Blockchain mania peaked in December 2017 when bitcoin prices, the first application of digital ledger technology, rose to a record high of nearly $ 20,000 in one of the most dramatic increases of any living memory resource. Since then, prices have fluctuated wildly, earning bitcoin comparisons with the Dutch tulip mania in the 17th century. Love it or hate it, however, a growing number of start-ups in a variety of industries, from finance to energy, from health care to food, and also – you've guessed – the & rsquo; art is embracing the blockchain, but what potential does the blockchain have? for the traditionally conservative and technophobic art market
To understand this, a peeling of the jargon is necessary to achieve the fundamental principles underlying the technology: transparency and accountability, two sectors in which the industry notoriously opaque art is lacking. Here, a handful of art registries with blockchain recording art works and their trading history are leading the way. They include Artory, which was founded in 2016 by Nanne Dekking, the president of TEFAF, and registers information from controlled partners. The Codex, meanwhile, established in 2017 by Mark Lurie, stores information of origin on art and collectibles. Approximately 5,000 auction houses now use the company's register.
The idea is that any art title safely stored on the blockchain is accompanied by verified certificates of authenticity, documents of origin, catalog details and sales prices. This allows companies operating in related sectors such as insurance, shipments, asset-backed loans and artist's rights to interact securely with data, which are permanently registered and can not be tampered with or selectively omitted.
The problem is that such systems can be "corrupted with bad information", according to Dekking, who was speaking in July at Christie's first summit & # 39; s Art + Tech, dedicated to the blockchain. In other words: "If you put shit, you are disgusted". Similarly, services such as authentication are performed independently of the blockchain, so it is necessary to perform due diligence before entering data. Companies like Tagmart, which authenticate themselves in a forensic way with "DNA tags", are the next step in providing the elusive missing link between the physical object and its digital record.
Another problem is that Bernadine Bröcker Wieder, the managing director and co founder of Vastari, who co-organized the summit, describes how the "VHS-Betamax problem", in which several registers emerge compatible at the same time. "Recordings must be transferable so that they can follow the chain even if it is saved on different protocols," he says. Vastari, which combines exhibition producers with venues, is collaborating with the Everledger diamond registry to create a database of exhibition stories to "measure the value of a work based on visitor numbers and audience engagement, as well as the value of the audience. current valuation methodology through auction prices ".
Other market players imagine a utopian future in which there is only one industry record for all purchases of fine arts, shared between auction houses, galleries and collectors and accessible via a digital "key". According to Anne Bracegirdle, Christie's photography specialist, such a register would "create a more complete version of a price database organically without the intermediary or the cost of access".
The future of market intermediaries, ie auction houses and retailers, has been called into question by blockchain initiatives. John Zettler, co-founder of the RARE Network, which sells digital art, believes that the secondary market is at risk, partly because the smart contracts, written on the Ethereum blockchain, "can do all the clearing of the secondary exchange". They also offer artists a percentage of secondary market sales, potentially solving a long-standing problem in the market. A consultant for Portion, a new auction house built using cryptocurrency and blockchain technology (scheduled for October), states that customers who choose to use Portion's proprietary Ports tokens will remove all third parties, brokers and brokers. commissions.
The area of the secondary market that is gaining momentum is tokenization, in which parts of blue-chip masterpieces are traded as assets. In June, Andy Warhol 14 Small Electric Chairs (1980), valued between $ 5.1 million and $ 6.2 million, became the first piece of art to be divided into portions and placed Auction using blockchain technology. The sale was organized by the London gallery Dadiani Fine Art (which tried to sell the canvas at Bonhams in 2016 and maintains a 51 percent share in the work) in collaboration with the blockchain Maecenas platform, and was still underway at the time of writing. With one million shares available, the final price of the shares will range between $ 5.10 and $ 6.20 (based on the June valuation).
The goal, says Marcelo García Casil, co-founder and CEO of Mecenate, is "to bring more transparency to the traditional model of artistic investment". The price of shares in a job could be published a few times a week, rather than every five or ten years or more, as in the case of pieces sold at auction through traditional channels. Unlike many blockchain registers, which are private, Garcia Casil says his company would consider making his database public.
Blockchain is welcoming the digital art market. Traditionally, the on-screen works market has suffered because art is easy to reproduce and distribute. But now, with blockchain, you can make digital art scarce or even unique: the Holy Grail for collectors. As an example: Celestial Cyber Dimension a unique digital image of a cat or CryptoKitty, sold for $ 140,000 in May against an estimate of $ 25,000 – $ 30,000. This is not a passing fad. This is an emerging market that has been activated by blockchain technology, "says Bracegirdle." Blockchain offers digital artists the opportunity to publish and sell their work and then create a value structure and a market. "
The big question now it is if the blockchain will become more widespread in the art market.After all, the global investment in blockchain projects related to art is almost nothing.There remain crucial legal uncertainties such as data privacy, IT security and competition laws Jonathan Kewley, a London-based technology lawyer, predicts that overseeing global regulation will be a major problem for blockchain businesses and users in the coming year, as most projects blockchain are based on largely unregulated cloud platforms.
there was always a sign that the old guard could still King transformed, was the announcement at the summit that Christie's working on a blockchain project that will soon be revealed. As Bröcker Wieder observes: "If this happens with one of the most established institutions in the world of art, then there is hope."
From the September 2018 issue of Apollo. Preview and subscription here.