Fine art collecting is one of those hobbies that immediately conjures a mental image of fancy cocktail parties, swirling brandy glasses, and auctioneers throwing around millions of dollars like so much Halloween candy. It’s an image of tweed jackets, fox hunting, exclusive clubs, and refined snobbery.
Almost by definition, collecting art is a pursuit of the upper crust.
Emerging blockchain technology is changing that, much as it’s changing how common folks invest in real estate and other typically capital-intensive ventures. It’s also changing how art is created, distributed, and authenticated.
One of a Kind
What makes art intrinsically valuable? This question plagues newcomers to the art world. They stand before a Jackson Pollock – just dribbles, smears, and specks – and gawp at the price tag. It has become a cliché.
The price difference between the original Mona Lisa and a gift shop poster of the Mona Lisa is tied to authenticity. It’s not tied to the image itself – both show essentially the same thing. However, one has been authenticated by a trusted third party, like an art dealer, and certified to be original and, therefore, of higher value than an identical image.
If that sounds familiar to the wording of Nick Szabo’s landmark “bit gold” proposal, then we are on the right track. Bitcoin and other auxiliary cryptocurrencies derive their value from the cryptographic signature applied by their respective blockchains. The blockchain takes the place of a bank or government in assigning and protecting the currency’s value.
In the same way, blockchains are being developed to cut out the middleman art dealer and directly authenticating and assigning value to individual works of art.
This is particularly relevant in the age of Photoshop, digital photography, and digital art. Old-school art forgery was an art in-and-of itself. It required immense skill and craft to take tubes of paint and a blank canvas and churn out a counterfeit Vermeer worth millions of dollars.
MS Paint Picasso
If I produce the next Mona Lisa on MS Paint, there is nothing stopping me from copying the JPEG thousands and thousands of times, spamming it to art forums, and hosting it on my blog, freely available for download. There’s also very little stopping someone else from doing exactly the same thing, apart from paper-thin intellectual property and copyright laws. Ask any celebrity that has done something embarrassing how difficult it is to remove an image from the internet.
The blockchain addresses this issue. Just as there is only one original Mona Lisa, there can be only one authentic, signed digital version of my original MS Paint masterpiece. Copies can be produced ad nauseum, but they are no different than the professional posters on sale at the Louvre gift shop. Copies of art just do not hold the same value as the original work.
Po.et is one Company using the Blockchain to prove ownership of assets
As the original artist, my rights and my future earning potential are secured by the blockchain. Millions can enjoy a digital copy of my art, but I alone control the price and the distribution of the original. This is, in some ways, the Napster phenomenon coming full circle. Metallica and other prominent musicians fought long and hard to prevent piracy of their material on Napster, BearShare, LimeWire, and other services around the turn of the millennium. Their material was copyrighted, they argued, and just because it was easy to steal didn’t make it right or legal. The counterargument was that a copy was a copy was a copy, and since it could be done instantly and for free, Metallica ought to quit whining about their music reaching millions more folks than it might otherwise have.
Enforcement became the crux of this issue. We all remember the students and grandmothers slapped with million-dollar lawsuits. Very, very few of those enforcement measures stuck because enforcement was so difficult. After all, the song itself doesn’t exist in a pocket or a hidden drawer. It exists in bits and bytes, spread all over the world.
The value of a cryptographic signature in this situation becomes immediately apparent. It’s much easier now to track the original painting, book, or song as it winds its way through cyberspace.
This end is being championed by projects like Poe Coin, which is primarily interested in literary works. Cryptokitties on the Ethereum blockchain is a prototype for how future art provenance blockchains might function.
A Piece of the Pie
Of course, art is worth exactly what someone is willing to pay for it. And that someone is usually of the brandy-swirling, fox-hunting variety, because art is expensive. The record was set in November 2017, when a buyer plunked down more than $450 million for Leonardo da Vinci’s “Salvator Mundi.”
Just for comparison, as of April 12, 2018, that’s more than the total market cap of most cryptocurrencies outside of the top 30, according to Coinmarketcap.com.
This limits ownership in the art world to the privileged world of the super-rich and institutions like museums. There is virtually no opportunity for the Average Joe to invest in up-and-coming artists or park their value in established old masters.
The blockchain is disrupting that centuries-old status quo. Much like how a company can issue stocks, now holders of fine art can issue shares in individual paintings via the blockchain. Much like owning a stock, a shareholder isn’t entitled to waltz into the home office and rifle through the CEO’s desk – but they are a part owner of the company, all the same.
Verisart, Provides Tamper-proof certificates for art and collectibles. Secured by the blockchain.
What’s the point in owning a slice of a Rembrandt? The original holder of the painting benefits by raising readily available cash for future purchases, much the way a company can raise capital via an initial public offering. The trade off is a little flexibility in how the art can then be bought and sold, but a painting that originally might have only earned money by attracting museum patrons can now actively fund its existence.
The buyer of an art share also benefits, above and beyond the noble pursuit of supporting the arts. He or she is now using art in much the same way as the super-rich: as a store of value. Currency can fluctuate, real estate can degrade, and company stocks can tank. A Rembrandt, however, is likely to hold and even increase its value over time, barring a catastrophic loss or proof of forgery. One of the leaders in this field is Maecenas, the first so-called decentralized art gallery.
Fine Art Folio
Blockchain technology promises a new way of storing, authenticating, and investing in fine art. The overall flattening of the market should pave the way for stronger artists’ rights, as well as common-man ownership of our shared cultural heritage. This is the promise inherent in all cryptocurrencies: more access to markets and ideas that were once the playground of the capital-rich. Best of all, it promises to spread the burden of supporting the arts across a wider appreciation base. A Pollock becomes more accessible to the mainstream crowd, after all, when the crowd owns a portion of it.
While it’s a bit harder to hang on the wall, digital art stakes may soon become just as important to the industry as museum trustees, restoration experts, and brandy glass manufacturers.