July 10, 2018
Storing value safely and securely is always a concern, whether it is in the form of traditional cash or valuables in a safe or safety deposit box, or in the form of collectibles such as art, coins, banknotes or antiques in the hope their value will increase over time in conjunction with limited availability and increasing demand.
The creation of blockchain and distributed ledger technology has subsequently led to a rise in physical objects being created in limited numbers that take advantage of blockchain enabling the option to effectively create an entire sector of collectibles with the additional benefit of being able to store additional value in the form of cryptocurrencies, which in turn has been shown to potentially increase an items value even further.
Coins representing physical Bitcoin have been around for a number of years, possibly the most well-known and one of the earliest quality coins in production came from Mike Cauldwell in the form of the Casascius coin. Cauldwell began minting physical coins pre-loaded with Bitcoin for anyone to purchase – after being featured in the mainstream press towards the end of 2011 – what started as a hobby for Cauldwell rapidly led to his coins becoming highly sought after collectibles with the added bonus of being able to store physical value.
Talk of Bitcoin becoming a “physical” currency was common at the time, so much so Cauldwell even worked on creating the code required to run a Point of Sale (PoS) terminal capable of reading his coins (and other cryptocurrency holding objects) – sadly it would appear the device failed to see the light of day although the original code still lives on in a GitHub repository.
Interest continued to grow reaching a high in 2013 at which point Caldwell was contacted by the US Financial Crimes Enforcement Network (FINCEN) over concerns that his business essentially equated to being the transmission of money, and, if he wanted to continue to mint and sell coins pre-loaded with digital currency, he would be required to meet a very long list of regulatory requirements both at state and federal levels.
Undeterred, Cauldwell continued with one small change – the coins would no longer be pre-loaded with any value – thus avoiding the regulatory requirements cited by FINCEN.
Early Casascius coins have more than held their value in both bear and bull Bitcoin markets. In January this year, a mint condition unredeemed 1BTC Casascius second series coin sold on Ebay for a staggering $28,700. Even when taking into account Bitcoin was trading at just over $14,000 at the time, the initial face value of the coin at production would have been no higher than $31 (the peak price of Bitcoin in 2011) the end result demonstrates there are healthy gains to be made on unique or limited run physical items that can be authenticated and verified as a result of incorporating blockchain technology.
Believe it or not, there was at one point the possibility of a government approved physical Bitcoin being minted - the Isle of Alderney in the British Channel Islands was considering launching physical Bitcoins in partnership with the UK Royal Mint in 2013 although failed to come to fruition at the time over political concerns surrounding what Bitcoin was at the time, and the unusual requirement to travel to the island to redeem the value of the coins themselves. At the time (November 2013) Bitcoin had reached new all-time highs over $1200 and even Ben Bernanke (chairman of the Federal Reserve) said virtual currencies could be beneficial with regulation. Quite what they would have been worth now is anyone’s guess – the coins were intended to be struck in Gold with a value of around £500 worth at the time, the idea being if the value of Bitcoin collapsed, the coins could still be melted down for scrap if needs be.
More recently, cryptocurrency notes have started to appear - Swiss company Tangem launched their "Smart Banknotes" in Singapore aimed to function in a similar fashion to traditional cash. A slightly more obtuse offering comes from former cyber security expert turned crypto-guru John McAfee with his intent to launch a "crypto-backed FIAT currency" - aimed at collectors with the option to redeem them in exchange for periods of time to meet face to face with McAfee himself.
Of course simply tying collectible objects to the blockchain doesn't make them instantly more valuable, however if the marriage of the two produces additional usability or function for current (and future) owners - be that through limited production, verifiable provenance, the ability to store value or an immutable proof of ownership - the future of the collectibles market looks very bright indeed.
September 28, 2018
August 29, 2018
August 21, 2018
Continuing our series of posts explaining how “smART” Art solves several issues for artists, and how “smART” enabled artwork combats counterfeits and provenance fraud – this post covers the additional features and subsequent benefits Thomas Crown “smART” Art provides as a result of integrating blockchain with the art world...