Here are two graphs, which I think speak pretty clearly for themselves:
I have several notes:
- The collectible value of physical cryptocurrency is not correlated with its loaded value. These values change independently over time.
- Stack's Bowers current commission structure is plainly unethical, at the expense of sellers, and to the benefit of the auctioneer.
- As the ratio of the coin's loaded value to its collectible value increases, the auctioneer will make a larger share of the profits. This correlation is linear.
- If the ratio is 0 (the coin is unfunded or it has zero face value), the auctioneer will make 16.667% of the profits (aka a 20% commission). This is fair.
- For the vast majority of coins auctioned by Stack's Bowers, this ratio is close to 0. For example, rare dollar coins, ancient coins, etc.
- If the ratio is 5, the auctioneer will make 100% of the profits and the seller will receive the coin's face value.
- If the ratio is greater than 5, the coin will not be able to sell at an auction that uses this commission structure.
- By including the coin's loaded value in the auction price, the bidding increment is also artificially inflated, resulting in slightly undervalued sales.
- In the most recent auction, which took place on June 19, 2024, at least 14 sellers sold coins that earned them no profit whatsoever.
- These 14 sellers actually lost money because if they'd peeled and redeemed their coin, they'd still have their unfunded coin.
- Stack's Bowers made a total on $92,920 in profit on the sales of these 14 coins.
This problem is easy to fix:
- Buyers would agree in advance to pay a fee equal to the loaded value of any coin they win on the day of the auction.
- The bidding would start at $0 with no reserve, or at a starting price somewhere below the estimated collectible value of the coin.
- The auction house would make a typical 20% commission on the collectible value of the sold coin.
- Sellers would always receive a fair share of the profits from the sale.
- Any coin could be successfully auctioned, even if the ratio of its loaded value to its collectible value was greater than 5.
- The auction house would make less profit from each loaded coin, but would also be able to sell coins with high loaded values that they otherwise couldn't.
- More sellers would be willing to work with an auction house that adopted these ethical policies.
- Bidders would be mostly unaffected, except that they would benefit from less inflated bid increments.
I've been seriously considering what it would take to start an auction house that used this commission structure.
Here's all of the data in CSV format that was used to generate the graphs above:
Date,Lot,Firstbits,Slab,Cert,Grade,Sale Price,Hammer Price,Loaded Value,Collectible Value,Seller's Profit,Stack's Bowers' Profit,Source
2022-04-05,3209,1Att3xxP,PCGS,44146109,66,"$78,000","$65,000","$46,000","$32,000","$19,000","$13,000",https://auctions.stacksbowers.com/lots/view/3-VJGGN
2022-04-05,3210,13CEMJaT,PCGS,44146215,63,"$69,000","$57,500","$46,000","$23,000","$11,500","$11,500",https://auctions.stacksbowers.com/lots/view/3-VJGHB
2022-06-15,2308,1B2Q7Cyc,PCGS,44614956,67,"$50,400","$42,000","$21,000","$29,400","$21,000","$8,400",https://auctions.stacksbowers.com/lots/view/3-WWDXU
2022-06-15,2309,1BFbetd6,PCGS,44614948,67,"$52,800","$44,000","$21,000","$31,800","$23,000","$8,800",https://auctions.stacksbowers.com/lots/view/3-WWDY5
2022-06-15,2310,16nHSDxK,PCGS,44614954,66,"$44,400","$37,000","$21,000","$23,400","$16,000","$7,400",https://auctions.stacksbowers.com/lots/view/3-WWDYG
2022-06-15,2311,13iKRGjj,PCGS,44614942,65,"$40,800","$34,000","$21,000","$19,800","$13,000","$6,800",https://auctions.stacksbowers.com/lots/view/3-WWDYR
2022-06-15,2312,155gAYPX,PCGS,44614955,65,"$38,400","$32,000","$21,000","$17,400","$11,000","$6,400",https://auctions.stacksbowers.com/lots/view/3-WWDZ2
2022-06-15,2313,13FvPEep,PCGS,44614949,64,"$38,400","$32,000","$21,000","$17,400","$11,000","$6,400",https://auctions.stacksbowers.com/lots/view/3-WWDZD
2022-06-15,2314,176cKZbo,PCGS,44614947,63,"$36,000","$30,000","$21,000","$15,000","$9,000","$6,000",https://auctions.stacksbowers.com/lots/view/3-WWDZO
2022-06-15,2315,18RTn6hn,PCGS,44614953,63,"$36,000","$30,000","$21,000","$15,000","$9,000","$6,000",https://auctions.stacksbowers.com/lots/view/3-WWDZZ
2022-08-25,7270,18iok44x,PCGS,44614939,67,"$33,600","$28,000","$22,000","$11,600","$6,000","$5,600",https://auctions.stacksbowers.com/lots/view/3-XS9DM
2022-08-25,7271,1BA8Ct1P,PCGS,44614945,67,"$31,200","$26,000","$22,000","$9,200","$4,000","$5,200",https://auctions.stacksbowers.com/lots/view/3-XS9DZ
2022-08-25,7272,19HBVU9K,PCGS,44614941,66,"$31,200","$26,000","$22,000","$9,200","$4,000","$5,200",https://auctions.stacksbowers.com/lots/view/3-XS9ED
2022-08-25,7273,1PHaKVcS,PCGS,44614952,65,"$27,600","$23,000","$22,000","$5,600","$1,000","$4,600",https://auctions.stacksbowers.com/lots/view/3-XS9F7
2022-08-25,7274,14i3bSEg,PCGS,45430789,63,"$26,400","$22,000","$22,000","$4,400",$0,"$4,400",https://auctions.stacksbowers.com/lots/view/3-XS9FL
2022-11-04,10004,157dpvaU,PCGS,44614946,67,"$38,400","$32,000","$21,000","$17,400","$11,000","$6,400",https://auctions.stacksbowers.com/lots/view/3-Z8XSX
2022-11-04,10005,1896nPkp,PCGS,44614951,66,"$31,200","$26,000","$21,000","$10,200","$5,000","$5,200",https://auctions.stacksbowers.com/lots/view/3-Z8XTG
2022-11-04,10006,13tC89uL,PCGS,44614944,66,"$31,200","$26,000","$21,000","$10,200","$5,000","$5,200",https://auctions.stacksbowers.com/lots/view/3-Z8XTQ
2022-11-04,10007,18iGiQi5,PCGS,44614940,66,"$31,200","$26,000","$21,000","$10,200","$5,000","$5,200",https://auctions.stacksbowers.com/lots/view/3-Z8XU1
2022-11-04,10008,1BFsw3pu,PCGS,44614950,66,"$34,800","$29,000","$21,000","$13,800","$8,000","$5,800",https://auctions.stacksbowers.com/lots/view/3-Z8XUC
2023-03-24,8004,13K7EBoF,ANACS,6132851,66,"$57,600","$48,000","$27,000","$30,600","$21,000","$9,600",https://auctions.stacksbowers.com/lots/view/3-11DVUB
2023-03-24,8005,147X1yWH,ANACS,6132495,65,"$48,000","$40,000","$27,000","$21,000","$13,000","$8,000",https://auctions.stacksbowers.com/lots/view/3-11DVUM
2023-06-16,4005,16ppVhXt,ANACS,4748923,67,"$40,800","$34,000","$25,000","$15,800","$9,000","$6,800",https://auctions.stacksbowers.com/lots/view/3-134QI4
2023-11-21,7001,15m2Pnxw,PCGS,45761378,67,"$55,200","$46,000","$36,000","$19,200","$10,000","$9,200",https://auctions.stacksbowers.com/lots/view/3-160685
2023-11-21,7002,131sJqhg,PCGS,47321554,64,"$44,400","$37,000","$36,000","$8,400","$1,000","$7,400",https://auctions.stacksbowers.com/lots/view/3-16068Q
2024-03-28,8003,147Veuat,PCGS,48568588,67,"$96,000","$80,000","$70,000","$26,000","$10,000","$16,000",https://auctions.stacksbowers.com/lots/view/3-18DWU2
2024-03-28,8004,15LiaCSR,PCGS,48931636,66,"$90,000","$75,000","$70,000","$20,000","$5,000","$15,000",https://auctions.stacksbowers.com/lots/view/3-18DWUF
2024-03-28,8005,13VsK17R,ANACS,Unknown,65,"$84,000","$70,000","$70,000","$14,000",$0,"$14,000",https://auctions.stacksbowers.com/lots/view/3-18DWUS
2024-03-28,8006,1Ahz7F6U,ICG,Unknown,65,"$84,000","$70,000","$70,000","$14,000",$0,"$14,000",https://auctions.stacksbowers.com/lots/view/3-18DWV6
2024-06-19,5005,16R8wrCv,ICG,1208350201,68,"$78,000","$65,000","$65,000","$13,000",$0,"$13,000",https://auctions.stacksbowers.com/lots/view/3-1A8OQO
2024-06-19,5006,1P1nsaoV,PCGS,49121934,66,"$78,000","$65,000","$65,000","$13,000",$0,"$13,000",https://auctions.stacksbowers.com/lots/view/3-1A8OQZ
2024-06-19,5007,148Y7D3U,ANACS,6132498,66,Passed,N/A,"$65,000",N/A,N/A,N/A,https://auctions.stacksbowers.com/lots/view/3-1A8ORC
2024-06-19,5008,165yQGSZ,PCGS,49372057,64,Passed,N/A,"$65,000",N/A,N/A,N/A,https://auctions.stacksbowers.com/lots/view/3-1A8ORR
2024-06-19,5009,15kgxa59,PCGS,49372055,61,Passed,N/A,"$65,000",N/A,N/A,N/A,https://auctions.stacksbowers.com/lots/view/3-1A8OSL
