Since their recent creation cryptocurrencies have been hailed as the future of banking, trading and the economy. The recent acknowledgement of cryptocurrencies as legal tender in a number of countries and on trading floors only served to strengthen the argument for the future of cryptocurrencies.
The validation of these online currencies quickly resulted in their absorption into the art market, with companies such as Maecenas developing and releasing their own cryptocurrency ART through an Initial Coin Offering (ICO).
The ART launch began with an ICO in the autumn of 2017, when Maecenas raised more than US$15.5 million. The amount was a dramatic increase on the Company’s initial crowdfunding campaign, which failed to raise US$400,000 in funds through Seedrs only four months prior.
Fast forward to January 2018 when the capital value of ART was US$65 million and Bitcoin could be purchased for US$10,166.51. Comparatively, today (17 September 2018) ART is currently quoted at US$0.03 for a total market value of US$1.5 million, compared to a high of US$2.23 on 11 January 2018. This downward trend accompanied a global drop in cryptocurrency value, with Bitcoin being valued at US$7,013.97 as of August 2018 (source).
In June 2018 the ArtMarketGuru team released the first industry report on Maecenas in which we called into question the need for Maecenas to issue a cryptocurrency. We also analysed the top three market risks related to the use of cryptocurrencies in their business model: the speculative nature of cryptocurrencies in general, currency market fluctuations and the volatility of the art markets. The recent fall of ART seems to prove our earlier predictions to be correct.
In July 2018, at Christie’s Art+Tech Summit, Frédéric de Senarclens introduced the topic Speculation and Previous Initiatives Issuing Shares in Art and raised concerns about the business models of start-ups active in the field of tokenizing works of art.
However, questions are being raised about the considerable drop in the price of the ART token and the future of cryptocurrencies, many are questioning the regulation of these currencies, including ART; as well as a seeming lack of infrastructure supporting the ART token.
Many are closely following on a daily basis the two Maecenas Telegram channels including ArtMarketGuru. We have noticed an increasing nervousness and anxiety from Crypto investors who have recently suffered dramatic losses. A number of investors are fearful they may lose the majority of their investments, others wonder if Maecenas have the capability to turn the situation around?
As mentioned earlier, in our Industry Note on Maecenas, we explored the need for Maecenas to issue a cryptocurrency at all. As far as we understand the ICO was a way to fund the business outside national regulatory restrictions that ensure transparency and accountability.
Our conclusion stated “While Maecenas offers an exciting and potentially disruptive approach to investing in ﬁne art works, it will take several more rounds of funding to move the project from proof of concept to viability, and viability to proﬁtability.” Which is a common topic amongst the users posting on the Company’s two Telegram accounts, who although fully support the theory behind the token are questioning the implementation and application of ART.
After the first “successful” action and tokenization of an art asset, the need for ART cryptocurrency is not clear at all. A query highlighted by the damaging dichotomy that has occurred as the value of ART and all cryptocurrencies have fallen, and yet Maecenas’s have an on-going positive support of tokenization. When working in emerging and relatively new industries it is important to be realistic to the fluctuations of the markets and instability that can arise with emerging products.
At the time of the 2017 ICO, in facilitating the funding, company Cofound.it were according to Marcelo Garcia Casil allocated 4% of the ART Token. Cofound.it have since ceased operating and the Company are going through a voluntary winding down (source). All assets owned by Cofound.it will be sold and we ask how much ART do Cofound.it still own, and whether or not their percentage share will affect the ART token price?
As the Cryptocurrency markets remain volatile and continue to decrease, we wonder how Maecenas will fair? What we do know from our industry note is that Maecenas has produced a disruptive and forward-thinking business plan that taps into a growing and emerging market, they are, however, not at a stage where they can ensure shareholder value and a stable product available on public markets. We will continue to watch Maecenas and their progress during what is proving to be a pivotal moment in their history, contrasting their current news against previous industry note predictions.