Bitcoin Collecting: The growing use of cryptocurrency in the art market attracts tech-savvy clients– just beware of scam artists…

Shopping for priceless art at auction with virtual money is fast becoming a reality. Earlier this year, Christie’s accepted payment by cryptocurrency on the vast majority of lots – about 93% – in an auction dedicated to art created by artificial intelligence. It’s a transactional breakthrough that will be welcomed by many, especially young, tech-savvy art investors, yet others are still to be convinced of digital currency’s durability, and highlight its potential risks.

Cryptocurrency was first used as payment for a physical artwork at a major auction house four years ago, according to Michael Bouhanna, Sotheby’s Head of Digital Art and NFTs in New York. The sale in question, in May 2021, involved the quintessential Banksy painting Love is in the Air, with Sotheby’s providing the option to pay in Bitcoin (BTC) or Ether (ETH) via the Coinbase exchange.

“We made a decision to accept cryptocurrency for selected physical works in 2021 in response to the evolving art market and to attract an additional pool of collectors,” says Bouhanna of this pioneering initiative. “We were noticing an increasing appetite among collectors – many of a younger generation – for seamless payment options when doing business with us, and for many, this provided another method to participate in our sales.”

Confidence in Compliance

As with any other payment at auction, compliance checks and due diligence for crypto transactions are rigorous and all-important, especially given that the sums involved can be astronomical, equivalent to millions of US dollars. “Crypto is no different from any of the other currencies we accept, and all transactions are subject to applicable laws and regulations in whichever currency they choose to pay in,” states Bouhanna.

He adds that Sotheby’s has been accepting crypto for some time now on individual lots and groups of works, and the auction house will continue to offer it as an option when it makes sense. “It’s important that everyone who transacts with us [in virtual currency] feels as welcome in our world as any other client,” he says.

Other auction houses are getting in on the act, too. Phillips Hong Kong accepts crypto on certain occasions when it is perceived to be a fit. During Hong Kong Art Week 2025, payment by crypto was offered for a Spaces digital art exhibition of eclectic works reflecting upon the intersection of art, technology and impermanence.

Not all auction houses have taken up the crypto baton, though. Bonham’s indicated that its policy at this juncture is not to accept cryptocurrency as a form of payment.

Tapping into New Wealth

Sean Hung, founder and CEO of fintech platform Acwires, can see the logic in auction houses beginning to accept crypto, aligning with how young collectors want to transact. “Over the past decade, there’s also been a lot of new wealth generated from cryptocurrency-related businesses such as service operation, trading, decentralised applications, et cetera. They are part of the new wave of collectors that auction houses would like to target,” he says.

The digital currency expert believes the future lies in convergence between crypto and traditional finance, between accessibility and compliance. Acwires allows users to buy and sell crypto with their credit card, regardless of jurisdiction and currency, and previously he helped to build Diginex, which became the first crypto exchange to list on Nasdaq.

Regulatory Clarity

He is convinced that as regulatory clarity improves and infrastructure evolves, crypto will become part of everyday commerce. “We are already seeing a shift as mainstream payment companies and banks have started working closely with crypto service providers,” he notes.

As Hung shares, blockchain transactions are inherently transparent – but pseudonymous. “The transaction is visible, but the identity behind a wallet isn’t public unless disclosed,” he says. “We still have to rely on traditional KYC [Know Your Customer] procedures to attach a wallet to the actual buyer’s identity.” He adds that there are forensics firms able to trace a wallet’s previous transactions to identify if it has been associated with suspicious activities.

Some financial commentators have suggested it is possible to evade a blockchain’s transparency through crypto mixers. Hung says leading platforms and regulated payment providers screen for such activity, and the focus now is on building infrastructure that is compliant with anti-money laundering standards through traditional KYC, and also KYT (Know Your Token) policies.

Risks and Rewards

Sam Kima, Senior Vice-President of First Gold, believes Sotheby’s and Christie’s adoption of cryptocurrency is a calculated bet to future-proof its business, attract crypto-rich collectors, and streamline transactions. By accepting crypto taps, the auction houses connect with a new class of wealthy buyers who prefer transacting in digital assets rather than liquidating them for fiat currency – which, notes Kima, can trigger tax events. He also suggests that some buyers prefer the pseudonymous nature of crypto for discreet transactions, especially in high-profile sales.

Regarding the potential risks and challenges of transactions made in virtual currency, Kima warns: “Crypto prices can swing dramatically, creating uncertainty for both buyers and sellers. Some cryptocurrencies, for example Bitcoin, have high energy consumption, clashing with sustainability goals.” In addition, he foresees that regulatory uncertainty could complicate compliance.

“Cryptocurrency in auctions is a natural evolution, aligning with digital finance trends; however, its long-term success depends on stablecoins [pegged to another asset to mitigate volatility] and clearer regulations,” he says. “If managed wisely, it could democratise art investing, but risks remain.”

Trust Issues

According to Wojtek Paczos, Senior Lecturer in Economics at Cardiff University, cryptocurrencies payment systems operate on the basis of a fundamental mistrust. He says: “Nobody trusts anyone, so the record of transactions must be decentralised: it is kept in millions of copies all over the internet in a so-called ‘ledger’. The fact that it’s decentralised makes it economically inefficient.”

In his view, for crypto to become a viable means of payment like a standard currency, it must be a unit of account, a store of value, and a medium of exchange. “Cryptocurrencies fail badly across all three [of these qualifying] tests: nobody quotes prices in bitcoins, the set of goods purchasable with bitcoin is severely limited, and the fluctuations in value against traditional currencies render bitcoin an unstable store of value.”

He believes crypto is highly volatile because it is built on this basis of mistrust and lacks a safety net to prop up its demand, such as by paying taxes via the currency. “In cryptocurrencies, the demand might simply disappear one day, and there is no formal backstop,” he says.

Scam Alert

The image of crypto has undoubtedly been tarnished by incidents of scamming and hacking. Coinbase, one of the world’s biggest cryptocurrency exchanges, was hit by a cyberattack last month that is likely to cost it as much as US$400 million. Reportedly, the company refused to pay a bribe demanded by the hackers and has promised to reimburse every client who got scammed.

Bill Lee, Chief Technology Officer of Web3 pioneer DualMint says the promise of crypto technology has been undermined by a flood of scams, rug pulls and exploitative projects. “To combat this, both the industry and regulators are stepping up,” he shares.

DualMint emerged as a response to fundamental issues within the current digital ecosystem like ownership, control and transparency. Offering some measure of reassurance, Lee says: “Within the space, there’s a growing emphasis on auditing, code transparency and self-regulatory standards, such as those promoted by organisations like the Blockchain Association and [blockchain analytics firm] Chainalysis.”

As digital-currency tech evolves and improves, collectors at auction can take heart in the virtual reality of securing a beloved work of art without paying through notes.

Block Trooper: Jehan Chu, founder of blockchain venture capital firm Kenetic

Long a supporter of blockchain and cryptocurrency technologies, Jehan Chu now helms Kenetic, a venture capital firm helping others looking to break into the industry.

Kenetic is an interesting business. As its founder and managing partner, how exactly do you define it?
Essentially, it’s a venture capital firm, one that supports start-up companies at a very early stage. In particular, we help to fund entrepreneurs in the blockchain sector, while also providing them with advice and guidance, allowing them to realise their visions of the technology’s future. I firmly believe that blockchain represents the next stage in the evolution of the internet – a new technology that will underpin developments over the next 50 years. With that in mind, Kenetic is a bespoke vehicle designed to help facilitate that evolution.

At what point did you decide the time was right to launch Kenetic?
We opened Kenetic in 2016 when it became apparent that no Asian venture capital business was really focusing on blockchain technology. At the time, those of us who had first ventured into the bitcoin and blockchain space knew something special was
taking place. We also believed that, without support, it wouldn’t necessarily fulfil its potential. That’s where Kenetic comes in – we support those people crazy enough to try and make their dreams come true.

What was it about blockchain / cryptocurrency that first drew you in?
Well, while I was studying International Relations at Johns Hopkins University, I taught myself how to code html. After that, I went to work in New York coding as a front-end developer during the first dot.com boom. In 2013, I first came across Bitcoin. Once I started researching it, I immediately fell down that particular rabbit hole. One of the things that drew me to Bitcoin was my love of decentralisation and the idea of returning power to the people. I soon started a number of related communities, including a local Ethereum group, one of the earliest such associations in Hong Kong, as a means of helping to provide investment advice for those interested in the sector. In 2016, I went fulltime, leaving my job as an art dealer to focus solely on providing blockchain and cryptocurrency investment advice.

Why do you think cryptocurrency has become such an attractive investment option?
When I started out in cryptocurrency, nobody wanted to hear about it. It was, at best, a joke and, at worst, seen as somehow improper. Now, though, it seems as though everyone realises how important cryptocurrency is, especially with regard to decentralisation. If you look at what’s happening in the world right now, centralised systems are failing, making decentralisation seem an increasingly appealing prospect. Even companies like UBS, JP Morgan, Visa and PayPal are turning their attention to Bitcoin and cryptocurrency. It took a little time but it’s happening.

“ Kenetic aims to support people crazy enough to try and make their dreams come true”

Aside from Bitcoin, which other cryptocurrencies do you see as significant?
While Bitcoin is really a payment token or a store-in value token, Ethereum is an application-based blockchain with easily the largest community of developers and applications. Bitcoin is akin to gold, where Ethereum is more like oil – it is used to power things, whether an engine, a machine or a factory. The other interesting one is Polkadot, which is similar to Ethereum but has a very different approach in that it’s really trying to create a network of blockchains.

What are the some of the most common cryptocurrency misconceptions that you encounter?
A lot of people think that as cryptocurrency is not “backed” by anything, it doesn’t have any intrinsic value. This is inherently untrue. The value of Bitcoin and other types of cryptocurrency stems from the subscription and investment of the community, both in terms of dollars and effort. This infuses cryptocurrency and blockchain with value, be it in terms of its use in applications or in having a multi-million-dollar market cap. Basically, they are backed by millions of people who say there is value and are willing to put their money and commitment into them.

You co-founded Social Alpha Foundation, a blockchain / social impact non-profit. What can you tell us about its aims and ambitions?
I was raised by my parents to be very generous and try to support communities. As a result, I have always thought it was important never to take anything for granted and to use my resources to help others. In line with this, the idea behind Social Alpha Foundation is to support blockchain projects that are looking to create social impact. The first grant we made was to a small start-up in South Africa, which was providing official identity documents to children who were either too poor to apply for them or were refugees. What they would do is use blockchain technology to track these kids and verify an identity for them. Right now, though, we’re focused on environmental issues and have recently given a US$250,000 grant to Open Earth, a Yale University initiative aiming to use blockchain to help combat climate change.

In terms of cryptocurrency-friendliness, how do you see Hong Kong ranking on the global scale?
Hong Kong is easily one of the most significant centres in the world when it comes to blockchain and cryptocurrency and is probably the most important such destination in Asia. This is partly because the regulation is very engaged here and the regulators
are very knowledgeable. The entrepreneurial spirit is also very strong and there are a lot of start-ups, especially in the financial sector. There are also many people in institutional and more traditional companies across a variety of different sectors that have become engaged with blockchain and cryptocurrency. All in all, I think that I’m very fortunate to be in Hong Kong as there’s just so much going on here in terms of both cryptocurrency and blockchain.

You also invest in alternative proteins, notably Impossible Foods…
That’s largely because I have been going mostly vegan. I do what is called a 95-percent diet – depending on which week it is, I have only one or two animal protein meals in a seven-day period, staying vegan for the rest of the time. The fact that this has boosted my own health made me want to invest in initiatives such as Impossible Foods, as well as other alternative protein sources. My cholesterol has gone way down; my sleep,
skin and digestion are all better and it’s good for the planet too.

You are also big on meditation…
I actually practice Vipassana, an ancient breathing practice favoured by Buddha as the root of mindfulness and all other forms of meditation. When I was first introduced to it, it was quite a challenge – I had to undergo 10 days of silent retreat without
reading, using a phone or having any human contact. During that time, though, I learned how to quieten my mind, focus and use breathing to achieve a state of centeredness and hyperawareness. While it’s one of the hardest things I’ve ever done in my life, it also transformed it in a very positive way.

Thank you.

Interview by: Roberliza Eugenio
Photos: Jack Law
Video: Andy Wan
Art Direction & Styling: Jhoshwa Ledesma

Risk vs Reward: Navigating the risky world of cryptocurrencies

There are few areas of finance at the moment that are generating as much hype as cryptocurrencies. Bitcoin is the most popular, but it also fields its fair share of criticism. Earlier this year, Jamie Dimon, chief executive and chairman of JP Morgan, called it a scam and announced he’d fire any employee caught trading the digital currency.

To crypto-enthusiasts, this seemed to signal that the old world of finance is feeling threatened by the new. And from an investment perspective, they have a point.

As of December, the price of one bitcoin crossed the US$11,000 (HK$90,552) threshold. Compare that to the start of this year, when a bitcoin was worth less than US$1,000. Looking further back, for a lot of 2010 its value fluctuated between six and seven cents. Prescient people who bought bitcoin back in 2010 and held them until now would have seen their investment grow by 10 million per cent. Not a return to be sniffed at.

Ether, the second most popular cryptocurrency, looks like it is at an earlier stage of the same process. After its creation in 2014, the price saw little growth for a couple of years, and one ether was worth less than US$1 at the start of 2016. It rose, however, and in December 2017 the price floated around the US$460 mark. Again, solid returns for the early enthusiasts.

Looking beyond the big two, things get a little more complicated. There are now thousands of cryptocurrencies. Some – Ripple, for example – have been around for a while, but more are arriving. Genesis Block, a crypto exchange in Hong Kong, now allows traders to buy and sell over a thousand different cryptocurrencies over the counter. Since there are only about 180 traditional currencies in the world, some of which are barely traded, life for the normal investor in the crypto world is not going to be easy.

Another exchange in Hong Kong, OKex, will soon launch trading in bitcoin derivatives, with plans to offer derivatives of other cryptocurrencies in the future. If you fancy speculating on what the price of an ether will be in six months’ time, there’s the place to do it.

With the crypto ecosystem clearly growing, how should a normal investor take advantage of it? At their simplest, cryptocurrencies are digital tokens underscored by distributed ledger technology, or blockchain. Whatever happens to cryptocurrencies, blockchain is going to be part of the future. It is turning up in everything from the world of financial services to shopping. Over on the mainland, US retail giant Walmart is experimenting with blockchain technology to track its produce.

In some ways, blockchain could be seen as many giant excel spreadsheets, linked in such a way that if one is updated, all the others are simultaneously updated. In the age of pre-blockchain internet, one of the problems that prevented a digital currency takeover was figuring out whether an asset was the original or a duplicate. If you can copy your digital token and pay two different people with the same coin, it doesn’t work. Blockchain technology has changed that, and alas, bitcoin was born.

While many of the new tokens use the bitcoin blockchain to operate, others use the Ethereum blockchain, which underscores ether. Yet many fall into neither camp and are off doing their own weird thing.

Investors are advised to stick to cryptocurrencies that use an established blockchain. There are already enough variables to worry about when investing in crypto without throwing another into the mix.

If you understand what a token is used for and why, and it seems sensible, then maybe it’s worth a punt. If you really like an idea and want to get in on the action from the start, then a token sale, or ICO (initial coin offering), allows you to do just that.

Developers looking to create a project using cryptocurrencies hold a token sale to raise funds and distribute their tokens. They don’t normally cost a lot to invest in, and they may even offer high returns.

Many are getting excited. So far, nearly US$2.3 billion has been raised in ICOs, mostly in the first half of 2017. Be careful, though – even experts in the crypto world are exercising caution. “There are so many ways to scam people with an ICO,” Leonhard Weese, president of the Hong Kong Bitcoin Association, told the South China Morning Post.

“Investors beautifully admit that most of these start-ups will fail, so all you need to do is raise a few million, appear busy on social media for a few years and then say you ran out of money and blame it on competition, developers or bitcoin. Alternatively, you could ‘hack yourself’ and retire immediately.”

Text: Emrys Gould