The blockchain revolution is largely about taking money and power away from large, established, centralized institutions and moving towards a more decentralized model. The technology could improve efficiency and transparency but it poses questions about the future of dealers and auction houses. Bitcoin, the best-known use case for blockchain, cuts out banks and credit card agencies by decentralizing trust and making direct peer-to-peer payment possible.
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In December 2017 the craze for bitcoin, which is the first widespread application of the blockchain ledger technology, reached a fever pitch as its share price climbed to a record high of just under $20,000 - historically one of the highest accelerating asset growths ever. Since then, prices have fluctuated wildly, earning bitcoin comparison with the tulip mania of the Netherlands in the 17th century. Love it or loathe it, however, an increasing number of start-ups in a variety of industries, from finance to energy, healthcare to food, and even – you’ve guessed it – art are embracing blockchain.
But what potential does blockchain hold for the traditionally conservative and technophobic art market?
"The only way you’ll have more concrete and strong propositions is by asking the right questions and having a knowledgeable audience", confirmed Bernadine Bröcker, co-host and CEO of Vastari, a platform connecting private collectors, museums and exhibition organisers. With this in mind, it is worth reiterating exactly what this technology is. Blockchain is a decentralised, digital ledger allowing users to store information in a secure and permanent way. The data is stored in cryptographic blocks that form a time-stamped and immutable chain. This is verifiable and impossible to alter, and consequently reliable, trustworthy and traceable. The technology is widely known for currencies such as Bitcoin, but, from an art perspective, the same register can capture information such as provenance, sale history and records.
NEW ART, NEW COLLECTORS...
Blockchain has become part of artists’ practice, both as subject and medium. There is a nascent blockchain art movement from bitcoin graffiti art to artworks such as "The Last Bitcoin Supper" by French artist Youl, which sold for nearly USD 3,000 on eBay in 2014. The likes of Simon Denny have examined blockchain and cryptocurrency as a subject for years. Other examples include Plantoids – blockchain-based robotic plants which interact with people who donate via Bitcoin and Ethereum – and CryptoKitties, a virtual game that allows players to purchase, collect, breed, and sell various types of virtual cats. During this year’s Codex Art Auction, exclusive editions were auctioned for up to USD 140,000, attracting a new class of collectors – one which is perhaps less attracted to more conventional forms of art.
To understand this requires a peeling-back of jargon to reach the core principles underpinning the technology: transparency and accountability, two areas in which the notoriously opaque art industry is lacking. Here, a handful of blockchain-powered art registries that record works of art and their trading history are leading the way. They include Artory, which was founded in 2016 by Nanne Dekking, the chairman of TEFAF, and registers information from vetted partners. Codex, meanwhile, established in 2017 by Mark Lurie, stores provenance information about art and collectibles. Some 5,000 auction houses are now using the firm’s registry.
The idea is that any art title securely stored on the blockchain is accompanied by verified certificates of authenticity, provenance records, cataloguing details and sale prices. This allows companies operating in related fields such as insurance, shipping, asset-backed lending and artist royalties to interact confidently with the data, which is permanently recorded and cannot be tampered with or selectively omitted.
Other market players envision a utopian future in which there exists a single, industry-wide record for all fine art purchases, shared among auction houses, galleries and collectors and accessed via a digital ‘key’. According to Christie’s photography specialist Anne Bracegirdle, such a registry would "organically create a more comprehensive version of a price database without the intermediary or the access cost".
The big question now is whether blockchain will become more mainstream in the art market.
After all, global investment in art-related blockchain projects amounts to almost nothing. Crucial legal stumbling blocks such as data privacy, cyber security and competition laws remain. Jonathan Kewley, a London-based technology lawyer, predicts global regulatory oversight will be one of the major issues facing blockchain firms and users in the coming year since the majority of blockchain projects rely on largely unregulated cloud platforms.
But, if ever there was a sign that the old guard might yet be turned, it was the announcement at the summit that Christie’s is working on a soon-to-be-revealed blockchain project. As Bröcker Wieder notes: "If that happens with one of the most established institutions in the art world, then there is hope".
The art world is in the early stages of applying blockchain. Both Simon Denny and Robert Norton referred to the report Art Market 2.0 – Blockchain and the Financialization in Visual Arts, which notes how the current status of blockchain in the art world is similar to the internet in 1993. Will blockchain ultimately benefit art in a broader sense? The jury is still out.