The digital way to buy shares in a Warhol
It was to have been Bonhams’ star lot in its contemporary art sale in February 2016. Andy Warhol’s two metre-high painting, 14 Small Electric Chairs, was made in 1980 by reducing the scale of 14 separate paintings that he made in 1967 as part of his Death and Disaster series, and combining them in one work. Single examples (made in the Sixties) from that series are highly rated by collectors and have sold for as much as $20.4million
(£15.5 million).
Bonhams’ later combination work, in which each image is reversed, was billed as a rare example of a historic icon and estimated at £4million. But the Warhol market was going through a period of self-doubt, and the painting went unsold.
Over the years, 14 Small Electric Chairs hasn’t had much luck. In its previous outing at auction, at Christie’s in 1999, it also went unsold when it carried a £430,000 estimate. But now, two and a half years after its last auction appearance, it is back – not in an auction room or a gallery, but on a digital blockchain platform where it has been valued at a virtually unchanged £4.2million.
The painting itself is not for sale exactly, just shares in 49 per cent of its purported value. The controlling 51 per cent is owned by Eleesa Dadiani, a Georgian art dealer who set up in London’s Cork Street three years ago to sell contemporary art, and is believed to have been the unsuccessful seller at Bonhams. Although buying shares in an artwork is not new, this is the first piece to be offered for multiple shareholding, or “fractionalised ownership”, via blockchain, the technology behind cryptocurrencies such as Bitcoin and Ethereum. For her blockchain activities, Dadiani has set up the Dadiani Syndicate for multiple investments that her website says will turn “digital wealth into real wealth”.
Her partner in the Warhol venture is Maecenas, an online investment platform. Marcelo Garcia Casil, the CEO, says it hopes to democratise the ownership of art. As from tomorrow, anyone with $5,000 (£3,800) worth of cryptocurrency can buy into the Warhol once they have paid their two per cent commission charge and satisfied Maecenas that they are not money-laundering. The share offer will remain open until £2million or so has been raised, and they already have 500 hopefuls lined up before the auction begins. After that, they won’t get to live with the painting, but they will be able to trade their shares at the touch of a button through blockchain – which would be good news for them if the value of the painting went up.
But that could take time. Traditionally, when a work of art is unsold at public auction it becomes “burned”, and difficult to sell at that price again for a while. But Maecenas, which does not reveal the painting’s auction history in its provenance details, claims it “provides access to a far more varied audience than traditional auction houses, potentially increasing the chance of realising a strong market value”.
At a conference at Christie’s last week on the use of blockchain in the art market, there was much talk about how it could change the way things were done. Apart from providing more secure records of ownership and introducing new buyers to the market, it could challenge the existing market that revolves around auctioneers and dealers, introducing peer-to-peer selling and cutting out middlemen.
Whether collectors and investors will trust blockchain any more than a reputable dealer or auctioneer is open to question. Someone has to put the technology in place, after all, and someone has to apply notions of value to the work being traded in. Maecenas, it would seem, is being a middleman in the same way that auctioneers and dealers are middlemen. Either way, it’s going to be interesting to see if blockchain can succeed where the art auctioneers have failed.
Art market focus will return in September
The painting is not for sale exactly, just shares in 49 per cent of its purported value