Another company is using bitcoin to try and disrupt the sale of high-value physical assets by slashing transaction fees, this time in the art world. WeCoin88 is hoping to reduce fees on art sales by around 10% using the digital currency.
WeCoin88 is a service offered by Brussels-based Tutela Capital, a company launched by mathematicians that specializes in applying statistical analysis to art pricing. The spinoff service was launched to handle bitcoin-based conveyancing for art sellers.
Tutela, which advises galleries on how to value their work, uses a database of three million artworks, complemented by machine learning techniques. Cofounder Dr. Fabian Bocart explains that the company got into bitcoin because he is a believer in the digital currency.
Launched late last month, WeCoin88 is currently offering artworks worth a total of 4500 bitcoins from at least 12 galleries, says Bocart (this varies from week to week). Buyers can purchase artworks in either bitcoins or US dollars, although the physical assets are quoted in bitcoins. However, Tutela mandates that the sellers must take payments in bitcoin.
The rationale for this move is that, while buyers may not be persuaded to purchase pure in bitcoin, sellers are more amenable. He wants sellers of artworks to think exclusively in bitcoin, rather than using it simply as a means to transfer funds into fiat currency.
Fees and logistics
Tutela charges a 3.8% buyer fee, and no seller fee. "Because we deal in bitcoins, you get rid of the issues related to funds transaction that is really a burden in art," Bocart said, adding that security is less of an issue. "You can rely on a strong network which is basically free."
Tutela also hope to significantly increase its transaction volumes using the bitcoin mechanism, which will help to drive down transaction fees, he said.
The company has a due diligence process for the sale of its clients' artworks. After the purchaser pays for the art, Tutela holds onto the funds during a 15 day review period, during which the purchaser can change their minds. After that period, the bitcoins are sent immediately to the seller.
Notably, Tutela will not vary the price of the artworks in bitcoin to reflect the volatile nature of the digital currency. Doesn't this leave the company open to traders simply looking for arbitrage opportunities, and potentially expose it to exchange risk?
Sellers could change the pricing themselves, but few do today, Bocart admitted.
The cost of art conveyancing normally amounts to 10 – 15% of the artwork's price, he concluded.
Framed art image via Shutterstock
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