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Art investments and how they have changed - YouTube
Channel: Slidebean
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get this it's february 23rd 2022
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sotheby's this huge auction house is
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getting ready for a 30 million dollar
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auction and this is a lot of money but
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it's actually a tiny amount for
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sotheby's in one event they've sold up
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to a billion dollars eight million five
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hundred thousand pounds 119 million nine
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hundred thousand dollars for 97 million
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so this 30 million dollar action is just
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nothing should be an easy sale right
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well not quite because 25 minutes after
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the event started nothing happened and
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then an employee took the microphone and
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said well the auction is off it's gone
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it's canceled fans and connoisseurs and
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millionaires all of them were gasping in
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shock and potential buyers wanted
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answers but sotheby's pr was blunt and
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silent and the rest of the world had a
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field day speculating on what happened
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why would they back out at the last
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minute well it's because the auction
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house is dying as we know it let's talk
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about it in this episode of company
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forensics
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i mean auctions are kind of cool right
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like they're elegant and exclusive and
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they hold these like really expensive
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art pieces and they're visceral it's
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humanity's desire for possessions and
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luxury and greed at its best or worse
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and also that's like very primitive
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competition for like who is able to bid
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more auctioning is an art form that has
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existed for millennia really and in fact
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the earliest records show that in 500 bc
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in babylon people had auctions granted
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this was for buy and selling people but
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the essence is the same now the romans
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and ancient greeks loved auctions it
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helped them sell the bounties that they
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had after a successful war and this way
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they cleaned the mess they sold valuable
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stuff to others and of course made money
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and in history we humanity we've
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auctioned everything from castles to
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entire regions now the internet and
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beanie babies have taken over but one
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thing remains the same our drive this
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primitive drive as humans to buy and
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sell auction houses move big money in
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2018 christie's reported over seven
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billion dollars in revenue sotheby's
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reported one billion dollars and
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auctions are still vital for defining
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the international prices that we pay for
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a lot of things think fish in tsukiji
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market in tokyo in this case in art they
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very much define the value of art plus
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people trust auctions potential buyers
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get to analyze the items beforehand and
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then judge the conditions and in a way
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it's to see like what the market is
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thinking about this product now the
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auction house has the job of setting the
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buy increments and then the minimum
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asking price and that's i mean you could
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say that it's even transparent plus even
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in recession times auctions still work
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after the 2008 recession both sotheby's
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and christie's showed impressive sales
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despite what was going on outside so of
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course in the art world even more
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auctions are completely essential but
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nothing could have prepared auction
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houses for what was to come now if you
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imagine an auction this is what you
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think it's a crowd and there's of course
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this guy with a little 30.
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by the way that's a bit of a myth or i
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mean they exist but not in the art world
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most art auctioneers speak at a very
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normal low pace so that international
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buyers can understand 12 million
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dolichimilion
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12 million but you can imagine the crowd
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people raise paddles to bet more and
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more on art or houses or cars or cattle
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and this has been the equation that
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survived for centuries and that
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eventually companies like ebay brought
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online it was an old model that somehow
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lingered and then all of the sudden it
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just couldn't so yeah in history we've
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had buyers over the phone but they still
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needed that someone to physically check
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the art piece it was an essential part
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of auctioning inspectors could make or
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break the price of this painting so when
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we just couldn't see each other in
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person how would the auction survive
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well the pandemic actually helped them
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because you see for decades major
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auction houses knew that they needed to
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migrate somehow into the digital world
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but it wasn't until the pandemic that
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they had to just like a lot of
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industries that you had to convert
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during the pandemic so an auctioneer now
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took center stage in front of screens
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instead of buyers and zoom calls were
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somehow ideal for this now people from
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far away regions could just take part
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and this scenario not only shows the
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adaptability of the art market but its
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resilience i mean look at it there
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weren't many markets that continued
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producing returns as usual during the
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start of the pandemic but art could not
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be stopped in fact for the first six
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months of the pandemic i delivered
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returns that beat hedge funds
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commodities real estate and private
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equity and we're seeing that resilience
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in action again because financial
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markets across the world are struggling
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and this resistance goes beyond the
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correlation and the volatility as
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contemporary art also makes for a great
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inflation hedge in fact it's shown
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stronger price appreciation than gold
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and that the smp at times when inflation
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is above three percent so if you're
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sitting on a hundred thousand dollars
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and you don't want that eaten away by
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inflation you can look into our sponsor
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for today and you can do what thousands
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have already done and reach out to a
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platform that they trust for are
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invested which is masterworks they
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enable investors to invest in fractional
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shares of blue chip contemporary art
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from legends like picasso and banksy
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masterworks has developed this
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data-driven strategy and these valuation
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methods to find artwork with the
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greatest potential appreciation and then
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once a painting that you've invested in
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is sold by masterworks you get a
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potential return just as simple as that
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since launching three paintings
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masterworks sold each returned a net
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annualized gain of thirty percent to
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their investors for example this means
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that an investor putting forty five
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thousand dollars would take home sixty
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thousand dollars which is not bad for a
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climate where everybody else is raising
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for a recession and sometimes you don't
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assume that these ideas aren't that big
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but they are already a unicorn just like
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spacex and uber before them with over
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450 000 members demand is high so
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there's a wait list but our partnership
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with masterworks means that our viewers
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can actually get priority access to skip
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their wit list you just have to go on
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that link in the description but what
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they're doing was kind of a given
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technology was here to change the art of
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the auction and wow did it change
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growing markets like asia and africa now
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had the chance to sell and buy art in
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the us or in europe at the same time
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sotheby's and christie's tapped on this
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potential for these hybrids type of
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auctions people were now interested not
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only in art but in other things the
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lockdown drove up the value of more
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things to enjoy at home so you have
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things like designer furniture and cars
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and all of these things now find
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themselves at the same auctions as
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paintings and sculptures because you
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don't have to fit them through the door
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it's this old model and new model both
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together at the pandemics peak it seemed
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that auctions had no salvation but then
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an economic frenzy in 2021 helped just
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fuel this crazy demand in fact the big
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three broke records plus there was
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something else that would further change
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the world of auctions now there's
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something i haven't told you about this
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whole sotheby's thing where they cancel
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this auction now they were going to sell
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an art collection yes but it wasn't any
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art collection they were trying to sell
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104 nfts and yes this is not the first
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time that auction houses sell fads
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sotheby's sold celebrity teddy bears and
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even pokemon cards christie's isn't far
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behind but this time it was totally
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different this was this major auction
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house selling enough nfts to help set a
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standard in the market people longed to
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see how much they would go for in this
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context of an auction and many estimated
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that it would be about 30 million
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dollars instead it was an embarrassment
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and this is the guy who had assigned the
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nfts to the auction house for sale now
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he called it off after a huge discussion
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between the auction house and ox 650d he
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actually took that to twitter and this
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just guy decided to
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hold total
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holder huddle stands for hold on for
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dear life in the crypto world um anyway
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the the reasons here can be endless
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perhaps the guy didn't feel the price
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was right or maybe the auction house
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wouldn't come up with the minimum and
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yes he can actually do that it's not
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illegal but the consequences
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reputation-wise are terrible people
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immediately jumped this event was a
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significant milestone for both the nft
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world and auction houses alike 2021 was
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an essential years for nfts in the
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mainstream market in march actually
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christie's started it all when they sold
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this digital collage for 69 million
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dollars and it marked in many ways the
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so-called beginning of a new era
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sotheby's wasn't far behind in april
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they participated in their own auction
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by selling 17 million dollars worth of
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nfts from an artist named pak so auction
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houses were willing to dive deep into
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this new world in fact by the end of
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2021 the big auction houses were
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littered with people wanting to sell nft
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sotheby's even launched an nft platform
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for auctions in the maitverse and
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they've of course started taking bitcoin
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and ethereum as payment so this was a
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crucial moment that could consolidate
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the nft market and then prove that it
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wasn't a fad and it didn't and that's
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because nfts by all means are a whole
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different beast now think about it when
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a seller places a product in an auction
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house potential buyers can analyze every
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nook and every cranny they know the
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history and they can analyze the good
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and the bad about the product and that
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same story doesn't apply to nfts first
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of all almost nobody understands what
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the hell they are sodovy's bp of digital
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art once said that buyers didn't even
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know what they should do any with an nfc
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after they buy it and that of course
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connects to how much they're worth i
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mean art does work around speculation
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but it's about art in the end it does
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exist and yes of course it's subjective
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and yes of course people use it to round
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off taxes but check out this chart of
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arts pricing through the last 10 years
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and then check nft pricing in last year
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in fact many rumors that sotheby's
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pulled out because of the dropping value
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of ethereum and that would make sense so
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when this auction failed it derailed
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reputation for nfts the oxygen community
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came off as amateurish and speculative
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and it was embarrassing for both sides
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now did this mean the end of nfts in
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auction houses absolutely not it's the
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total opposite it's only the beginning
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nfts might work in a way that we don't
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know right now we have a whole video
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about what i really think about nfts
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which you should go watch anyway we're
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doing digital that's for sure but
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auction houses won't ever sell only nfts
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not even close art is still the
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obsession of many and many people with
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money in fact two months just two months
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after this fiasco in may 2022 sotheby's
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broke records by selling the maclo
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collection for a billion dollars
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christie's and phillips were not far
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behind the spring auction season of 2022
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totaled 2.5 billion
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now what is this showing it shows that
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auction houses can survive and it wasn't
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the first time that they had faced the
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challenge so while some people are
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paying
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big bucks for an nft that they don't
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really understand the potential lies
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elsewhere from a security standpoint
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nfts are absolutely here to stay they're
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a way for artists to collect royalties
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out of every transaction i think that's
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one of their best features actually art
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can also have more security by allowing
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public authentication through the
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blockchain and in that coexistence lies
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the beauty and the potential of this
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auction houses will use nfts to lure
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those into the crypto world and drive
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them towards fine art wines and
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furniture and cars i mean you can talk
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whatever you want about the houses but
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this is what people are buying and it is
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a hybrid within a hybrid and yes i am
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very sure that auction houses will
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survive they are going to continue to
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dictate the prices whether it's here in
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the real world or in the maitverse
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[Music]
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bye
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