How is 4ARTechnologies disrupting the art market?

9 min readJul 24, 2020

Summary

With a sales volume of $64.1 billion in 2019 and a decade-high volume of transaction of 40.5 million — the art marketplace is an ever more exciting field of opportunities for investors looking to diversify their portfolios.

However, buying art in the art market is not a simple task for inexperienced investors. Investing in a piece of art comes with many obstacles.

Starting from determining the artwork authenticity, making sure the accompanying documentation is not forged, insuring and transporting a piece of art, to managing art collections — all these actions require very specific knowledge that not many traditional investors possess to operate successfully.

Today there are multiple projects in the art marketplace trying to solve these issues in one way or another. Most of them focus on using blockchain for art provenance, track and trace solutions, and change of ownership of an artwork.

However, all of them fall short when it comes to authentication of a physical piece of art, including other actors in the art market besides buyers and sellers, and KYC identification according to legal and regulatory standards.

We at 4ARTechnologies have observed the gap between the needs of the art marketplace and the existing solutions. That’s why we have created a product, 4ARTapp which provides a solution were other projects don’t.

Whereas other cataloging and transaction platforms allow only for the authentication of an artwork’s digital certificates (of history and provenance), 4ARTechnologies allows for the authentication of the physical image itself.

That, and much more we discuss in this blog post. So, keep reading for learning how you can join the movement and become part of the new art market standard.

Current art market

With a sales volume of $64.1 billion in 2019 and a decade-high volume of transaction of 40.5 million — the art marketplace is an ever more exciting field of opportunities for investors looking to diversify their portfolios by investing in a piece of art.

To the uninitiated, however, buying artworks can mean a leap of faith. The market is notoriously intransparent; making wise investment decisions requires both considerable expertise, the right personal network, or the guidance of trusted but costly intermediaries, e.g. brokers or auction houses.

In the absence of a centralized database of artworks, investors often run into problems when trying to verify the history and provenance of a piece of art — information that is central to its valuation in the art market.

Museums, galleries, or public collections need to constantly perform costly and time-consuming work to verify and track objects, often incompletely due to a lack of funds.

While the rise of the internet has hailed the coming of an age of greater accessibility and equality in many realms, the art marketplace has been notably exempt from this.

Only 8% of sales in the art market are conducted digitally; most of them in the lower price segment of up to $5'000.

It is clear then, that tech has yet to tap into the art market’s full potential and to spur its growth by opening it to more buyers.

Existing issues in the current art market

The art market’s upward trend notwithstanding, it remains rife with problems.

Its greatest issue, no doubt, is the fact that an estimated 30–50% of artworks are likely to be counterfeited or cannot be declared as verified originals due to incomplete provenance information.

In light of this, owners and buyers frequently call on experts to assess an art object´s veracity. But not only does this command thousands of dollars in fees, but it also renders the result prone to human error or even ill-intent.

If, as a result of an expert appraisal, a piece of art is detected and/or declared fake, the impact goes far beyond rendering that one particular piece worthless in the art marketplace. Indeed, it casts doubt on that artist’s entire oeuvre.

Affected by subsequent losses in value are all art market participants who hold works by that artist: private collectors, galleries, the artist themselves, or their estate. The combined damages due to art fraud are hard to quantify; experts place them in the hundreds of millions per year.

Artwork authentication, then, is another area where the right tech solution can generate considerable growth by increasing process efficiency and eliminating the opportunity for human error. But it is by far not the only use case that would benefit from a tech-driven update.

A closer look at the most common transaction chains within the art marketplace reveals a multitude of areas needing a unified digital standard backed by a technology that promises to create value for all artworld players by increasing transparency, security, and process efficiency.

Manual image authentication: As image authentication is performed manually, it is prone to human error, costly, and time-consuming.
Easy to forge documentation: Records of history and provenance are central to image valuation in the art market and authentication, yet these are often incomplete, easily forgeable and not stored securely.
Expensive condition reporting: Condition reports are cumbersome and expensive — taking either human effort or large scanners. Owners often forego them, even though they are central for image valuation and insurance purposes (e.g. in the context of transactions/transportation).
It is nearly impossible to identify those responsible for damages to an image (e.g. in the context of gallery loans: whether damage happened during transportation or exhibition) which can significantly affect the value of a piece of art in the art marketplace.
No standard recording of restoration activities: There is no standard recording (and secure storing) of restoration activities along with an artwork’s other vital stats, i.e. history, provenance, and condition reports.
No logistics & transportation tracking: There is currently no track & trace solution and transports between different players in the art market are usually underinsured.
No royalties on artwork resale: Due to the lack of transparency around image transactions, artists are not able to gain royalties from resales of their artworks.
Difficult collection management: The absence of an effective digital solution means that managing large collections — from individual documentation/condition reporting to the coordination of restoration works — for every art market participant, it takes a great deal of time and effort.

Existing solutions in the art market

There is no shortage of projects in the blockchain space aiming to combat the lack of transparency and inaccessibility in the art marketplace.

Most of these solutions aim to create greater transparency around the history and provenance of a piece of art by storing this data on the blockchain and/or by facilitating sales transactions that cut out the need for middlemen, such as galleries, auction houses or brokers.

However, common to all these proposals are two major limitations.

Firstly, being able to verify the authenticity of a digital certificate is not the same as verifying the authenticity of the physical artwork itself.

And secondly, excluding some of the most powerful players in the art market — who hold a considerable amount of artwork data — is likely to prove a major barrier to wider adoption.

In summary, the projects aiming to harness blockchain for the art market fall short in these ways:

There is no authentication of the physical piece of art.
Provenance data, however securely stored, is worthless in the art market if the material artwork is not verified.
The use cases for other actors in the art marketplace besides buyers and sellers are extremely limited. By directly connecting buyers and sellers, these solutions exclude some of the most important players in the art market, such as influencers like galleries, exhibition makers, and trendsetters.
In the absence of KYC identification according to legal and regulatory standards, the identity of market place actors cannot be verified, eliminating the usefulness of these systems; this includes living artists who, while holding rights to their images, are not rewarded during resales of their artworks.

How is 4ARTechnologies solution different

The 4ARTechnologies solution combines the superior security of the blockchain with “augmented authentication” technology to tackle the industry’s most pressing problems while creating value for all art market players.

Authentication of the physical artwork
Whereas other cataloging and transaction platforms allow only for the authentication of digital certificates (of history and provenance), 4ARTechnologies allows for the authentication of the physical piece of art itself.

The “augmented authentication” technology to be featured in our mobile applications makes verification quick and easy.

In addition, it helps with the generation of condition and restoration reports.

Exclusively licensed technology
Thanks to the exclusive relationship with our technical partner Atlantic Zeiser GmbH — the leading German provider of security solutions for banknotes and identity documents — it is licensed exclusively to 4ARTechnologies for global use in the art marketplace.

Atlantic Zeiser has been part of Orell Fussli Holding since 2002, the company that has been responsible for printing all Swiss banknotes since 1909 and whose largest shareholder is the Swiss National Bank.

When a user (verified according to the KYC standards used by Swiss banks) scans a piece of art, this powerful software records its structural, material, and textural features as well as the color spectrum.

Using “augmented authentication” technology and layer photography, image data is then converted into an artwork’s unique fingerprint.

Biometric passport on blockchain
This “fingerprint” is stored on the blockchain along with all other relevant information, providing the artwork with a forgery-proof “biometric passport” that also lists its current condition/restoration status.

Image authentication
After the initial scanning of an image, its fingerprint can be checked against any other image purporting to be that same piece of art, again using only a smartphone.

Secure storage of accompanying documentation
For the first time, all information that is relevant to artwork authentication and valuation will be securely stored together.

This guarantees both the veracity of the digital certificate and the physical image. For now and for generations art marketplace participants to come.

Again: all it takes to scan and authenticate an image is a standard smartphone.

The combination of a blockchain-based cataloging and transaction platform with “augmented authentication” software makes for a wider range of compelling use cases beyond the authentication of a piece of art.

These create value for all art market players — including those excluded by current solutions.

With the introduction of one unified standard, 4ART brings much greater efficiency, security, and transparency to all artwork-related transactions:

All platform users are verified according to regulation-compliant KYC standards.
Artwork owners (private or institutional) benefit from increased investment security and a convenient solution for managing their portfolios.
Condition reports (which accompany any transaction) are easily generated on a smartphone and are now feasible to add security to any transaction, from selling artworks on the art marketplace to shipping or insurance deals.
Logistics and transportation providers benefit from track & trace functionality.
Underinsurance is no longer a problem as artworks can easily and quickly be registered individually, rather than through a bulk estimate (as is often the case).
Artwork conservators and restorers are able to log the details of their work and/or access the details of previous restoration or conservation activities.
Artists will be able to gain royalties thanks to the recording of resales of their piece of art in the art market in the artwork’s blockchain-passport.

How you can become an investor in 4ARTechnologies

If you like what you read and you believe in our cause of changing how the art market works, you can support us by investing in the 4ARTcoin.

Since the 16th of June, the 4ARTcoin is tradable on Bittrex Global Exchange and it can be purchased with Bitcoin as well as with USDT.

The 4ARTapp is available for iOS users on the AppStore. You can download the app here. The Android version will become available at the end of August 2020.

If you want to learn more about how the 4ARTecosystem works within the art marketplace and why we expect 4ARTcoin coin to grow long term, read this article.