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Bid Against The Winklevoss Twins In This Crypto Art Auction

Online auctioneer Paddle8 is gearing up to attract crypto enthusiasts with money-themed art and collectibles.

Bid Against The Winklevoss Twins In This Crypto Art Auction
[Illustrations: Bitter/iStock; irontrybex/iStock; Flickr user Antana]

Bitcoin has minted many a millionaire, but what to do with all that digital cash? Online auction house Paddle8 has a suggestion, endorsed by none other than bitcoin billionaires Cameron and Tyler Winklevoss: Buy some art.

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This August, Paddle8 will host “Bidcoin,” an online auction dedicated to money-themed fine art and collectibles (think works similar to Andy Warhol’s Dollar Sign series). Successful bidders will be able to use bitcoin and other major cryptocurrencies to pay for their purchases.

The Winklevoss twins, who became Paddle8 strategic advisors in 2015, have been encouraging the New York-based startup to embrace the crypto community. But for most of last year, Paddle8 was preoccupied with other matters. It had merged with its European counterpart, Auctionata, in late 2016, only to see Auctionata file for bankruptcy just months later. Eventually, Paddle8’s founders were able to extricate the company from the mess and regain control. “It was very tough,” says cofounder Alexander Gilkes. He says he spent last year focusing on “getting back to basics.”

Now Gilkes and his team are preparing for a new chapter, with a new partner. Paddle8 announced today that it is joining forces with Swiss e-commerce specialist The Native, which has agreed to buy a 15% stake in Paddle8 for around $8.8 million. Together, the two companies will create Paddle8 Lab, a blockchain-focused business unit. The lab will be responsible for the technology behind Bidcoin’s crypto payments, and will also develop a blockchain-based service for tracking art and collectible ownership.

“There is such opacity within the art market,” Gilkes says. “There’s also an abundance of fraud and misrepresented goods, which leads to mistrust between buyers and sellers.” Historically, the strength of an auction house’s brand helped to solve the issues of fraud and provenance. But a blockchain solution, in theory, could solve those same issues while delivering even greater transparency.

Gilkes also believes that blockchain-based technologies have the potential to make auction operations more efficient. “Today, authentication is very manual,” he says. Paddle8’s blockchain service could free specialists, at Paddle8 and at partner galleries, to dedicate their time to curation, rather than authentication.

Despite that promise, Paddle8’s shift to crypto raises a number of questions. In recent months, a host of struggling companies have tried to capitalize on the current crypto bonanza. Camera company Kodak, for example, launched an initial coin offering, which sent its stock soaring 44%. A beverage company selling iced tea rechristened itself Long Blockchain Corp. Meanwhile, the Securities and Exchange Commission has been issuing crypto warnings as cases of fraud continue to mount.

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Art auctions are already fertile ground for money laundering. How much more so when bitcoin is involved?

But Paddle8 and The Native remain undeterred. “There is clearly a lot of abuse going on,” says Sergey Skaterschikov, chairman of The Native. “But we really are not exposed to these risks. We know who our clients are, we have the right risk management mechanics.”

Bidcoin will take place on August 18, bitcoin’s 10th anniversary.

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About the author

Staff writer Ainsley (O'Connell) Harris covers the business of technology with a focus on financial services and education. Follow her on Twitter at @ainsleyoc.

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