Art 2.0: An Analysis of the Alan Turing Institutes Study on Art and Blockchain
Blockchain technology is an exciting prospect for many industries, including the art market. A recent study by the Alan Turing Institute interviewed twenty six representatives in the art and tech industries to gain an overarching opinion on the potential impacts of Blockchain on the art market. The study found that even though Blockchain technology is still in its infancy, it has the potential to help artists with copyright and forgery issues as well as increase the overall liquidity of the art market. “The Art Market 2.0” has a lot of potential, but also raises a few concerns.
What is Blockchain?
Blockchain is the current hyped technobabble that I’m sure many have heard of, but few really understand. It became popularized through the use of cryptocurrencies, specifically the eponymous Bitcoin. I think the easiest way to understand Blockchain is to compare it to a close cousin, email. With email, you can communicate with groups of people very easily. Say you sent a company email to about fifty recipients. If someone wanted to make a change to the email post sending it, it would be nearly impossible because fifty separate recipients have already received the email. Blockchain operates in the same way. It distributes its information across a network of computers, making an outside source attempting to change the information much harder because there are many backup copies. This naturally makes the technology enticing for financial purposes such as Bitcoin or for security purposes in general.
So What Exactly Is Wrong With the Art Market?
The art market is not exactly easy to follow as it exists in a variety of domains such as galleries, fairs, auction houses, online sales, and art dealers. High profile pieces sell at auction sites like Sotheby’s for hundreds of millions whereas an artist at a fair may be able to sell you a print for around $15. There is a saying “it is hard to put a price on art.” The saying applies not only to artists trying to price their works, but to pricing high profile pieces at auction as well. Auction prices have a tendency to appreciate and depreciate very rapidly, which make them very hard to keep track of. These factors create a high barrier of accessibility to art and cause it to have a relatively low liquidity.
Aside from the barriers to entry, the market has a reputation for shadiness. The art market is known for fraud and forgeries. With soaring auction prices, the incentive to forge is quite high. Other problems include tax evasion and illegal sales. Research on an artworks history, known as provenance, helps alleviate some of these problems. In the museum industry, for example, a researched provenance is required before a piece can be accepted into a museum. Provenance however, is often hard to ascertain and requires a great deal of research including questioning of the artworks previous owners and finding supporting documents to authenticate those claims. When purchasing online or through a dealer, a clear provenance or any provenance is not always a guarantee. Collectors want to know they are getting the real deal and the art market is not universal about providing this information.
What Can Blockchain Do?
Blockchain can be useful to the art market because of the ability to create and spread shared ledgers. This means that information about an artworks provenance and authenticity can be widely spread. Imagine having an artworks entire history attached to it that is easily able to be shared with a large amount of people, without much fear of it being hacked or corrupted. Imagine if the barriers to entry such as the fluctuating prices and lack of universal standards of notating an artworks history and authenticity were eliminated. Ideally the liquidity of the art market would go way up, as there would be much more demand caused by the heightened accessibility. The end goal of all of this is a more transparent and equitable art market.
Artists also hope that the equitability created by the Blockchain art market will extend to them. It is no big secret that well known (dead) artists rule the market with their work going for millions of dollars at auction. This kind of competition creates a barrier for emerging artists entering into the art market. Aides like gallery representation are helpful, but hard to attain. The concepts of the “struggling artist” or the “starving artist” are widely accepted colloquialisms because of these barriers. Artists hope that Blockchain will help them better assign values to how much their work is worth. Shared ledger systems allow artists to authenticate and copyright their art for all to see. The main dream though is simply for artists to have a killer platform to gain recognition and sell their art. Many of the artists interviewed for the study, viewed Blockchain as a veritable art utopia and a way of equalizing the playing field.
Blockchain is a technology still in its infancy and has yet to reach its full potential. Where Blockchain is now is akin to the start of the World Wide Web in 1993 before things like dot com, search engines, social media, or online shopping. As of right now Blockchain is incredibly slow and can process about seven transactions per second. Compare this to a company like Visa’s processing speed of around 56, 000 transactions per second, and there is a fairly large difference. If Blockchain is indeed going to become the next big commercial thing, it’s going to have to speed things up. Blockchain also currently operates on a closed system, meaning that different Blockchains cannot link up with each other. An example given in the case study describes a concert site with multiple vendors selling tickets to a concert. If each vendor had their own closed Blockchain network, there would be no way for the concert site to know how many total tickets were sold and will cause the concert to be overbooked. Blockchain will become revolutionary when different Blockchain networks can talk to each other.
Think of how the tech worlds operates, when there is a new idea, there is going to be one powerful company that will try and swoop in to control the market. Think of how Facebook is the king of all social media sites and made other sites like MySpace obsolete. Think of how Amazon monopolizes the online shopping game to the point where physical storefronts are going out of business. Some artists fear that if Blockchain intersects with the art market, there will be a company that swoops in to control the art market. The potential of controlling the market also has a lot of money attached to it. Some of the interviewed artists were turned off by the idea of trying to monopolize art. Art is something done for expression and enjoyment that is meant to be shared. It is not for fattening some powerful tech company’s wallet.
The intersection of Blockchain and the art market has the potential to revolutionize it. The concept of a shared ledger makes it easier for buyers to know an artworks provenance and authenticity. Artists would have a platform to show their artwork is legitimate and easily assign a copyright. The market would be less prone to fraud and barriers while more prone to transparency and equitability. However there are some concerns about Blockchain’s operating speed and closed systems, as well as apprehensions about a single entity utilizing Blockchain to control the art market. For now, Blockchain’s potential is still waiting to be tapped.
For a more in depth discussion, I highly suggest reading the original study. It is a bit long, but a very interesting read.
— Article by: Christopher Rahmeh