How blockchain is being used to help prevent fraud in the art world
Exclusive: the art world is turning to blockchain to help offer transparency of ownership, and reduce IP theft…
By David Crookes for CNR
It may be 252-years-old but the leading auction house Christie’s is looking to the future with blockchain technology in mind.
Anne Bracegirdle, Christie’s photography specialist, believes blockchain has the potential to be revolutionary. She says it can overcome problems faced by the art industry, simplify the lives of clients in the art industry and make the market more accessible.
“I have literally had trouble sleeping out of sheer adrenalin and excitement,” she told the recent Art+Tech Summit. “If implemented successfully and securely, this technology will result in simpler processes, more transactions and more empowered buyers, sellers and artists.”
Bracegirdle is not alone in thinking this. The art world has, for some time, been attracted to distributed ledger technology, and many in the industry are starting to understand the benefits of being able to tie legal documents to a secure, trusted database.
“Personally, I wasn’t particularly engaged in emerging technology but then I heard someone describe blockchain and, despite my ignorance, I instantly saw natural connections to our industry’s roadblocks,” Bracegirdle admitted.
By creating a single place where information related to traded art is stored securely, she believes the days of having to present physical invoices and dusty catalogues for provenance will one day be banished in favour of an automatically-updated digital ledger.
“If implemented successfully and securely this technology will result in simpler processes, more transactions and more empowered buyers, sellers and artists,” she explains. What’s more, it will allow auction houses such as Christie’s to get a better handle on the fast-growing digital art market.
“It is not a fad,” she told the summit, raising the fact some people in the art industry had written it off. “It has been enabled by blockchain and it is a attracting a new buyer base. Scarcity, value and demand is created and sustained in the same way as in the physical art world.”
Indeed it is. With blockchain, digital artists can create limited digital editions of their work and know that someone cannot simply copy and seek to sell their art without being caught out. Bracegirdle also says artists would be able to receive a portion of the sale proceeds regardless of how many times a work is subsequently sold.
“The blockchain finally provides an answer to the question, ‘How can you own digital art?’,” confirms John Watkinson, who created a tool that generates a unique set of collectible digital pictures called CryptoPunks. “Before blockchain, there was never a satisfying method since it is always possible to make perfect and unlimited replicas of the work.”
Watkinson tells Crypto News Review that he and business partner Matt Hall originally launched CryptoPunks for free. The artworks were quickly claimed and then the buying and selling began. “Just over a week after launch, a CryptoPunk had sold for 10ETH which was around $3,000 US dollars at the time,” he adds.
The benefit is stark: the ownership of a piece of digital artwork is incontrovertible and highly liquid. “Anyone can instantly determine the ownership of a particular work, and the owner can sell the artwork to anybody in the world with negligible fees,” Watkinson continues. “That’s a big change compared to the very expensive gallery/auction house experience of the traditional art marketplace.”
Faced with such challenges, it is little wonder that the likes of Christie’s are looking to get involved. For Bracegirdle, it’s a way to keep up with the times while offering increased trust, security and transparency, even with the recordings of physical work. “Imagine one place where all information related to traded art was stored securely with catalogue details, provenance and the sale process,” she says. “The data would be linked to the artworks and the owners.”
An important part of this is the fact the database is public, rather than in the hands of a private company. Bracegirdle talks of an industry-wide database and Watkinson says this is the way to go.
“If we launched the CryptoPunks with ownership managed by our private database, nobody would have been interested and rightly so,” he explains. “How could our database be trusted if the artwork became increasingly valuable? What would happen if we suddenly went out of business and our database disappeared?
“In contrast, now that the CryptoPunks are deployed as an Ethereum contract, nobody can alter or undermine it, not even us. As long as Ethereum itself still exists, the CryptoPunk smart contract will continue to operate, and it could theoretically outlive any physical artwork.”
And yet, despite Bracegirdle’s enthusiasm, he says blockchain seems poorly-suited to being involved in physical art. “Because the artwork exists in the physical world, there is a fundamental “centralization” that cannot be overcome by simply involving the blockchain,” he tells us.
“Consider, for example, fractional ownership for a famous painting managed by an Ethereum smart contract. The ownership itself would be impeccably managed in a transparent way. However, who would physically hold the artwork? What if it was damaged in a fire, or stolen? What if expensive maintenance was required to restore the artwork and prevent its deterioration?
“Even if the expenses for that were somehow managed via the blockchain, who would decide if such expenses are necessary, or that the funds are spent properly? All the answers to those questions involve centralisation, which undermines the value of storing the ownership on the blockchain. We think the blockchain’s involvement in digital art is vastly more interesting and promising.”
Making A Living
Indeed, a growing number of digital artists are becoming more attuned to the benefits of the blockchain. “As a means for representing work to be sold, whether existing physical work or new digital work that could not otherwise be easily represented in the art market, and whether fractionally or whole, the blockchain represents a new opportunity for artists to try to make a living from their work,” says Rob Myers, who has explored blockchain in his artistic works.
“In turn, art and artists represent a unique challenge for blockchain technology that can help develop it in new ways.”