In a bid to make operations easier and improve the authenticity of the products they offer, the art industry is embracing blockchain technology as the future beckons.
It was back in 2014, that the Fine Arts Expert Institute (FAEI) in Geneva stated that over 50% of the artworks it had examined were either forged or not attributed to the correct artist. It is in this vein that blockchain could change all of this. Art collectors, for example, can use the technology to track the origin of a piece, its owner, the history behind the piece and other information to verify the authenticity of the piece to be purchased. Companies like Artlery, CryptoArt and Verisart are already using blockchain to trade in art and enable their clientele to use cryptocurrency in a blended experience that is really transforming the industry in such a fundamental way.
Clare McAndrew’s report, “The Art Market 2019” showed that the global art market reached an estimated $67.4 billion, with the US extending its position as the largest market, and the UK in second position ahead of China in third position. So just how is blockchain making its presence felt in the art industry? Auction houses like Christie’s have been experimenting with blockchain to establish provenance and create trackable records for art sales. For living artists, placing their work on a blockchain registry would establish a chain of ownership tying back to the artist and the work’s creation. Perhaps the most famous sale that involved Bitcoin was back in 2018 with the sale of Andy Warhol’s 1980 work “14 Small Electric Chairs” for $5.6 million, where 49% of the sale was in Bitcoin and Ethereum cryptocurrencies.
Talking to industry press, Adam Stuckert, a partner at KPMG China’s IT Advisory, says the concept of using blockchain technology for trustworthy transactions in the world of art is “almost perfect”. “For digital art especially, this is exactly the kind of reasonable application of the technology because you can store a part, or the entire piece of art, on the blockchain itself. With physical pieces of art, however, you need to tie the ledger to an extra, physical identifier like a very high definition scan, or a chip or sensor embedded in the artwork,” he says. According to research, only about five percent of the $500 billion blockchain is focused on the art market, but that is set to change as this technology increases the speed, transparency and volume of art sales globally. More importantly, it democratizes the sector so that artists, collectors and viewers can enrich themselves from the ecosystem as a whole.
Art tokenization is the next big thing, and a monolithic painting is defragmented into thousands of digital tokens that can be issued to the buyers, and it digitizes the ownership into tradeable tokens that improve the liquidity of the artwork. Macenas were the ones who were behind the Warhol sale, and they are also in the process of tokenizing one of Pablo Picasso’s masterpieces that will be auctioned in an open Ethereum platform. Offline assets are registered on the system which is then transformed into digital assets and a unique token is then assigned to it which ensures the copyright of the artist as well. Blockchain and the world of art may only be starting a relationship that is still in its infancy, but the future certainly looks awe-inspiring, to say the least.
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