What are NFTs and how do they compare to physical art as a form of investment? In 2020, investing in NFTs was a hot topic that has been on everyone's minds. However, by 2022, the NFT market saw a decline with the crash of TerraUSD in May and the bankruptcy of FTX in November, while the physical art market flourished.
At Mintus, we believe in the technology behind NFTs and see their potential for the future. However, we're cautious about their current business models and usage, which may change with time.
While there are similarities between digital and physical art, they differ in one unignorable way: NFTs' short and volatile track record is the polar opposite of the long and successful performance of investing in physical art. NFTs' rapid hype-to-crash trajectory, along with scandals and economic headwinds, caused a decline in the NFT market. In contrast, physical art has held up through times of war, high inflation, and slowing growth, as proven by years of data.
While NFT investments may have gained popularity due to social media hype and celebrity endorsements, their short and turbulent history has not proven to be a solid investment strategy.
The NFT market experienced significant setbacks in 2022, with two major scandals further eroding confidence in the digital currency. The collapse of the so-called "stablecoin" TerraUSD1 in May and the bankruptcy of the third-biggest crypto exchange FTX2 in November caused bitcoin to nearly halve in price from the beginning of the year, with ether also dropping significantly.
In addition, the NFT market has seen a sharp decline in activity, with dedicated marketplace OpenSea laying off 20% of its staff in July3. Today, there are only about a third as many NFT investors as there were at the peak in January 2022, and the tokens themselves are being minted around 60% less often4.
In contrast, physical art investment has a long track record of success, with data showing its ability to withstand times of economic uncertainty. The Sotheby's Mei Moses Index indicates that fine art has increased in value by an average of 8.5% annually since 19505.
In fact, early data suggests that 2022 was a strong year for art investing, with auction sales of Old Masters, Impressionist, Modern, Post-War and Contemporary Art at Sotheby's, Christie's, and Phillips reaching $7.5 billion, up approximately 15% from the previous year and a new record.
Despite a strong performance in 2022, the art market may not continue at the same pace in the coming year. Digital collectibles with fan bases may still find success in building out entertainment franchises. Additionally, Ethereum's recent move towards a greener staking alternative could drive usage of the platform up and give NFTs a second chance.
In the words of Tamer Ozmen, Mintus CEO, “Even if the NFT market does make an unlikely resurgence, let’s face it: the days of choosing a Bored Ape over an Andy Warhol are probably long gone. Investors must remember that any ebbs and flows in the art market are features, not bugs, in the lifecycle of any long-term investment. The performance of all traditional asset classes in 2022 reflects that. Whilst the art market may have had a record-breaking year in 2022, the biggest takeaway was that high-quality, fresh-to-market artworks will fetch premium prices, no matter the wider economic climate.”
The difference this time around is that with Mintus, you get to buy in and set yourself up for the potential to profit.
We welcome any owner who wants to unlock liquidity from their collections to contact our Fine Art Team. This includes individual investors, galleries, institutions, and artists. Please reach out if you're interested in listing your artwork on the Mintus platform.
All artwork offered by Mintus is stored in climate-controlled, specialist art storage facilities, under a Mintus account. Current paintings are held in a facility in Delaware.
Artwork is acquired through our unique relationships with the world’s most renowned collectors and galleries. Our Fine Art Team marries their own expertise with insights from fellow industry experts to identify one-of-a-kind investment opportunities from established artists with high-growth potential. Our team examines metrics such as the artist’s market track record, recent price velocity and momentum, and the size of their international collector base when making investment decisions.
If you need support you can send an email to [email protected] or schedule a call using the links on each page of our website. If you need to make a complaint you can write to [email protected]. A description of our complaints policy is set out in the Investment Terms & Conditions for each investment.
Mintus Trading Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom under firm reference number 942522. For more details on our regulatory permissions please see the Financial Services Register.
For more information on risks, see the Memorandum for the relevant artwork and the important disclosures.
Mintus does not sell NFTs. NFTs are digital assets. Mintus enables qualifying investors to participate in the art market by purchasing interests in high value, physical artworks. Mintus’ platform facilitates investment in real, iconic artworks created by established artists.
Mintus will introduce a Secondary Market for investors in permitted locations, which will facilitate selling of shares to buyers, dependant on demand.
According to the regulations, certain investments can only be made available to investors who fall within these categories and Mintus must also follow appropriateness requirements when registering investors.
Fees are dependent on the specific artwork and the specific structure of the investment opportunity. Fees are clearly shown in advance for each artwork / investment opportunity, as displayed in the Memorandum that relates to the artwork / investment opportunity; this document is available to download from the profile of each artwork under the Opportunities section.
Both individual investors and institutions can invest in artworks. Individual investors will need to declare themselves to be ‘high net worth individuals’, ‘sophisticated investors’ or 'accredited investors' during the account creation process. Individual investors will also need to pass an appropriateness assessment. Professional investors including wealth managers, private banks and family offices should contact our team for more information on investing as an entity or managing multiple client accounts on the platform.
For the opportunities listed, a minimum investment of $3,000 is required however investments can be for any amount above this and generally range from $15,000 to $100,000. International payments are accepted.
Funds can be sent from any denomination into our USD bank account. We will show you the estimated cost in your chosen currency during the investment process, however this may change at the point of transfer, and does not account for fees charged by your bank. When transferring, your bank may show an estimated conversion; alternatively the funds can be sent in your local currency and converted at the point of receipt. Other transfer services such as Wise display exact fee and currency conversion rates to ensure you're sending the subscribed amount.
Mintus does not provide tax advice. We recommend that investors obtain their own tax advice as every person has specific tax circumstances. Generally, income and profits generated from your investment can be subject to either income tax or capital gains tax (depending on the individual investor and the specific structure of the investment). Artworks are not income-generating during the period they’re held. If you are unsure about your tax or other legal requirements, please speak to a professional advisor.
Not directly. In order to take an investment from one artwork to another, shares would need to be sold to a willing buyer on the future Mintus Secondary Market and then proceeds reinvested on the platform. The Secondary Market will only be available in permitted locations.
Typically, valuations occur at the end of June and December, with reports distributed to investors as soon as possible thereafter.
All actions in relation to the asset are at the discretion of Mintus. Mintus will communicate with investors on a six-monthly basis with an update on the net asset value, and any further news will be communicated on an ad-hoc basis.
Distributable profits will be made available to investors as soon as possible, once all sale-related administration is complete.
Profits will be received into your Mintus wallet, with the option to withdraw the profits into a bank account or reinvest on the Mintus platform.