Citywire - For Professional Investors

Register to get unlimited access to all of Citywire’s fund manager database. Registration is free and only takes a minute.

The one million dollar rose: when art meets blockchain

The one million dollar rose: when art meets blockchain

This Valentine’s Day the crypto world marked the historical merging of blockchain technology and fine art. It sold a rose for $1 million – or rather it sold a digital photo of a rose for $1 million.

Known as the Forever Rose, the project was produced by Kevin Abosch, a visual conceptual artist, and GIFTO, a blockchain gifting platform.

The project met with an overwhelming response, with over 150 potential buyers, but was sold only to 10 investors who paid $100,000 each using two cryptocurrencies: GTO by GIFTO and IAMA by Abosch. The collectors can’t hang the photo on the wall, but can choose to hold their portion, sell it, or give it as a gift.

Among the list of investors were ORCA Fund; Future Money and Ink; TLDR Capital; Node Capital and Jinse Finance; Node Capital and Jinse Finance; and Meng Zu, a prominent crypto investor in China.

‘Crypto art is a combination of art, cryptocurrency and blockchain technology, encapsulated in a representation of art that has an intrinsic monetary value,’ said Andy Tian, CEO and founder of GIFTO.

Crypto assets in demand

For HNWIs, Tian added, cryptocurrency as a stored value is very attractive, as bitcoin and other major currencies have enjoyed substantial gains.

New token projects are also becoming attractive. ‘This increasing crypto-led interest has a possibility of it transcending over to the art sector, or crypto art in this case,’ he said.

The Forever Rose comes after SwissBorg, a crypto wealth management platform, launched its initial coin offering (ICO) in the same month. Called the SwissBorg Network Token, it began trading on the cryptocurrency exchanges BitHTC and LiveCoin.

The firm’s last ICO hit a hard cap of $54 million, with 20,000 contributors from 75 countries. Token holders will get first dibs on SwissBorg’s investment products, including a hedge fund and indexed crypto-fund in the first half of the year.

What’s more, last December, Telcoin introduced its ICO globally, with plans to raise between $10 million and $25 million. According to the Tokyo-based company, it has seen investment interest from entrepreneurs and HNWIs, particularly in Asia.

Recent investors include Mixi co-founder Batara Ito, and East Ventures, a Southeast Asia-focused venture capital company.

Bitcoin’s highs and lows

Bitcoin had a stellar year in 2017, reaching an all-time high of approximately $20,000 in December. Its value dropped below $9,000 this year, but now it is averaging around the $10,000 mark.

Within Asia there have been mixed feelings towards this asset class. Japan, Australia and South Korea, for instance, have been at the heart of the cryptocurrency fever, and have been far more welcoming of the asset class than other countries in the region.

Despite losing about $500 million in cryptocurrencies from Coincheck in January, Japan still plans to become the bitcoin  capital of the world. South Korea said it has no plans to shut down trading.

China, on the other hand, has been outright against the idea. In January, the country outlined plans to limit power supply for some bitcoinminers as part of Beijing’s continuous efforts to crack down cryptocurrency.

The move comes after some bitcoin miners took advantage of lower power prices, affecting electricity use in local households.
India, too, hinted plans to crackdown cryptocurrencies, all so to eliminate unlawful activities in the country. Finance minister Arun Jaitley said during his 2018 budget speech that the government does not consider cryptocurrencies legal tender or coin.

Hong Kong set out its cryptocurrency crackdown in February. The Securities and Futures Commission took regulatory action
against 14 cryptocurrency exchanges and ICO issuers on the back of complaints from investors.

Not yet an investable asset?

John Woods, Asia Pacific chief investment officer of Credit Suisse, says for now, bitcoin and many other cryptocurrencies are a long way from proving themselves as currencies.

‘Cryptocurrencies are not investable assets as they fail several criteria such as transparency, analytical clarity, volatility and regulatory uncertainty, to name a few.

‘It is not an exaggeration to state that the price behaviour of many coin offerings and cryptocurrencies is reminiscent of historic asset prices bubbles.’

This view was echoed by Mark Haefele, UBS’ chief investment officer for global wealth management. He noted in the Swiss bank’s latest house view report that the volatility for bitcoin is more than 10 times that of equities, and its correlation is close to zero but not negative, meaning that it cannot be expected to rally when markets fall.

Currently, Credit Suisse, UBS and other wealth and asset managers are betting on blockchain, the underlying technology that makes cryptocurrency work.

Daryl Liew, a senior portfolio manager with REYL Singapore says blockchain and its applications could be interesting  investments, as there are tangible benefits and applications to various industries like banking and insurance.

‘I think there is so much research and development happening in the space that a new technology will emerge in the next few years in the cryptocurrency space.

‘One that lends itself better to processing large volume of transactions and that doesn’t waste precious energy resources,’ he concludes.

This article appeared in the March issue of the Citywire Private Wealth magazine.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Events
  • Citywire Asia Bangkok Retreat 2018: day one images

    Citywire Asia Bangkok Retreat 2018: day one images

  • Citywire Asia Bangkok Retreat 2018: day two images

    Citywire Asia Bangkok Retreat 2018: day two images

  • Citywire Asia Taipei Retreat 2017: day two images

    Citywire Asia Taipei Retreat 2017: day two images

  • Citywire Asia Bangkok Retreat 2017: day one images

    Citywire Asia Bangkok Retreat 2017: day one images

  • Citywire Asia Bangkok Retreat 2017: day two images

    Citywire Asia Bangkok Retreat 2017: day two images

  • Images from Citywire Thailand Forum 2017

    Images from Citywire Thailand Forum 2017

  • Citywire Asia Awards 2017: images from Singapore

    Citywire Asia Awards 2017: images from Singapore

  • Citywire Asia Awards 2017: images from Hong Kong

    Citywire Asia Awards 2017: images from Hong Kong

  • Citywire Asia Taipei Retreat 2017: day one images

    Citywire Asia Taipei Retreat 2017: day one images

  • Citywire Asia Retreat in Bangkok: day two images

    Citywire Asia Retreat in Bangkok: day two images

  • Bangkok buzz: day 1 images from our Asia Retreat

    Bangkok buzz: day 1 images from our Asia Retreat

  • Images from Citywire's Thailand Forum

    Images from Citywire's Thailand Forum

  • Pictures from Citywire's Hong Kong forum

    Pictures from Citywire's Hong Kong forum

  • Images from our Citywire Singapore Forum

    Images from our Citywire Singapore Forum