1. A Delaware company called Freeport is using blockchain technology to fractionalize ownership of art, making it more accessible to individual investors. The company is minting shares in four Warhol prints as fungible tokens on the Ethereum chain, with prices representing 10% markups on previous sales and additional fees for investors.
2. While fractional ownership promises to democratize access to art, the high fees associated with small investments eat into potential returns. Investors are paying a 10% procurement fee, 1.5% annual management fee, and a 10% sales fee, meaning that investing $1000 may represent less than $800 in artwork.
3. Investment advisors caution that while top tier art has proven to be a market-beater, broader measures such as the Artprice Global Art Index have not performed as well. Fractional investing provides diversification for individuals but accounts for less than 1% of global art sales in 2022.
The article discusses the use of blockchain technology to fractionalize ownership of art, making it more accessible to individual investors. However, the article fails to provide a balanced view of the potential risks and downsides of this approach. The fees associated with investing in fractionalized art are high and can eat into potential returns, which is not adequately highlighted in the article. Additionally, while the ArtPrice 100 blue-chip index has outperformed the Dow Jones industrial average, a broader measure like the Artprice Global Art Index shows that investment in art is not always profitable.
The article also lacks critical analysis of the claims made by proponents of fractionalized art ownership. While it may democratize access to art for investors who cannot afford to buy an entire artwork, it does not necessarily mean that they will make a profit from their investment. Moreover, there is no evidence presented to support the claim that investing in top-tier art is a market-beater.
Furthermore, the article seems to be biased towards promoting fractionalized art ownership as a viable investment option without exploring its potential drawbacks thoroughly. It fails to consider factors such as market volatility and liquidity risk associated with investing in illiquid assets like art.
Overall, while fractionalized ownership of art may have some benefits for individual investors, it is essential to present a balanced view of its potential risks and downsides before promoting it as a viable investment option.