The Challenges of Buying Art at Auction
Some auction houses lose up to 10% of their revenue to non-performing bidders. Here’s why.
Accepting bids internationally online may be easy, but receiving payments traditionally has not been.
Ivan, a private collector, explains in a 3-minute interview his experience, which lends him at times as little as 3-days between receiving an invoice and meeting its due date, putting him at risk for losing the pieces or incurring fees. For art collectors residing internationally, this is a major challenge.
Currently, many auction houses try to reduce the number of non-performing bidders by requiring them to register for auctions in advance, disclose their identities and financial ability to pay with bank statements, and even wire funds into pre-auction escrow. These disclosure requirements are burdensome, compromise privacy, and deter many bidders.
The solution for increasing trust in the process
Biddable is a title-escrow and payment application that integrates into auction software and enables holders of cryptocurrency to register, bid and buy at auctions.
Biddable, the first dapp created by Codex Labs, Inc., provides an instant and private alternative to the status quo registration and approval process with a deposit-escrow system wherein cryptocurrency deposits are escrowed from the buyer and the seller. Bidders can therefore prove their intention to pay while maintaining privacy, increasing trust between the parties.
The bidder’s initial deposit is in a major and highly liquid cryptocurrency like Ether (CodexCoin will also be accepted). Sellers leave their stake, and the maximum amount the auction houses requires as a deposit is directly proportional to that amount. This incentivizes auction houses to set the lowest possible deposit requirement that will deter non-performing bidders rather than the maximum possible deposit that will help inform shill bidding (which occurs when a dishonest auctioneer or seller submits false bids to drive up the winning price).
Where is Biddable used today?
In January 2018, LiveAuctioneers became the first to adopt the Codex Protocol and today, thousands of unique items can be purchased using cryptocurrency in auction.
“While we have been recognized in the industry for our customer service, there are major frictions in the bidding experience. Registering for auctions can be hard, especially for foreign bidders and those with anonymous wealth. Meanwhile, some auction houses lose up to ten percent of their revenue to non-performing bidders, and the auction industry likely rejects over one million bidder registrations per year. LiveAuctioneers has continuously invested in providing our auction-house partners with services and technology solutions to address this problem, and Biddable is the most impressive we’ve seen. Biddable can securely and anonymously increase trust among buyers, seller and consignors, so we, our bidders, and our auction-house partners eagerly await its launch.” said Phil Michaelson, president of LiveAuctioneers.
For auction houses, addressing the reneging problem with Biddable is easy as the API can be seamlessly integrated as it is currently with the LiveAuctioneers online marketplace.
In the coming weeks, we will announce another auction house partner adopting Biddable and the Codex Protocol. Subscribe to our publication and stay tuned!
About Codex
Codex is the leading decentralized asset registry for the $2 trillion arts & collectibles (“A&C”) ecosystem, which includes art, fine wine, collectible cars, antiques, decorative arts, coins, watches, jewelry, and more. Powered by the CodexCoin native token, the Codex Protocol is open source, allowing third-party players in the A&C ecosystem to build applications and utilize the title system. Codex has launched two initial decentralized apps (beta), Biddable, providing access to unique assets for crypto-holders, and Codex Viewer, to create and manage blockchain identities for your unique assets. The Codex Protocol and CodexCoin will be adopted as the only cryptocurrency by The Codex Consortium, a group of major stakeholders in the A&C space who facilitate over $6 Billion in sales to millions of bidders across tens of thousands of auctions from 5,000 auction houses in over 50 countries.
