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.