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Whilst the global news is focused on the economic doom & gloom, the crypto crash and the energy crisis - a new record for the 1930s artist Piet Mondrian has been set.
Composition No. II was sold to an anonymous collector in Asia for $51 million at a recent Sotheby’s Auction. Breaking the record for the most valuable work by Mondrian to sell at auction, the final sale price was more than 20 times the previous record of $2.1 million from the last time it appeared at auction almost 40 years ago.
As an asset recovery practitioner and an ex-auctioneer myself, I’m fascinated by the psychology behind large purchases, from investments to passion projects, and the endless debates that rage on about valuations.
Research shows that people are more willing to spend money on things they perceive to be more valuable, even if the item is of lower quality. One study by The California Institute of Technology (Caltech) and Stanford University used MRI scans to show that people found more enjoyment in drinking wine when they were told that it came from a more expensive bottle.
I’m going to wildly generalise and say that if I ran a poll and asked if people thought that Composition No. II was “worth” $50m, many would say that’s absurd but what’s not up for debate is it’s performance as an asset. If you are buying this painting as a speculative asset then all the data points towards the fact that it will be worth far more in 5, 10, or even 15 years.
And for every $50m Mondrian, there are millions of abstract paintings around the world that would be considered worthless in a market sense.
This is precisely my own take and opinion on digital art and NFTs.
Whether it’s a Bored Ape or Cyber Punk it’s not the imagery itself that is valuable, it’s the concept, the speculation, and its place in history. It’s the hope that in 5,10,15 years time, that collection of pixels will be worth much more than the buyer paid for it (in most cases - see my passion project comment above!).
Despite this, when I’m at conferences and training events, many people still ask me, perplexed, about the value of NFTs - “why would someone pay that?”
When I’m asked why someone would invest in digital art or NFTs, I can always rely on modern art to help explain; as it’s just as baffling to many people yet has been around for decades.
“Something is only worth what someone is willing to pay for it”. Save yourself the stress and don’t get caught up in “why?”.
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