Art-back digital currency

[frubeng]

I have been mandated by the owners of an extremely valuable piece of art to examine ways of expanding its owner base to the public. I am thus interested in creating a digital currency, that would be backed by the art-piece. The planned functioning would be similar to Bitcoin.
The currency creation mechanism would strictly be rules based in order to provide users with full transparency as to what the coin value is linked to.
Having little experience in crypto-currencies, we are looking to create this as a joint venture with serious partners.
Please contact me directly for details if this interests you!

Ruben
(re-posted in this more appropriate thread)

[bitkilo]

Interesting but it's definitely an idea that's way out there.

I am interested to know what would happen if 40% of users wanted to cash out, you couldn't sell the piece or loan against it so who would pay?

Also how do the coins increase in value, as the art piece does?

And the biggest question - who would hold the piece so no one person has full control over the asset?

[frubeng]

Thanks for your interesting feedback. The idea is not entirely thought out yet, which gives the project more scope at this point; but here's what we're thinking at this point:

A Coin Issuing Entity (CIE) is created and promotes the currency. For every coin it sells, it uses parts of the proceeds to purchase shares of the art-piece at a discount. For example, if the piece is valued at $1Bn, the CIE can purchase shares on the par value of $500m, using then 50% of proceeds to cover costs and enlarge a fund (which will cover future expenses and potential expansion to other art-piece/collectibles - just an idea).

If coins are redeemed, the coin owner hands over the coins and receives shares of the art-piece. This automatically makes the coins more valuable as the art-piece goes up in value and ensures the CIE will always be able to honor guarantee agreements.

The great thing about this is that, unlike for example with gold, the art-piece can actually generate revenue, by being loaned out to a museum for example. This revenue can serve to increase the value of the coin guarantees (eg. 1 coin is now redeemable for 1 share + a dollar amount) and to augment the CIE's security fund to secure financial stability.

Control of the painting would lie with the shareholders, including the CIE itself, and any revenue would be distributed proportionately among all of them. (tag-along etc. with attractive premia clauses could be in there as well in case someone buys a large majority of the coins, redeems them and wants to sell the painting)