Art moves family offices - and me - into the crypto world

After watching the cryptocurrency madness for a decade from the sidelines, even hard-boiled skeptics plunge and buy their first digital assets.

Is this a moment of justification for the pioneers who promoted digital currencies as an asset class and announced a technological and financial revolution? Or is it a sign that the hype cycle reaches its last, frenzied moments before the fever breaks? I wish I knew it - because I am one of these skeptics. And now I have a non -fungbles token or nft.

The annual survey carried out in September under Family Offices of Citi Private Bank showed that 23 percent now have crypto-assets in their portfolio, another 25 percent are considering them. Half of the family office managers who took part in a Citi forum in connection with the report said that they expect to increase the allocations for crypto next year. These are large numbers of often conservative managers of other people's money. The interest in digital assets, which initially spreads from the over-thinkers (crypto utopists who are enthusiastic about a complex solution to an undisturbed question) to the underdoors (herd followers who see the quick money in a hardly understood trade) finally seems to be the consensus thinker.

I have a theory why. If wealthy individuals and their consultants of a knowledge, it is art - and this year the worlds of cryptocurrency and art are collided in the form of NFTS.

These NFTS are code pieces that represent a work of art - or a clip of a basketball game, a tweet or a photo by William Shatner. They can be bought with cryptocurrency or conventional funds that are converted into crypto. The property is recorded in a digital ledger called blockchain and transmitted with the cryptocurrency of these blockchain. It was easy to reject the benefits of blockchain technology. We already have opportunities to record and transfer the property of digital assets (such as money in a bank account), and an established legal infrastructure in order to ensure the trust in this system that blockchain does not have. I still don't know that we need a different way. But it is no longer justifiable to say that the applications for blockchain are purely theoretical.

The reason why I own an NFT is that a friend of your friend/developer has shaped her. You are not only a way for him to make money with his work, they are also a unique option. The code embedded in the token guarantees him a licensing fee for resale, which no artist can insist on the physical world. This is an application.

Now I am the proud owner of a token on the Tezos blockchain, which represents a piece of generative art, a gif of a hexagon that dissolves and turns in an endless loop. You can download the GIF if you want. But I'm the only one with the token.

I don't get illusions about what I have here. I want to see what happens. Apart from whether the work of an artist will be considered valuable in the future, it depends on what happens to a NFT, whether we agree that owning a unique token is different and better than copying the GIF or watching on a website. The blockchain in which the token exists and the cryptocurrency in which it is rated are other variables. Blockchains can and will expire. Tezos has powerful supporters, but it ranks far below Ethereum, which claims to be the blockchain of choice for higher -quality NFTs, new financial services, games and many other developer experiments.

Whatever creates and the next step is to act with blockchain technology can have a higher value. I also have no idea how to evaluate the currencies that allow every blockchain to work. The biggest investment opportunities may not be in crypto-assets, but in the companies that operate and use the technology. But now I understand more about the possibilities than before I dive.

The point is that we are in the middle of a large experiment and investors who may have once rejected it should now consider taking part. I agree with the 25 percent in this Citi Family Office survey, which said that they "are still in research mode and are looking for advice". Whatever a Family Office provides for research and advice, it can also gain valuable insights by diving a little in cryptocurrencies to see what happens.

This article is part of ft assets , a section with detailed reporting on philanthropy, entrepreneur, family offices as well as alternative and impact investment