Cryptocurrency-only online auction houses offer tangible benefits
If there's one thing blockchain is good at, it's making purely digital items tangible.
Distributed ledger technologies have a way of making the digital real, allowing properties like non-fungibility and finiteness to be reliably used in the digital world for the first time.
These properties can help undo some of the downsides that crept into different industries as they went digital. The Portion digital art auction house, for example, is using it to turn back the clock on some of the problems that came up when auction houses went online.
Shill bidding simply means casting fake bids. This is typically done by the seller or a compatriot in order to drive up the final bid.
Shill bidding has become a rampant problem in online auction houses, with people using the cover of anonymity to cast fake bids to drive up prices or to just troll and bid on items they have no intention of buying.
To prevent this, some auction houses have started requiring bidders to deposit funds ahead of time. The downside is that this naturally drives away potential customers, creates a new expense and poses an unnecessary headache, especially now that markets have gotten so international and there are more language and currency barriers to contend with.
By only accepting cryptocurrency, Portion can validate funds in real time and only allow users to bid on items when they have sufficient funds. There are no deposit or third parties required and no currency barriers to worry about.
A lack of transparency
Portion will be using a blind bidding model to help reduce the chance of collusion and to further validate the ownership and final prices paid for all goods.
Buyers will be able to learn more about the price history of goods, while sellers can set reserve prices and create their own listings. Ownership can be transparently determined through blockchain certificates.
By some estimates, up to 40% of the big ticket artworks in circulation today are forgeries. Most will probably never be identified, but creating a digital trail of provenance for new works right from the start, and for old works when possible, can reduce or eliminate the risk of forgery going forwards.
Portion will require users to provide references when asked, to demonstrate credibility and to take steps to prove that a listing is legitimate. This is made easier by similar platforms which are more aggressively hunting down artworks to add to the blockchain.
It might not be useful for buying a coffee, yet, but cryptocurrencies can provide some very tangible benefits in other areas by building a bridge between the physical world and the growing digital world.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.