If Art Isn't A Bubble, Maybe Bitcoin Isn't Either
Content adapted from this Zerohedge.com article : Source
Authored by Peter Tchir via Forbes.com,
I am getting tired of reading article after article comparing the rise of Bitcoin to tulips (link). Or the rise of Bitcoin to the South Sea Company bubble (link). Maybe the detractors are just comparing it to the wrong asset that is difficult to value but continues to rise in price.
Someone paid $450,300,000 for a Leonardo da Vinci painting of dubious provenence that quite frankly struck me as ghastly (link).
If Bitcoin, or cryptocurrency pricing is supposed to be "rational", then why shouldn't art be subject to the same standard? The cost of material for most art is only a fraction of the alleged 'value'. Why does Bitcoin need some inherent value, while art doesn't?
Basically, if $450 million for a painting isn't a bubble – why are we so sure that Bitcoin has to be a bubble?
Can you really get that much aesthetic value from looking at that painting? Maybe it's just me, but I remember rushing around the Louvre to see the Mona Lisa and being disappointed. I've seen that and other famous 'must see' paintings and usually walk away wondering what was so special.
Yes, maybe I am just too plebian to understand the meaning. When I look at Black on Grey or Orange and Yellow, I think I can understand exactly what the artist was thinking – "If I can sell this, I have a whole series to color combinations to foist on the public!"
Maybe it is the attention you receive for owning it?
If I had $450 million to plunk down on something, I'd own a part of a sports team as I think you get a lot more attention and perks from owning part of a sports team than a piece of art.
Then why aren't we bombarded with daily rants about the art world being crazy?
- What would the Sunday paper be without an Arts session?
- How embarrassing would an Art History degree look if art collapsed.
- What would all the auction houses do?
- What stores would fit between the confectionaries and real estate stores in a typical vacation town?
There is an infrastructure that has been built up to support the concept of art as value and one designed to push the price ever higher and it has worked for a very long time. Every few years it seems that there is some unbelievable record setting price at auction, only to be surpassed by some new record.
The art world has also been very smart to create ''entry' level gateways for would be art collectors. These lithographs, sketches, numbered prints are the art world's equivalent of LiteCoin, BitCash, Ripple, Ethereum, etc.
While I cannot fathom why art sells for what it does, it has sold at prices that defy most market related measures of value for decades, if not centuries and is not subjected to daily comparisons to tulips or South Sea corporations.
Maybe Bitcoin shouldn't be compared so blithely to tulips either.
I am not sure what the long term path for cryptocurrencies are, but the detractors need to start coming up with better arguments – as the cryptos are tulips argument just doesn't cut it.
I'd rather buy Bitcoin than art, it's easier to sell, transport or store. Better store of value imo.
Plus, I can't afford a Picasso, and never will.
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Maybe Bitcoin (and blockchains in general) shouldnt be compared with any other thing that we already have.
It is a revolutionary concept, and i dont think anything like It has ever happened.
Compare It to anything else (marketwise) is like comparing cars with boats. They have the same Basic function(transportation), but how, why, and what for are totally different on each of them.
No one would use a boat(except on some specific places) to their daily mobility problems. Also, no one would try to use a car to cross the atlantic sea.
Cryptos is a New beast, and whoever says what exactly is their Future is wrong or lying.
All se have right now is educated guesses.
Totally agree ! This is something so special and new, that there is no room for comparison. I think that is just in the nature of people, they have to know and if they don't it just buggs them !
Its Just like the internet. No one knows for sure what Will work, and what Will fail. We have to wait and see, and hopefully, make the best bets.
Definition of an economic bubble
A bubble is an economic cycle characterized by rapid escalation of asset prices followed by a contraction. It is created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior.
via Investopedia
You decide for yourself, if BTC fits the description :)
arguments have been made that bitcoin is used to launder money. well, in my opinion, art can also be used as a vehicle to launder money. in fact, art is one of the most illiquid asset, and not everybody is willing to throw 450M for a piece of paper that sits in a corner of the living room to collect dust.
The buyer of the supposed Da Vinci was Abu Dhabian, if not the government itself. If they aren't the country-icon for tops, we dunno what is. Are we the only ones that remember them "bailing out" those freaky man-made islands in Dubai?
Valid point @zer0hedge.
I am not an art expert but I can tell you that it is foolish some of the prices people pay. Although art does have the scarcity concept but it is sorely lacking in the utility arena.
Bitcoin has the scarcity and there is utility. Yes there are challenges with the blockchain but there is no doubt that bitcoin is a much better alternative to the banks when transferring large sums of money. For this reason, I see bitcoin being a player for years to come.
Art, well I would rather have just a print and save the money. Of course I dont run in the circles where I worry about impressing anyone.
While this is true you can also replicate social networks easily, but in general there is little incentive for users to switch. I expect there will be multiple cryptos that succeed but one will be dominant,You can’t replicate a Bitcoin on the Bitcoin network. You can only make a replica of the Bitcoin network but they are absolutely worthless
Interesting take, I haven’t thought about comparing bitcoin with art prices, but those 2 things are totally different, so I would not think this to be a fair comparison.
Crypto being a new technology makes it difficult to find a proper comparison, perhaps the internet? Perhaps credit cards? Or both combined? I don’t really know
I know that there is an infrastructure that has been built up to support the concept of art as value and one designed to push the price ever higher and it has worked for a very long time. Every few years it seems that there is some unbelievable record setting price at auction, only to be surpassed by some new record.
The art world has also been very smart to create ''entry' level gateways for would be art collectors. These lithographs, sketches, numbered prints are the art world's equivalent of LiteCoin, BitCash, Ripple, Ethereum, etc.