Leonardo da Vinci’s painting “Salvator Mundi” was recently sold for a staggering 450 million US dollars. It’s the most expensive painting ever sold. The painting depicts some 15th century goth-metal bass player called Chris. Even art critics find it kind of ugly. Despite this it’s worth more than most small villages in Italy are. Why? Because it’s scarce. Leo da Vinci was a remarkable man. He made a career as a an artist, an inventor, a scientist, an architect, an anatomist and a closet vegetarian. Today, there’s only about 25 paintings left that have been verified as authentic da Vinci originals and this makes them extraordinarily valuable. Just imagine an auction for the Mona Lisa.
To move a 450 million dollar painting securely from one place to another is neither easy nor cheap. It requires bulletproof trucks, guards and police escorts. Moving a Bitcoin is not free either. It costs about 15 dollars to send a transaction today. It used to be free but due to the popularity of the network blocks are full and therefore there’s a fee market. Bitcoins are also scarce, just like Leos paintings. Someday we’ll run out of them. That day may be far off in the future but it is coming. People lose their Bitcoins every day for various reasons. They’re still getting mined but they’ll always be scarce. The high fees disincentivizes small transactions which in turn makes the users of the network even more privileged. Some argue that this makes the network unusable but is this really the case? Prices suggest otherwise. The fee is high because people are willing to pay it. This ecosystem is self balancing in a way the world has never seen before. This is the invisible hand that Adam Smith talked about.
Leonardo’s paintings are valuable because of the da Vinci brand name, which has survived for more than 500 years, and because there’s only 25 of them. Bitcoins are valuable for the same reasons. The brand name is there and if humanity survives the next century it will still be there. There will only ever be 21 000 000 Bitcoins and the whole world will have to share them. Contrary to “Salvator Mundi” Bitcoins are divisible into smaller parts. This is a property that ugly old paintings lack. Right now twelve and a half of these precious digital gems are produced every ten minutes. Those twelve and a half have to be shared by everyone on the planet that wants one. Off course they’re expensive! Imagine if only twelve and a half houses were built, worldwide, every ten minutes.
Leonardo da Vinci, the engineering prodigy who designed musical instruments, mechanical knights, helicopters and parachutes, would have loved the internet and all it has to offer a curious mind. In addition to this he would probably have been a huge metal fan and chances are that he’d be touring east Europe with some suspicious looking Norwegians right now, getting paid in Bitcoin.