Why Bitcoin Is Good for the Art World

Bitcoin Presents Potential Enormous Impact.

Why Bitcoin Is Good for the Art World
Image courtesy Bitcoin.org

Gary T. Kerr pens this guest post. He is the president of Fine Art Impressions. It is one of the leading digital fine art printing firms worldwide. Gary also contributed a hugely popular post here titled 12 Mistakes Every Artists Should Avoid.

Bitcoin Is a Revolutionary Payment Method and a New Kind of Money.

(Editor note: I have been marginally aware of Bitcoin for some time, but without much notice until recently. That changed with Gary’s interest in contributing an article, and reading a recent “Why Bitcoin Matters” NYTimes.com article by venture capitalist, Marc Andreessen. He is also an Internet pioneer having developed the Mosaic browser, which helped pave the way for today’s Internet.)

 Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can dispute the legitimacy of the transfer. The consequences of this innovation are hard to overstate. ~ Marc Andereessen

Here Are Gary Kerr’s Thoughts on Why Bitcoin Is Good for the Art World.

Bitcoin has now been evolving for 5 years, and yet, it is still widely misunderstood. Its unique qualities and relative newness are behind the confusion. Bitcoin essentially has four functions, which are:

  1. A decentralized currency.
  2. A payment system.
  3.  An advanced protocol.
  4. A financial platform.

So what is Bitcoin?

It’s a virtual currency that has a predetermined number of coins being “mined” each day through mathematical problem solving, and has a total cap of 21 million total coins, currently there are about 12 million coins in use, and a Bitcoin is worth about $800 as of January 2014.

Government backed currencies by comparison, such as the dollar or yen have no such preset cap. As a result, Bitcoin is the only currency in existence that has a deflationary value since the current supply is insufficient to meet demand. This simply means Bitcoin in the future, has the potential to purchase more than it can today.

Bitcoin Is a Pure Digital Asset.

Despite the image above for illustration purposes, there are no coins to trade or to counterfeit. Please understand Bitcoin exists only in digital form. It is a mathematical crytpo-currency that is comprised of a public ledger called the blockchain and accounts for all coin transfers between two parties in what is a massive peer-to-peer network calculating complex math to provide integrity to the ledger. Because this network is not controlled or owned by any central entity, it is not subject to manipulation by corporations or governments.

In being independent of those traditional entities, it enables two parties to exchange payment almost instantly and for free or nearly free without a third-party such as a bank—which has been the traditional facilitator of payment systems. The value of such a system for anyone who has run a merchant services account like Paypal or Square will fully appreciate the value compared to the scrumptious fees associated with most payment networks.

There Are No Barriers to Own or Trade Bitcoin.

To own or use Bitcoin, it only requires that you have a Bitcoin wallet and an understanding of how the system works, see blockchain.info for more on this topic. So can you trust it? Can you trust math? Since the blockchain is not subject to being tampered with, your Bitcoin transactions are secured by something called SHA-256, an encryption technology developed by the NSA back in 2001. This makes it virtually bulletproof. But, it is not without risk as you must manage your Bitcoin transactions and protect your private key which is well documented at this point.

Addressing Volatility and Liquidity Issues.

For many who choose to learn about Bitcoin, the first issue brought up is volatility, meaning the value of Bitcoin changes throughout the day. Because of this, it immediately is seen as something negative. Nothing could be further from the truth. You have the option to accept Bitcoin for payment and instantly convert it to your local currency, likely US dollars and never feel the effects of Bitcoin volatility.

There are many money services businesses that can enable the transaction in that way such as coinbase.com. In doing so, you simply are accepting payment with Bitcoin but have dollars land in your bank account without any significant cost. Compare that with Amex, Mastercard, or Visa which will likely take days and cost 3% or more in fees. You could also opt to accept Bitcoin and store the value in the ledger (your wallet), only accessible via your private key to at a future point in time, make a purchase, or pay someone else in Bitcoin, again, almost instantly and practically for free.

How Can Artists and Galleries Benefit from Bitcoin?

Since buying and selling art and related services requires payments just like any business, Bitcoin brings highly desirable features for artists and art dealers to expand their reach globally without the associated transaction costs and potential risks.

For artists and other small businesses,  the cost savings is an attractive feature of accepting Bitcoin. Bitcoin also has another unique feature that has the potential to protect artists and art dealers selling art. Mainly that a Bitcoin payment is one-way and irrevocable and not subject to third party mediation.

While this may sound crazy, in fact it favors the party with the asset at risk, the one who is selling art. There are many viable systems that can minimize counterparty risk such as escrow services to balance risk for buyers if necessary. However, reputable dealers and merchants can enjoy receiving payment without the dreaded and costly chargebacks or disputes common with international commerce and sometimes with domestic payments depending on your customer or transaction type.

What Should Artists and Galleries Do Now?

There are many remarkable aspects to Bitcoin as a payment system, but there is a great deal more coming to the Bitcoin universe. In the short term, accepting Bitcoin will expand with whom you can do business globally while reducing risk and cost. Long term, Bitcoin will enable your business to do even more with your art.

So in the meantime, get educated, understand how your business could benefit but keep in mind that all truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. With that in mind, put Bitcoin at the top of your business strategies list for 2014.

Gary T. Kerr is president of Fine Art Impressions, an advance art-imaging studio located in Palm Springs, California. For disclosure, he accepts Bitcoin at his company, owns Bitcoin for speculation, mines Bitcoin as a business, and runs a local Bitcoin MeetUp to educate entrepreneurs.

 

(Editor’s note: I can foresee a huge worldwide impact from the Bitcoin revolution, and believe it can succeed. That said, there are legitimate concerns that need to be addressed before Bitcoin can meet its potential. This analysis from Karen Webster “What Andreessen Missed About Bitcoin“ voices those concerns. It cannot succeed without being able to answer its critics, which I am hopeful it can do.)

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About Barney Davey

I am an art marketing author, consultant, blogger and podcaster. I enjoy helping others understand and reach their potential. Follow me on twitter.com/barneydavey.com and check out my art marketing e-store at barneydavey.com/products

Comments

  1. Fantastic article, Gary – and so timely. I had a conversation about Bitcoin recently with a smart, successful, forward-thinking artist who understands the value and is very excited about the potential. More entrepreneurs should know about this.

    • W. D. Smith says:

      I’m seriously thinking of trying it, I just don’t know how to go about it. I am wondering if Fine Art America participates in Bitcoin?

  2. W. D. Smith says:

    Gary, this is indeed fascinating. I have heard of Bitcoin, but can you walk us through how to get started using it?

  3. W. D. Smith says:

    Cool…I just set up a Bitcoin wallet. Looks easy so far. Now, I am wondering how to get started selling my work using this currency, and how to actually convert it into dollars when I sell something….

    • Your best place to start is at coinbase.com where you can set up an account to have Bitcoin transactions land in your wallet or set it up to convert to dollars and sweep to a linked account at your bank.

  4. I’ve been around for over 7 decades, & a serious student of American Gov’t, politics, & the Corporatocracy for decades. The probability is extremely high that the Powers-That-Be in the Oligarchy will NEVER allow Bitcoin, or anything similar, to exist for any significant amount of time. I assure you, Oligarchs are strategizing as we speak on how to destroy the entire concept. An alternative to Banksters…are you serious? Believe me, it will never be allowed…though it definitely should be. You see, it’s simply too egalitarian to be allowed by the Oligarchy. Sad, but true.

    • Mr. Haley, I acknowledge your observations as a possibility. But the architects of the email protocol SMTP, did not worry about the USPS shutting it down. When people take the time to figure out that the decentralized public asset ledger known as the blockchain, is not subject to manipulation, it will become more trustworthy than banks or government. I know it sounds revolutionary because it is. Decentralized, peer-to-peer can only be stopped by taking down the entire internet, no army powerful enough exists to do that. These are interesting times and I encourage you to read Satoshi Nakamoto’s outstanding white paper on the invention of Bitcoin as it is in the pantheon of the discovery of electricity, fossil fuels, and the internet itself.

      • W. D. Smith says:

        Gary, I have set up a Bitcoin wallet, but now I hear one needs to purchase some sort of server to be able to use it? If so, where can this be obtained from a trustworthy source without getting ripped off?

        • No server necessary! If you have set up your wallet at coinbase.com, they will handle the transaction functions for you. Be sure to have made the right choice between just having a wallet to accept and keep Bitcoin, versus having your Bitcoin as an instant payout and convert to dollars in your bank account. Both options are available at coinbase.com. See their “How do I register as a merchant?” under support to have an automatic conversion to dollar set up.

          • W. D. Smith says:

            Cool! I’m very interested in doing this, most definitely as a merchant! I hope Fine Art America accepts the use of Bitcoin.

  5. Great article Barney, we have changed our shopping cart to accept bitcoins just recently and not sure if you know but Etsy is also promoting Bitcoins for their sellers too.
    Shawna

  6. Mr. Kerr, I wish everyone associated with Bitcoin (BC) the very best of luck. No one has to sell me on the value of the concept; however, be aware that you’re in for the fight of your life. I 1st became aware of BC because of the anti-BC, Edward Bernays style propaganda already being put out by the Oligarchs. There’s about a 99% probability that said propaganda will grow, & grow, & grow. As you know, one does not have to take down the entire internet to destroy something on the net. BC is the only complementary currency I’ve seen that has any decent chance of impacting the negative aspects of mega banking. While it’s not being promoted as REPLACING banking, it nonetheless has the capability to do that…and that’s why the Corporatocracy will oppose it with an unparalleled ferocity. That, and the fact that it’s not fiat money in the traditional sense. Right now, BC is not big enough to warrant the full attention of the Upper Crust, the One Percenters. But that time is not far off; then, it’s Game On. My hope is that BC has some sort of organization which is now preparing/launching an effective defense…and counterattack. Hint: you’ll need some attys in the vein of William Kuntsler or Gerry Spence. Best of Luck…really.
    http://individualsovereignty.blogspot.com
    p.s. BC already is more trustworthy than banks or government; but you’ll need more than that.

  7. Wow, this is a bit mind boggling, I hadn’t heard of it until reading this article. Thanks Barney.

  8. Here’s “Why Bitcoin Is BAD for the Art World”
    Better stick to real forms of payments. This will go down in history as one of the Biggest Scams the World has ever Seen…… :(

    http://finance.yahoo.com/news/bitcoin-just-completely-crashed-major-105751675.html

  9. Lou Ann Ephraim says:

    Hi Gary,

    Thank you for the article in spite of the uncertainty lurking round this topic. I’m a newbie at the Bit coin World in general but have been doing lots of research on it. One of the ways to gain access to Bit Coins from scratch is through mining. The other is through trading and I am no expert in that field. I was wondering, how did you go about with yours at the beginning stages and what were your hiccups? Have you heard the legitimacy of ButterflyLab? I’m weighing in the pros and the cons as someone who is not a techie expert and only an artist, yet would want lucrative bit coins. So far it looks like I’d need a lot of $$$ to buy enough equipment to set it up. If that is the case, what about cloud-hashing-mining? Have you heard of that term?

    Looking forward to your reply.

    • Hi Lou Ann, I would love to guide you through the process, but this is not the forum to do so. I suggest finding a local Bitcoin MeetUp to get excellent advise and guidance on mining and investing. Simply visit MeetUp.com and find a local group. Thanks for your insightful inquiry!

    • Lee, it is obvious from your comments that you did not read Satoshi Nakamoto’s remarkable white paper on the subject at hand, therefore your comments fall into the speculative conjecture category. The most significant prognosticators of the internet by which you are communicating here, has put the invention of Bitcoin in the pantheon of the internet itself. If you do not respect Bitcoin as a currency, that’s your own prerogative, but to not respect Bitcoin the protocol, is just buffoonery. Many of your ilk tried to write off the internet as a fad back in the ’90s, I encourage you to further educate yourself;
      http://siliconangle.com/blog/2014/02/11/bitcoin-is-the-biggest-land-grab-since-the-internet/?

  10. Another Clue for YOU……… Obviously I didn’t waste my time with that Buffoonery Article, because 30 years of Conservative Investing has taught me if it Sounds to Good to be True, 99.99% of the time…… IT IS to Good to be TRUE…… Everybody, take CASH or Credit Cards or Pay Pal and leave the Speculation up to the Speculators and NOT the Artist :)

    http://news.yahoo.com/bitcoin-exchange-mt-gox-39-website-down-053727771–sector.html

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