The founders of a new online auction house see cementing financial trends of cryptocurrency and nonfungible tokens, or NFTs, as having a big place in the future of luxury consumption.
With the launch of Duchamps.io, cofounders Julien Lafon, 24, and Will Holley, 27, are looking to bring a new level of service and ease when buying large-ticket items and collectibles via cryptocurrency, like Bitcoin or Ethereum. The platform’s first lot, going up this weekend, is a rare boxed and never opened Pokémon deck from 1999, expected to fetch at least $50,000.
Although the purchases on Duchamps, transacted with blockchain-backed Ethereum, will result in a buyer actually owning a physical item (unlike the recent $69 million Christie’s sale of a digital-only Beeple artwork), the site’s issuance of an NFT in addition to the physical item gives any buyer new leeway in what they do with the item after they make a purchase. The auction platform is launching in partnership with OpenSea.io, an NFT marketplace.
While still volatile, the entire cryptocurrency market was valued in February at more than $1 trillion and NFTs mainly serve as a way to ensure ownership of a digital good purchased through the currency. An NFT is not interchangeable and is backed by blockchain, essentially a digital history record.
“We see this as the first step in building out a system where people can easily buy and sell goods online [with cryptocurrency],” Lafon said. “With this, they can resell the NFT or they can show it off in an online portfolio. That’s one of the big things we’re seeing in these cultural communities — in some the physical good carries weight, in others it’s just the NFT.”
After the Pokémon sale, Lafon and Holley will hold a Rolex auction and then likely get into contemporary art. They want the process to be “frictionless and safe” and something that buyers who are not well-versed in the technology behind crypto and NFTs can participate in and enjoy. While the demographics of crypto users is predominantly young and male, Lafon and Holley see putting up lots like art and luxury consumer goods as one way to get more women and more age demographics in on the boom.
But why bother with cryptocurrency at all when shopping for pricy items or collectibles? Lafon and Holley cite speed and ease of use as the appeal for the luxury consumer who wants to spend millions on an artwork or even a house.
“You can send $10 million worth of Bitcoin for a big purchase and it’s instantaneous,” Lafon said. “You don’t have to go through a clearing house or verification services.”
Beyond that, Holley noted the overall trend of “people starting to put a price tag on pop culture items” like tweets and digital art, making crypto “the best way to do something like that.”
Operating an auction house that transacts only in cryptocurrency will also create a pathway for a potential new luxury or big-ticket consumer: the crypto “whale” who is sitting on massive amounts of digital wealth. One such Whale, known only by the handle Metakovan, is who spent $69 million this month on the Beeple, an artist with the given name Mike Winkelmann.
“It’s a very insular world, the whales,” said Holley, who previously worked analyzing hammer prices for the likes of Christie’s and Sotheby’s. “They sat on their currency for so long, while everyone else started to take notice, but there are only so many things you can buy with it. So this is one thing we’re offering with the platform, an off-ramp for those people to transition some of their wealth.”
Duchamps is operating similar to a traditional auction house in that it’s offering “white glove” service to buyers. The platform authenticates goods and will manage a buyer’s portfolio if they wish. It’s also offering a new level of security, as NFTs are a new target of hacking and online theft.
“It’s been a pretty big problem because a lot of this is so technical,” Lafon said.
But as Duchamps is trading in physical goods, that gives buyers an added level of security, too.
“With a traditional NFT, the value is derived from the NFT itself,” Holley said. “With us, the value is derived from the product — even if a buyer stores the NFT title to the asset, the buyer has the physical good, or we do if we’re managing it for them.”