‘As long as life is ascending, happiness and instinct are one.’ –Nietzsche
If we — art dealers, collectors, writers and experts — all agree a particular work has value, it surely does, irrespective of its cost of production, utility and purpose.
In that sense a lot of the art market fuses the core characteristics of both Bitcoin and the gold market.
Though, of course, art, unlike Bitcoin and gold, is not scarce. Certain works of established artists, especially those who are no longer living, are scarce. Only forgeries can threaten supply in that case. But overall there are no barriers of entry. New assets can always be produced.
Consequently, regulating supply is down to the tight and clubby world of the art dealer and auctioneer network.
Art, then, is very similar to venture capital, insofar as who you know matters — and also insofar as both markets go to great lengths to hide natural valuation fluctuations. “Down rounds” are if anything even more harmful to an artist than they are to a startup: galleries will, as a rule, drop an artist before selling her art for less than she was charging at her previous show. The reason is entirely to protect the gallery’s own credibility: the gallery wants collectors to see it as a place where they can buy art which is going to rise in value, and as a result it will do everything in its power to make it look as though the work of all of its artists is only ever going up in price rather than down.
