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ART LASTS, MARKETS PASS: CAN NFTS FINALLY MAKE ART AN ASSET CLASS?

ARTICLE BY ARTNEWS

 

APRIL 20, 2021          BY: MARION MANEKER

“People have long used art to store value,” Miami-based NFT investor Robert Rodriguez-Frail told Business Insider after he sold a Beeple NFT for a lot of money in March. “Crypto extends easily into digital art. This is just a more modern approach to investing in art and using it like someone would use gold or bitcoin.”

Rodriguez-Frail had originally bought his Beeple five months earlier for $67,000; he sold it for $6.6 million. That kind of 100-fold return isn’t really evidence of art being a “store of value.” Yet one of the underacknowledged factors contributing to the rise of this year’s NFT-mania is an overall assumption built up over the last two decades of the rise in art values that art is an asset class.

One can reasonably wonder after two decades of dramatically rising art prices whether art has not finally become an asset class, as some have hoped and many others feared.

There is no doubt that some art has become extremely valuable—for certain collectors, holdings of art have become their most valuable asset. Linda and Harry Macklowe await the disbursal of their collection estimated to be worth more than $700 million. When the estate of Sally and Victor Ganz was sold 25 years ago, the value of their art dwarfed their other holdings. Even David Rockefeller, whose collection sold for more than $835 million in 2018, wrote in his Memoirs, “While we never bought paintings as an investment, our art collection has become one of my most valuable assets and represents a significant part of my personal wealth.”

Because high-quality art has also become high-value art (in many, though hardly all, cases), there has been a tendency to view all art as valuable and something to be treated as an asset. An asset is simply something that you know someone will buy from you sometime in the future. If you are reasonably confident in the price someone will pay in the future, you can use that asset in a number of different financial ways. But once art becomes an asset, many detractors fear, it ceases to be seen as art. To put it another way, when you look at a work of art that has become an asset, you have a hard time seeing the art itself—its beauty, its formal innovations, its cultural or social ideas. Instead, you just see the price someone is likely to pay for it. Wondering whether it will increase or decrease in value, you worry about its future price more than you enjoy the art itself.

 

Think of it this way: When collectors buy works of art as an asset, they’re buying them the way most people buy a house. The hope that your home will increase in value isn’t the only reason to buy a house. But when faced with a major financial purchase, most people don’t want to imagine that they will lose money or, worse, that their house might one day become worthless.

For the rest of the article go to artnews.com

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