Another bucket of 2 trillion dollars that will partially flow into Bitcoin is art.
It is often presented as an 'orthogonal' asset class providing a store of value. But it has all sorts of problems as an investment:
- Once-popular artists can quickly lose value. A friend of mine had several paintings by Julian Schnabel. At the height of their popularity, they were worth millions, but now they sell for pennies on the dollar as tastes have changed.
- Forgeries are everywhere. Domenico De Sole, the former CEO of Gucci, spent 8.3 million dollars on a Rothko painting that turned out to be a forgery. There is a great Netflix documentary about this.
- Insurance for works of art usually costs 1-2% of their value each year. This is a high cost.
- Selling works of art is extremely expensive. Commissions usually range from 10 to 25% of the hammer price, depending on the value of the artwork. Both buyers and sellers pay this absurd spread.
Art can easily be damaged, stolen, or go out of fashion. You can have the best art consultant in the world and still not make money in this category. Liquidation of artworks is extremely expensive and time-consuming.
Bitcoin is infinitely better.