russia has indicated that it may accept Bitcoin as payment for oil.
Cryptocurrency has also impacted an often-overlooked investment class: art. It has pushed galleries online, created a new type of art investment in the form of non-fungible tokens (NFTs), and is helping level the playing field in this industry. Sotheby’s even began accepting cryptocurrency payments for certain art auctions.
Galleries are Moving Online
Technological advances and the COVID-19 pandemic caused art galleries to move online. Art buyers and sellers were able to use Zoom Video Communications Inc. ZM to see live art and payment processors like Paypal Holdings Inc. PYPL to conduct transactions. These new technologies have made it easy to buy and sell art anytime and anywhere.
Buying and selling art online has become more prevalent even as the pandemic wanes. Per a 2021 art market report published by UBS Group UBS and Art Basel, more than a third of sales had taken place on dealers’ websites or through art fairs’ online viewing rooms.
Another main benefit of this movement is being able to list prices on these sites. Increased transparency and access are a few reasons why younger generations are more interested to invest in this unique asset class.
NFTs: A Different Type of Asset Class
Online art galleries and advanced crypto technology transact NFT art using smart contracts that automatically triggers buy and sell orders without an intermediary such as a bank. NFTs are powered by popular cryptocurrencies that use smart contracts, including Ethereum and Solana.
NFTs are unique because they’re non-fungible, meaning that they hold a distinct value separate from other tokens. One Bitcoin can be replaced by another Bitcoin, making it fungible. One NFT can’t be substituted for another since its value is influenced by unique factors like rarity and desirability. In addition to art, real estate, collectibles and vintage cars are examples of non-fungible assets.
A More-Level Playing Field
Online art galleries, NFTs and other technology have enabled different types of buyers and sellers to enter this space. Traditionally, buying and selling rare art was meant for wealthy, older clientele.
Online art marketplaces like MasterWorks have made this asset class more mainstream. Buyers can invest in shares of popular art and diversify their portfolios, since it can often be inversely correlated to the stock market. Art can appreciate while stocks depreciate.
See also: Benzinga’s Top Art Offerings
OpenSea is another online marketplace that specifically focuses on NFTs. Users can buy and sell NFTs for as little as 0.0001 ETH ($0.32 USD) or as much as 5,000 ETH ($116,037,900).
Each day, cryptocurrency technology is becoming more advanced and increasing its impact on society. Cryptocurrency has also greatly influenced the art industry by making this asset class once reserved for the wealthy more accessible to all.
Photo: Christopher Wool “Untitled” 1995 – Courtesy of Masterworks