Sotheby's Has Officially Jumped on the Crypto Bandwagon

Though it’s one of the oldest auction houses in the world, Sotheby’s isn’t stuck in the past.

The UK-founded institution has its finger on the pulse of modern technology. Earlier this year, it released Instagram filters that would let users “try on” a $1.8 million tiara and hang Botticelli’s Portrait of a Young Man Holding a Roundel on their walls.

Now, the 277-year-old luxury auction house has made history by being the first in the world to accept Bitcoin and Etherium as payment for a physical piece of art, for its auction of Banksy’s Love is in The Air masterpiece.

“Fittingly, the pairing brings together the biggest disruptor in finance with one of the most notable disruptors in the art world—Banksy,” Sotheby’s wrote in a statement.

The work, which went for $16.7 million, paid in Bitcoin, isn’t Sotheby’s first encounter with cryptocurrency, In March, it announced it would auction off a series of non-fungible tokens (NFTs).

NFTs are digital assets such as art, videos or memorabilia. Ownership of NFTs is stored in the same way as ownership of cryptocurrencies, on what’s called a blockchain network. NFTs are swiftly becoming a lucrative form of investing, as well as popular for collectors.

“It may well be that the winner of this painting pays in dollars and not crypto, but I think for us, creating the possibility for this is interesting,” Sotheby’s CEO Charles Stewart said ahead of the auction. “There’s clearly a large audience interested in the NFT aesthetic and possibility there. Why wouldn’t that extend to the physical art world, as well? It will be very interesting to see.”

Bitcoin is the largest cryptocurrency in the world, with a market capitalisation of almost $1.3 trillion, and Etherium is the second largest, with a market cap of around $479 billion.

While prices for both have pushed to record highs, they are not without controversy. Tesla founder Elon Musk (who sent another crypto, Dogecoin, into overdrive when he tweeted about it, then sunk its value a month later when he called it a hustle) has recently said Tesla will not accept Bitcoin because of the environmental cost of mining it—it is created when high-powered computers compete against other machines to solve complex mathematical problems, which uses a lot of energy, usually created through fossil fuels.
Other critics have called crypto prices speculative and ultimately worthless, and have questioned the need for a currency without a central system.

Investment company Berkshire Hathaway’s vice chairman, Charlie Munger, called Bitcoin “disgusting and contrary to the interests of civilisation”.

“Of course I hate the bitcoin success,” Munger said. “I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air.”

Despite the detractors, Sotheby’s adoption of cryptocurrencies suggests they’re here to stay. Watch this space.

Want to know more about NFTs? Read about their impact on the fashion industry, here.