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"slabbing" art with blockchain?
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24 posts in this topic

11 minutes ago, delekkerste said:

https://mobile.nytimes.com/2018/06/08/arts/art-financialization-blockchain.html

Or, fractionalizing ownership of art through blockchain...might be coming to a comic-con near you!

You think collectors have evolved enough to the point where they can overcome the Bart-Martin-Milhouse Syndrome?

Trigger warning: Destruction of a #1 comic book issue. Not for the feint of heart.

 

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48 minutes ago, rotembk said:

You think collectors have evolved enough to the point where they can overcome the Bart-Martin-Milhouse Syndrome?

It's a valid question. I think because nostalgia is not really a factor in fine art (except for some upper illustration such as Rockwell and Wyeth and maaaaybe Warhol), financializing it is easier. I would say we COULD BE on the cusp (because of rising values) of this with high end OA and comics.

I wonder if fractionalizing large works could finally be a way to directly short not only the art market in general but particular artists. Or maybe I am misunderstanding how that could work. Anyone care to learn me?

I'd love to be able to short Bronze Age OA.

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This was a thing that some people tried to do a few years back. I think it was posted in comic general but can't seem to find it. The guy had two comics that people could buy a share of and you would be given, I think, "comic coins". It went as well as you would expect it to on the boards.

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1 hour ago, BCarter27 said:

It's a valid question. I think because nostalgia is not really a factor in fine art (except for some upper illustration such as Rockwell and Wyeth and maaaaybe Warhol), financializing it is easier. I would say we COULD BE on the cusp (because of rising values) of this with high end OA and comics.

I wonder if fractionalizing large works could finally be a way to directly short not only the art market in general but particular artists. Or maybe I am misunderstanding how that could work. Anyone care to learn me?

I'd love to be able to short Bronze Age OA.

I reacted to Gene who asked about “a comic-con near you”. I agree it’s totally different when talking about collecting (you want to own the particular piece) and investing (you want the monetary appreciation).

I believe you can find private equity funds that invest exclusively in fine art portfolios already today.

Nothing prevents you from writing derivative contracts even today if you can find a willing counterparty (and if you have enough money you probably can). What you’re really asking about is having a public, readily accessible derivatives market. Others on this board are far more capable than me to answer that question, but I think that you need a sophisticated, public market for the primary commodity (the art) to develop first. The blockchain technology can facilitate that for sure, but blockchain technology is just a tool - a shinier, sexier, probably better tool - but still only a tool and we had similar tools for decades and we still don’t have such a market.

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Hypothetical... What would happen if I launched a Kickstarter to buy the McFarlane DPS at CLINK (a Copper piece whose demographic still has some collecting years left) and each supporter would get a proportional piece of a blockchain for just that piece of art?

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Debbie Downer Note:  fractionalization or selling participations etc. raise securities law issues (ie, depending on how it is structured and intended to operate and rights of the participants, securities laws may need to be complied with.)

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19 minutes ago, Ironmandrd said:

Debbie Downer Note:  fractionalization or selling participations etc. raise securities law issues (ie, depending on how it is structured and intended to operate and rights of the participants, securities laws may need to be complied with.)

Also, keep in mind you’d probably have to raise roughly double the winning bid because the funds you’d raise would be subject to tax as ordinary income. Of course, you’d probably want to do all of this offshore to avoid the regulatory issues and also the tax issues. But it’s a fascinating mental exercise and if you can figure it all out there’re a lot of wealthy people out there who’d be happy to talk to you and make you rich and then you can buy that DPS all on your own without having to share it with anyone. 

(And to be clear, I responded to Darren just to keep the discussion orderly, nothing more than that.)

Edited by rotembk
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29 minutes ago, BCarter27 said:

Hypothetical... What would happen if I launched a Kickstarter to buy the McFarlane DPS at CLINK (a Copper piece whose demographic still has some collecting years left) and each supporter would get a proportional piece of a blockchain for just that piece of art?

There would be too many problems such as who would hold on to the art? Could one investor buyout another's share? When would people agree to sell?

It reminds me of that guy who wanted to get investors to buy those Jim Lee trading cards from Moy so he would be able to keep one since he couldn't afford to buy them himself. People brought up the issue of how the cards would be distributed since some characters would be worth more than others.

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34 minutes ago, DeadpoolJr. said:

who would hold on to the art? Could one investor buyout another's share? When would people agree to sell?

I imagine the aforementioned private equity funds have already invented this wheel, but...

(hypothetically) The asset would be held in a secure location in the name of the LLC created just for this purpose.

Another investor could buy as many shares as others are willing to sell in some kind of public marketplace.

The shareholders would hold annual (?) votes on when to sell. Maybe there is minimum hold time of x years?

Thoughts?

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My initial reaction is that I just don't ever see this model working for OA for a variety of reasons unless it adopted the same passive investor/PE model involving other high end/luxury/unique assets.  For example, there are a number of private funds that buy high end vintage cars (Ferrari etc.) and I understand one investing motivation is that investors get a kick out of owning a fund that owns a portfolio of cool cars.  But no investor is asking if a car is available for them to borrow for the weekend to drive around town or show their friends.   And the manager of the fund makes all the decisions and of course the fund has custody/ownership of the assets.  A small group could form a general partnership or similar collective vehicle whereby money is pooled and decisions to buy or sell are made by all "partners" but that leaves the fundamental issue of who is holding the art and how do the partners appreciate the art.  I don't see it as practical of course to share the art or pass it around for periods of time. 

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5 hours ago, rotembk said:

You think collectors have evolved enough to the point where they can overcome the Bart-Martin-Milhouse Syndrome?

Trigger warning: Destruction of a #1 comic book issue. Not for the feint of heart.

 

This is even harder to watch. :roflmao:

 

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1 hour ago, BCarter27 said:

I imagine the aforementioned private equity funds have already invented this wheel, but...

(hypothetically) The asset would be held in a secure location in the name of the LLC created just for this purpose.

Another investor could buy as many shares as others are willing to sell in some kind of public marketplace.

The shareholders would hold annual (?) votes on when to sell. Maybe there is minimum hold time of x years?

Thoughts?

No need for any of that. People will be buying and selling fractional shares of the asset based upon the underlying value of the asset. It precludes having to liquidate it, which is the point.

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3 minutes ago, PhilipB2k17 said:

No need for any of that. People will be buying and selling fractional shares of the asset based upon the underlying value of the asset. It precludes having to liquidate it, which is the point.

I’m not sure if you’re serious in discussing the logistics at this point, but your suggestion works only if there’s a readiily available, sophisticated market. Factually, no such market currently exists. Or maybe you were thinking owners would auction their beneficial interests on HA or CL (or better yet, eBay!)?

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9 minutes ago, BCarter27 said:

10% fees. How bad is that comparatively?

It's not difficult to setup an online auction site that is purpose-built.

Sure, sure, sure. Or just do what a couple of guys from the Facebook MtG Art Market group did, a 12 hour livestream from their home, auctioning art, cards and other MtG stuff to the people of their Twitch stream.

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