Bitcoin Adoption in the Luxury Market is Growing at a Rapid Pace
Bitcoin Adoption in the Luxury Market is Growing at a Rapid Pace
According to Dr. Garrick Hileman, an economic historian at the University of Cambridge and the London School of Economics, the popularity of Bitcoin in the luxury market as a payment method is increasing at a rapid rate, due to the inefficiencies and high fees of traditional banking systems.
The vast majority of items in the luxury market that include paintings, antiques, and rare collections are priced at tens of thousands of dollars in minimum. Last week, the art industry observed the $450 million sale of an original Da Vinci painting and most of the works presented by Christie’s were priced in the range of $1 million to $100 million.
Traditional banking systems and financial networks charge transaction fees based on the amount of the transaction. For instance, a wire payment of over $100,000 could cost the sender nearly $4,000 in transaction fees, which is impractical and inefficient, especially if the sender settles a large number of payments on a regular basis.
In contrast, Bitcoin transaction fees are dependent on the size of the transactions, not the amount. Hence, a transaction which costs over a million dollars can be settled with a $1 to $2 fee, which is substantially smaller than a bank settlement fee that could rise up to the tens of thousands of dollars.
Hileman said in an interview with CNN:
"Many economists dismissed it as a flawed form of money, something that could never achieve the level of adoption that it has. Today we estimate 5 to 10 million unique active users of Cryptocurrencies, and in my opinion that's nothing short of a minor economic miracle. If you're only paying a $2 transaction fee on a piece of art that's worth tens of thousands, the fee is basically zero. But if you're paying 2 or 3% on a piece of art of that value, then the numbers can go up quite a bit.”
The adoption of Bitcoin as a payment method has also been evident in the real estate market in the UK and the US, with several large-scale realtors and real estate companies only willing to accept Bitcoin as the sole payment method.
In September, a realtor in Dubai announced the sale of an apartment complex worth over $220 million in Bitcoin, given its low fees and its ability to eliminate intermediaries from the process of settling large payments.
Businessman Doug Barrowman stated:
"I’ve been invested in Cryptocurrency for some time, it's not a new thing.We’re offering the opportunity for people who’ve made significant gains to invest it in land. The Dubai development is the pinnacle of design, architecture and commerciality. That said, I didn’t feel this was enough. I wanted to offer the property, tech and blockchain community a unique and exclusive opportunity by merging the property and tech sectors together in a true first for the industry."