It isn’t uncommon for bourbon enthusiasts to boast home bars stocked with dozens of bottles — especially in Kentucky. For some people, however, collecting rare whiskies, wines and other spirits extends into the realm of investment. Their collections may be valued in hundreds of thousands or even millions of dollars, which presents several unique challenges. One is where to store the bottles to ensure their security and optimal conditions. Another is valuing and insuring the collection. And then there’s managing the logistics of confidently buying, selling and trading bottles.
Justin Sloan, a long-time bourbon collector and co-owner of Justins’ House of Bourbon [JHOB] in Lexington and Louisville, has helped numerous clients build, appraise and sell their collections. He recently teamed up with BAXUS, a New Jersey-based blockchain company, to develop a digital solution to manage physical assets.
The newly launched JHOB x BAXUS platform uses non-fungible tokens, or NFTs, and blockchain technology to allow owners to track, manage, sell and trade their spirits conveniently and securely. Bottles are authenticated through a machine-learning algorithm and by JHOB’s team of experts, and a high-resolution, 360-degree scan is created. The owner is assigned an NFT, the details of which are recorded and verified through blockchain, and the physical bottle is tagged with an RFID barcode and stored in a secure climate-controlled vault. Owners have around-the-clock access to buy, sell, trade, hold or redeem individual NFTs.
If a buyer matches the price of an NFT listed for sale and completes the transaction using a credit card, fiat or cryptocurrency, ownership immediately changes hands and the details are recorded on the blockchain, all while the bottle remains securely stored. Owners may also redeem their NFTs at any time and have the bottle shipped to them as long as they meet age verification requirements.
“People hear ‘NFT’ and think it’s just a digital picture or whatever, but it’s really a proof of concept,” Sloan said. “We’re assigning tokens to tangible assets, and the first asset we’re doing on the platform is whiskey.”
While using a digital token to represent ownership of a physical item is a relatively new concept, Sloan said the security and convenience of blockchain allows for all kinds of applications — from buying and selling jewelry and artwork to automobiles, antique coins, rare gems and all sorts of valuable items.
“How do you know you own your house? It’s a piece of paper down at the courthouse,” Sloan said. “Well, this is the future of record keeping. Once the NFT is submitted, you own the token that says that you own that bottle, and at that point, you can treat it like a secured asset — you could even leverage that asset against a loan or a mortgage.”
“The idea is for people to be able to log on to BAXUS and use it in the same way that they will use a Charles Schwab account for traditional assets,” said Todd Wiesel, BAXUS founder and CEO. “You can see where the thing is priced now in the market and all of the historical pricing and chain of custody for the asset.”
Wiesel said JHOB x BAXUS (baxus.co) currently has more than $7.5 million of whiskey stored in its vault in New Jersey. There is currently a 10 percent seller’s fee to create an account, including storage and insurance on the items.
Wiesel previously worked as a professional whiskey trader and with a leading brokerage in the United Kingdom. He noticed when clients would buy bottles through him, they’d often turn around and resell those bottles shortly after, often using his brokerage services.
“That means that if I had shipped a bottle from New York to Taiwan, I then shipped the bottle back from Taiwan to New York in order to sell it to a guy in California,” Wiesel said. “It’s not good for the liquid, and it’s not good for the environment.” Bottles could also be lost or damaged during shipment, held up by customs or contain counterfeit whiskey sent by unscrupulous traders.
“The idea here is that you don’t have to worry about who’s on the other side of the deal — everything goes through a trusted intermediary,” he said. “The bottles are stored on our platform; they’re all authenticated, secured and insured; and owners receive a digital token, which represents ownership of the specific bottle.”
JHOB x BAXUS has partnered with Meta-Sill to offer a wall-mounted digital frame to showcase the high-resolution scans for people who also like to display their collections. Owners can also use the screen, smartphone or computer to display a QR code for quick transactions.
“Let’s say you have another collector coming into your office — you can display the code on the screen, and they can buy it right then and there,” Wiesel said. “We’re giving people a real-world use case for blockchain.”
