Damien Hirst

When Pablo Picasso was at the height of his fame, his signature was so valuable he could use it as money. He would write a cheque for a meal, say, and the restaurateur would keep the slip of paper with the precious signature rather than cash it.

The same thing is happening to Damien Hirst who, at 43, is almost certainly the richest and most famous contemporary artist on the planet.

"Someone in a gallery in New York told me the other day that my signature is worth $350," he says in a still-broad Yorkshire accent. "So that's, what, about £200? That means if I sign a cheque in a restaurant and it's for £150, the cheque is actually worth more than the bill comes to." He sits back and contemplates this startling fact for a second, vaguely amused by it. "So on that level, yeah, maybe I am in the same position as Picasso." He pauses for a beat. "If you believe all that shit."

If you believe "that shit", the Hirst is not only in the same position as Picasso, he has, at a stroke, surpassed the master's achievements – in a financial sense. Last night at Sotheby's in London, on the first day of a historic two-day auction featuring 223 box-fresh works – dot, spin and butterfly paintings, animals suspended in formaldehyde, medicine cabinets, meticulous displays of cigarette butts, all dated 2008, Hirst sold lots which raised raised £70.5 million. This smashed the previous record set in 1993 for 88 works by Picasso, which totalled $20 million . Sotheby's said last nigh's sale was equivalent to $127 million.

It's the first time a contemporary artist has cut out the "middle man", the gallerists who mediate a sale (and take up to 50 per cent of the proceeds) and it may transform the art market overnight. This is the art-world equivalent of the online music revolution, a smashing of orthodox sales techniques.

In person, he looks more rock star than ever. He is dressed in a black T-shirt with a glittery skull motif and wears large tinted glasses.

Yet Hirst has never been a prima donna, nor (when sober at least) a pretentious gabbler on the subject of his art. He has always embraced his fame willingly and is still fairly blokeish.

"Yeah, but I've never farted in front of the Queen," he laughs, when I mention his (long-gone) hell-raising days as the twentysomething knave of the Britart pack.

Speaking after last night's sale finished, Hirst hails the art market as "bigger than anyone knows", adding: "I love art and this proves I'm not alone and the future looks great for everyone!"

However, in the days running up to the auction, he is not so confident.

"I'll be glad when it's over," he says cautiously, when I meet him in the days leading up to the sale. "I think it's risky, yeah. When it's just on paper, you're thinking: can I do this? Should I do this? What will I benefit? Will it be any good? How will it be perceived? All that stuff gives you f***ing nightmares.

"Then we get to this point, where the show is up on the walls and it speaks for itself, and kids are coming in saying, 'Wow, I really love that.' And it kind of feels like all the gambling is over."

Hirst has already announced that he will make no more spin or butterfly paintings (where dead butterflies are embedded in pigment and resin) and this will shore up their value. But the prices are still phenomenal. The Golden Calf, said to be the highlight of the sale with an estimate of between £8-12 million, sold for £10.3 million.

Fragments Of Paradise, made from stainless steel, glass and manufactured diamonds, was estimated at £1-1.5 million, but sold for more than three times that – just under £5.2 million.

AS unlikely as it now seems, it can only be assumed that Jay Jopling, Hirst's UK dealer, initially agreed to the Sotheby's sale with great reluctance (his London gallery, White Cube, stood to lose millions if the auction was a failure).

Hirst is frank: "I was a coward and I told him on the phone. He said, 'I'm going to have to think about this and call you back.'

"After a few days thinking he said, 'You know, actually I think this is going to widen your market.' Everyone has fears and doubts and nobody likes change, but once you accept that it's inevitable, you look at what it can bring to the table."

The largest collector of his work, Hirst reveals, is "probably" François Pinault, the billionaire French businessman who owns Gucci, the Chateau Latour vineyard and Sotheby's great rival Christie's. He has in his collection "about 45" Hirst works. Hirst owns a great many himself – in 2003 he bought back 12 early pieces sold to his first great patron, Charles Saatchi. The designer Miuccia Prada and the art-loving city trader Robert Tibbles own a substantial number. Elton John has a few – and David Beckham owns one. "Well, his missus does. He bought her one as a birthday present."

But the auction is really aimed at none of these buyers. The buyers at Sotheby's today are a new crowd altogether – the 21st-century global rich from India, Russia, China, the Middle East – which is clearly the whole point of the sale. Ten years ago, Hirst had the reputation to break free of his dealers, but back then there simply wasn't the breadth and potential of the world market today. Sotheby's and Jopling hope to uncover dozens of hitherto unidentified new buyers this week. It is Hirst's great shop window.

As he walks around the exhibition Hirst feels "it's the work of someone who's much younger than I am. I suppose I used to believe I was going to live for ever and now I know I'm not. The work I was making was a celebration: we can't lose, nothing can stop us now, that kind of thing. Now it's more a sense of, well, no-one gets out of here alive.

"I've started making black butterfly paintings – they were all very bright colours at first – and I've just noticed (the canvases] have got rosary beads, scalpel blades, broken glass on them (too]. It's all gone a bit dark. "

Some would say, of course, that Hirst has always been "dark" – his solitary lamb, his sliced animals, his terrible insect-o-cutor, were always preoccupied with mortality, disease and the cycle of life and death. Yet there has always been huge humour to his work, too.

"I suppose having children makes you a bit more afraid as well, but I don't think that's a bad thing," he says. He and his partner, Maia Norman, have three boys – Connor, 13; Cassius, eight and one-year-old Cyrus – and own houses in Devon and Mexico (Hirst's manager, Frank Dunphy, who puts his client's wealth at more than £500 million, has said that Hirst owns between 30 and 40 properties). When in London, Hirst stays on his houseboat in Chelsea.

It was the diamond encrusted skull, For the Love of God, that, depending on your view, most recently displayed Hirst's genius, or genius for outrage. Priced at £50 million, one third of it was sold last summer to an unidentified consortium of investors, while Hirst "bought" the remaining two thirds. Dunphy now says the skull would be worth an even more jaw-dropping £150 million at auction.

But Hirst has always been an astute self-promoter and businessman, and thinks a lot, unapologetically, about money. "Art can be about money as long as the art outweighs the financial side," he says. "Frank always says, 'Make sure that you're using money to chase the art and not the art to chase money.' It's advice I think about every time I do anything. I've got money and I use it to have a goal of (making] art, not the other way around."

Then he says something startling: "The other way around is a problem, and we do skirt dangerously close to it sometimes. But in the end we make sure we're on the right side."

When I ask what art he is currently making, or thinking about, he reels off a list of ideas: "I'm interested in magic at the moment, in things like levitation and floating balls and magic that isn't real – illusions, puns, games, secrets.

"Come to my next exhibition and you'll see what I'm talking about."

Whatever his next exhibition holds, there is no doubt that, given the success of last night's auction, Hirst has a magical gift for making staggering sums of money.