Auction house Sotheby’s is auctioning the first ever piece of fine art that can be paid for using cryptocurrency.
The auction firm’s New York outpost has announced that it will accept cryptocurrencies Bitcoin or Ethereum, also known as Ether, for Banky’s Love is in the Air, which goes up for sale on May 12.
The famed painting – described by Sotheby’s as a ‘unique work’ based on an artwork first sprayed onto a wall on Jerusalem – depicts a protester hurling a bouquet of flowers.
It has a reserve price of $3 million to $5 million dollars.
‘This is the first time that cryptocurrency will be accepted as payments for physical artwork,’ Sotheby’s CEO Charles F. Stewart said in an interview with CNBC, ‘and we’re really excited to make this happen.’
Cryptocurrency is money created using computer code. Those currencies and transactions made using them are authorized and recorded using secure technology known as blockchain.
Sotheby’s says it is giving the artwork’s seller the chance to accept payment from them in the form of Bitcoin, Ether, or to have it exchanged for regular cash using cryptocurrency platform Coinbase, which is being used to facilitate the sale.
Buyers can also pay with regular cash, or cards.
Coinbase offers a platform that lets users buy cryptocurrencies and exchange them for cash. Its experts will be on hand for the Banksy auction to manage fluctuations in the value of Bitcoin and Ether while the auction is underway.
In the past few years, cryptocurrency has become popular, with one of the largest, Bitcoin, worth over $55,400 on Tuesday morning.
Ethereum, meanwhile, was worth nearly $3,500.
Sotheby’s will sell this Banksy painting, called Love is in the Air, on May 12. It will be the first ever fine art auction sale that will let buyers pay with cryptocurrency
Sotheby’s, whose New York auction house is pictured, believes offering cryptocurrency payments could dramatically boost interest in their auctions
Sotheby’s CEO Charles Stewart, pictured on CNBC on Tuesday, said he was ‘excited’ for the auction house’s first potential cryptocurrency sale
‘I definitely think we will expand the audience doing this, and it is definitely something we will explore going forward,’ Stewart said, ‘although we’re definitely very curious to see how that first step in this direction goes.’
Stewart said of the artwork on offer: ‘Banksy has been a very popular artist at auction,’ he said, ‘and there has been a lot of interest in his work.’
Prospective buyers will also be able to bid on the painting in cash, and when asked whether Sotheby’s would keep its cryptocurrency in an account or immediately transfer it to cash, Stewart said it would be up to the owner of the painting.
‘Part of the partnership with Coinbase gives us not only the ability to process the payment,’ he said, ‘but actually that possibility (holding the cryptocurrency in an account) as well.’
Cryptocurrencies, like Bitcoin, are created using computer code, which is stored on many decentralized computers, making them secure
Shares of Bitcoin reached over $5,5400 on Tuesday morning, following the announcement that Sotheby’s would accept the digital currency
This is not the first time an auction house has decided to experiment with new technology.
In March, the British auction house Christie’s sold a digital art file known as an Non-Fungible-Token (NFT).
NFTs are units of data on a blockchain that represent a unique digital file – whether its an audio, video or art file.
They can be widely shared by other people, and can include popular tweets or memes.
But when a person buys an NFT, they are really buying a token that confirms they own the original file, with some experts predicting that NFTs could boom in popularity like cryptocurrencies have.
The NFT ‘Everydays – The First 5000 Days’ – a digital artwork by American artist Mike Winkelmann, better known as Beeple, sold for nearly $70 million.
Christie’s, a British auction house, first sold this digital image titled ‘Everydays – The first 5,000 Days’ at an auction in March for nearly $70 million.
A month later, Sotheby’s also decided to sell its own NFT by the anonymous artist Pak at auction to establish connections with a new audience of art collectors.
Max Moore, the specialist in charge of that auction, said in a New York Times article that NFT buyers tend to be ‘younger and are more digitally native than other collectors.’
‘We wanted to establish an understanding of what is defining their taste and collecting style.’
The sale attracted more than 3,000 bidders, Stewart said, ‘so it made us really think that we need to take this next step, and begin to accept exploring crypto as payment for physical art as well.’
He said cryptocurrency is simply a reality in today’s society.
The digital money is already being accepted at a range of companies and businesses, including Tesla, Whole Foods and Overstock.com.
‘I think we are definitely seeing an interest in the part of cryptocurrency owners wanting to participate, them pushing into the physical world,’ Stewart said.
‘I definitely think we will expand the audience doing this,’ he added, ‘and it is definitely something we will explore going forward, although we’re definitely very curious to see how that first step in this direction goes.’
If it goes well, Coinbase officials said, it could pave the way for other auction houses to accept cryptocurrency as well.
WHAT IS BITCOIN AND HOW DOES IT WORK?
What are Bitcoins?
Bitcoin is a cryptocurrency – an online type of money which is created using computer code.
It was invented in 2009 by someone calling themselves Satoshi Nakamoto – a mysterious computer coder who has never been found or identified themselves.
Bitcoins are created without using middlemen – which means no banks take a fee when they are exchanged.
They are stored in what are called virtual wallets known as blockchains which keep track of your money.
One of the selling points is that it can be used to buy things anonymously.
However, this has left the currency open to criticism and calls for tighter regulation as terrorists and criminals have used to it traffic drugs and guns.
How are they created?
Bitcoins are created through a process known as ‘mining’ which involves computers solving difficult maths problems with a 64-digit solution.
Every time a new maths problem is solved a fresh Bitcoin is produced.
Some people create powerful computers for the sole purpose of creating Bitcoins.
But the number which can be produced are limited – meaning the currency should maintain a certain level of value.
Why are they popular?
Some people value Bitcoin because it is a form of currency which cuts out banking middlemen and the Government – a form of peer to peer currency exchange.
And all transactions are recorded publicly so it is very hard to counterfeit.
Its value surged in 2017 – beating the ‘tulip mania’ of the 17th Century and the dot com boom of the early 2000s to be the biggest bubble in history.
But the bubble appeared to have burst, and questions arose over what market there is for it long-term.
However, it has since boomed again, and in March 2021, surpassed the $60,000 mark for the fist time.