Technology is changing the definition of both money and assets. Cryptocurrencies are now making more headlines than traditional currencies and over the last few months non-fungible tokens (NFTs) have become a massive talking point. Digital money and digital art are fascinating, but the key to an exceptional investment portfolio has always been diversity and balance. And this is where tokenised wine comes in…
There are a handful of wines gracing cellars around the world that date back three centuries. They don’t come to public auction often, but when they do, they generate a lot of interest. The wine is unlikely to ever be consumed, it is simply an investment that can command impressive, and impressively stable, prices.
A bottle of wine is a celebration of the producer’s skill. It is also a recognition of a particular year in history. Every bottle tells a unique story, and the older the bottle the more complex the story. Like antiques or classic cars, as a bottle gets older, the story of its production can be enhanced by the story of its ownership, and the more complete the story the higher the value of the bottle.
The wrinkle is that because the wine is unlikely to ever be consumed, you need to be certain that what you are buying is the genuine article. To sort this, the wine industry has become adept at proving the provenance of a bottle of wine, its history of ownership and a record of how it’s been stored.
The challenge is that while the fine wine market consistently offers better returns than comparable sectors, the speed, complexity and cost of the wine trading process mean that it is often passed over when investors are looking for ways to diversify a portfolio.
Replace slow, complex and expensive trading…
Technology is in the process of changing this. Without going too far into the technical details, blockchain, and more specifically the Ethereum blockchain as the leader, makes it possible to create a unique, tamper-proof digital token for a bottle of wine that tells its story and makes it possible to trade virtually instantaneously.
The reason for this is that the blockchain that contains information about the wine is non-centralised. It is comprised of information that is stored and verified in small parcels all over the world. If any of these small parcels have been changed, it quickly becomes obvious where the information doesn’t fit with the rest of the chain and so the changes are rejected.
…with quick, transparent and cheap
There are three reasons why this tokenised approach is attractive from an investment perspective:
- the decentralised structure makes it virtually impossible to fraudulently claim ownership of an asset that has been tokenised
- because the blockchain doesn’t have a central authority that needs to maintain its integrity, fees are significantly lower
- transactions can be completed virtually instantaneously because activity is electronic rather than paper-based
This is why tokenisation is attracting the attention of a new generation of wine investors that want to add fine wine to their portfolio as a liquid asset that can be traded quickly and transparently. It is an approach that also has the potential to support many of the world’s vineyards as they struggle to recover from the loss of trade caused by the global pandemic.
Owning and protecting an asset
One of the interesting aspects of these tokens is that they represent the actual ownership of a bottle or case of wine. In fifty-years, if you own a bottle of wine that has been recorded on a blockchain, you will irrefutably own that bottle of wine. And because the wine’s journey through those fifty-years will be tracked, it will be possible to show how it has been stored, and whether it’s been stored professionally. This means that the token will show both proof-of-ownership and proof-of-value.
This is why the WiV approach includes management of the wine or case of wine in professionally maintained and insured wine vaults. By buying through the WiV platform, owners have the possibility to trade wine quickly, transparently and as a result at a low cost. They also have the confidence in the value their investment.
The last few years has seen the crypto investment market flourish, with bitcoin and NFTs creating new opportunities that would have been unimaginable a decade ago. Investing in wine via the WiV platform offers the best of both worlds: an efficient, transparent and fast way to invest in a physical product that is traded on a market that has proved itself to be stable and offer consistent returns. Wine has proved itself as a sound investment for a very long time. It is something to appreciate and, if it is well looked after, it is something that will appreciate in value. And now it has never been easier to own an investment level bottle of wine.
WiV Technology is the global leader for turning fine wine into NFTs. WiV’s award winning platform WiV NFT Platform allows Wine Producers and Collectors can instantly buy, sell and borrow money against their wine through our platform, giving them rapid access to finance without having to endure extensive bureaucratic processes. . For further information, go to www.wiv.io