Cryptomania also flourishes strangely in art

under the current Crash at Bitcoin, Ethereum and Co. many crypto investors should be sweating, yet another hype is running in the art market, which is currently being celebrated in Munich under the title “NFT-May 2022” in the form of a festival for NFTs in art. But the fuss about NFTs sometimes takes on absurd forms and is very reminiscent of them tulipanmani in the 17th century in Holland, when the price of a tulip bulb at its highest exceeded the value of a house with a prime location in the center of Amsterdam. For explanation:

NFTs (“non-fungible tokens”) are unique files encrypted using blockchain technology that digitally represents the ownership of assets such as art. However, this does not involve the physical possession of a work of art, but rather a negotiable right defined in a wide variety of forms. The idea behind this is to assign value to something even though it does not physically exist in the real world, simply because it is in demand. The purchaser of an art NFT does not acquire the work of art itself, but a non-reproducible file that – to put it simply – certifies ownership of a digital version of the art or collectible. So far so complicated and the imagination of crypto traders knows no bounds when it comes to NFTs. Concrete:

Profit from the NFT hype in the art market

Everything possible and also seemingly impossible can be wrapped up in an NFT. The only deciding factor is that NFT can be traded with a uniqueness guaranteed by blockchain. That alone sometimes secures astronomical prices and makes the NFT market a playground for speculators. In March 2021, for example, an NFT on a virtual stretch from the collector monster game Axie Infinity was sold for $ 1.5 million (real). Almost at the same time, Christie’s auction house put an NFT work of art by digital artist Beeple, which had been popular on social media, but was otherwise virtually insignificant, under the hammer for $ 69 million. This spectacular auction really set in motion the NFT boom in the art market, where renowned museums and exhibition centers are now also eagerly participating. To make money, for example, digital copies of famous masterpieces or parts of them in the form of NFTs are offered. An example:

Klimt-NFT: 1850 euros for an extract of a digital copy

A few months ago, in February 2022, the Vienna Belvedere separated a high-resolution digital copy (!) Of the famous but not for sale painting “The Kiss” by Gustav Klimt into 10,000 individual parts and offered these fragments in the form of NFTs to sale at a price of 1850 euros each. A good deal for Belvedere, which so far has been able to raise around 4.4 million euros with this fundraising campaign. But what do NFT buyers get out of it?

The Klimt NFTs each represent a ten thousandth of a digital copy of the famous 180 cm x 180 cm painting. So the proud NFT owner can call a few square millimeters of the digital copy of the image his own. The question arises about the feeling of buying a digital excerpt at a relatively awful price. For there can be no question of enjoying art, especially since there are probably better and cheaper options for this purpose. For example, a high-quality full-size art print of the entire Klimt painting is available on amazon for a fraction of the NFT price. The only motive for buying the digital snippet is speculation about a possible increase in the value of NFT. So far, however, things have gone completely wrong in this case. Because the Klimt NFTs are currently traded on the Opensea NFT platform for an average of around 650 euros. In other words, a loss of value of 65% within three months. It means:

When it comes to art, it is much more advisable physically to buy an affordable original, for example from a young artist. If the expected increase in value does not occur, then you can at least enjoy the sight of the artwork in the long run. If, on the other hand, there is a focus on investment, then it is important to steer clear of cryptocurrencies or NFTs and fairly solid assets such as master shares or to bet gold. Because by buying Champions shares or shares in funds co-ownership of real, long-term successful businesses is acquired. And unlike NFTs, the one backed with physical gold is securitized (WKN: TMG0LD) the right to delivery at any time in the form of beautiful gold coins. Detailed information can be found at www.boerse-gold.deand everything you need to know about investing, asset accumulation and asset protection can be found in our Guide to your wealthwhich we would like to offer you sent for free.

With the best recommendations

Thomas Driendl
Börsenverlag’s editorial staff

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