Art on the Block

Art and technology seem to be clutching hands on a rollercoaster ride like never before. Several art on blockchain projects have sprung up over the past year and this article takes a look at the problems people are trying to solve and at how decentralised the solutions really are. It’s a vibrant space that exemplifies the debate at the heart of the new internet — control. We ask whether blockchain technologies are delivering on the promise of disrupting the established relationships in the online art world or whether the same same old tunes are just being replayed on different instruments. Is it possible to bring blockchain technology into the online art world to allow a thousand flowers to bloom?

“red, pink, and yellow flowering plants” by Eva Waardenburg on Unsplash

To come to grips with these questions we will discuss the main innovations in the blockchain space and look at how the new art on the block projects are using and thinking about these technologies and the role they play in respect to art.

Permissionless Blockchains

To get clear we need to differentiate between the terms permissioned vs permissionless blockchains. Permissionless blockchains are few and far between. In fact only two really stand out; Bitcoin and Ethereum. The chief characteristics of permissionless blockchains are;

  • Decentralised
  • Trustless
  • Open Source
  • Transparent

Control of the Ethereum or Bitcoin blockchains is in the hands of the communities who run nodes, mine transactions and collaborate on the source code. These communities are open and transparent. The transaction history (or ledger) embodied and maintained by this type of blockchain can’t be undermined or subverted by national governments or tech giants. Permissionless blockchains hold amazing possibilities from redefining banking, challenging opaque man in the middle practises and reversing the pernicious centralisation of the internet that has led to Equifax, Facebook / Cambridge Analytica and many other scandals.

Permissioned blockchains on the other hand are really just a new type of database. Season 2 episode 11 of Mr Robot makes the point very well in a speech by the CEO of Evil Corp where he compares their own E-Coin with Bitcoin.

The Art Market 2.0 report published by University of Oxford and the Alan Turing Institute makes the point loud and clear. They describe the problem clearly by pointing out “the current art market including the online component is plagued by fraud, illicit business and tax evasion”. However their conclusions are very disturbing; “a digital ledger powered art trading market would be a valuable business to create and thus why a large company is likely to to develop and patent the infrastructure for it”. They go on to assert that a global tech company is most likely to create, patent and run a ledger that powers the Art Market 2.0.

Art in its essence is something that challenges our norms and deeply held convictions. Like technology, art is also continually usurped by the hegemonic contexts in which it exists. In the modern world art has become just another tradeable asset where for example around 80% of all fine art is stored in Freeports — tax exempt lockups beyond national jurisdiction.

For the Art on the Block projects to get anywhere near challenging the current state of affairs in the online art world they need to be based, at the very least, on the permissionless versions of the new technology.


Tokenomics

Having made this primary distinction we need to get clear about the main difference between Bitcoin and Ethereum. Most of the new Art on the Block projects are focused on the power of ‘smart contracts’ and their accompanying economic model — ‘tokenomics’. Ethereum took the basic idea of Bitcoin and added the ability to do arbitrary computing on the blockchain. Smart contracts are in effect small pieces of code which execute inside the nodes that make up the Ethereum network. To fully appreciate this idea we need to take a step back and properly define the Bitcoin blockchain.

Bitcoin is electronic money and a payment processor combined. It bundles ‘bitcoin’ the cryptographic analogue to fiat currency together with the ‘bitcoin consensus network’ a network of nodes which work out and agree on the current state of the ledger — the complete history of all transactions performed on the blockchain. Bitcoin is like fiat currency plus all the various payment engines, processors and gateways (paypal, visa, amex, etc) all rolled into one.

Ethereum by extension is the state of the ledger — in this case the history of transactions in Ethereum’s base currency ‘ether’ together with the history of executions of all the smart contracts deployed on the nodes in the network. Ethereum brings the possibility of code as legal contract and also opened the door to a revolution in funding of technology projects.

This funding revolution is called the ICO (Initial Coin Offering) model because smart contracts on Ethereum can be used to generate coins or tokens which then act as a means either of exchange of value as in money or as a basis for incentivisation within the functional ecosystem of the particular project. The coins or tokens generated by a project are then traded, typically via an centralised exchange, to raise funds. The model flourished over the period 2016–2018, until the regulators were able to get back some degree of control and the price of ether — the base currency of the tokens, began to fall.

There is a paradox at the heart of the ICO model that has caused it to be a mixed blessing to the crypto community. On the one hand it ushered in a wave of investment that has allowed thousands of projects to get going on their various ideas to change the world. On the other hand it brought much interest into the blockchain space at a time when the permissionless blockchains were not ready for it — they hadn’t solved their scalability problems. Additionally there has been a deeper existential threat. The ability to run an ICO and generate say 5M to run a project pushed the ethos of the crypto space from one of social activism toward one of money men, crypto traders and get rich quick schemes. I.e. toward the same values that dominate the current online art world.


What are Art on the Block Projects?

The main use cases being explored by the Art on the Block projects that have emerged so far are around the certification of the provenance or ownership of artwork, see for example Verisart. A mechanism known as timestamping — storing a hash of some data in the blockchain is the key here. A hash is a fairly straight forward cryptographic operation the details of which are out of scope but it is important because it can be used to associate a user address with some information in a tamper proof manner that is available to anyone to verify.

Timestamping is seen as a game changer, especially for digital artwork, since it means for the first time a piece of digital art can be scarce — a one off, just like its non-digital counterpart.

The distributed ownership of artwork is another use case being explored e.g. by the Maecenas project. Here tokens generated by an Ethereum smart contract are used to represent shares of ownership of the artwork. These shares or tokens can then be sold to and distributed among many users allowing everyday folk to own a little bit of a Picasso or a Turner and enter the privileged world of art speculation.

A third important area where blockchain technology has entered the dialog is in relation to online auctions. Much of the art sold online is traded via auction platforms it is a natural fit to introduce the above blockchain use cases into the lifecycle of an online auction. For example liveauctioneers.com are exploring the codex project for plugging in blockchain based provenance solutions into existing auctions and Sotheby’s are exploring integration of blockchain technology into their own auction platforms.

These ideas are great but something is missing here and it has to do with the synergy between art in its essence and Bitcoin as an inherently political technology. Both art and Bitcoin challenge the assumptions which underpin the commercial and economic relationships between the citizen and the state or between the user and the tech company. However many of the new projects act like service enhancements and plugins for existing incumbent platforms. In other words they aren’t so much about disrupting the power structures underlying the online art world as incorporating it into these structures.

So the question is are the new Art on the Block projects just more of the same? Industry led ideas that ultimately lead back to where we started or are they ideas which genuinely challenge the existing power structures and hidden assumptions at a deeper level?

The familiar Hayekian response of Silicon Valley fails to see the problem — investment drives innovation and that is all there is to it. However like Kronos this kind of free market capitalism tends to eat its own offspring and we end up back where we started — with a handful of tech giants running the show and an online art world trapped in its Glass Bead Game.


Decentralization

User data has become the real currency of the early 21st century with pretty much all of it flowing into the control of a small number of companies. People are giving away their personal data and creative content because right now they have little or no choice. This issue is crucially important in the context of freeing both artists and technologists to think in new and creative ways because unless the data is truly decentralised both remain fundamentally constrained by the existing economic models.

The permissionless blockchains decentralise the baseline financial data and Ethereum goes a little beyond this by decentralising some application specific logic but in reality has very limited capacity for storing application data. So how is the vast majority of data — user data, images and other media managed by the Art on the Block projects?

In general the Art on the Block projects turn a blind eye to this issue. Some integrate with a decentralised storage project called IPFS but this has limited scope for handling the user data. In general however the problem is ignored and conventional infrastructure with centralised application and database servers is used to store the vast majority of user and application data.

Compare this with the current situation of uploading artwork to Instagram. Instagrams terms mean that ownership of files uploaded to their servers automatically transfers to them. This state of affairs is not something that can be easily addressed by the Art on the Block projects which build mostly upon centralised infrastructure.

There is however a potential solution out there that has been quietly building a new kind of internet infrastructure for decentralised applications away from the hype of the ICO bubble. The Blockstack project takes a different approach to that of smart contracts by reversing the relationship between user and centralised service provider. Starting with a decentralized user identity system which allows a user to own their own online identities — based on a timestamping solution in the Bitcoin blockchain- they have created a different paradigm for Art on the Block projects to explore.

The second innovation of the Blockstack project recognizes that these Bitcoin backed identities form a foundation for a new solution for decentralized user storage which allows users to control their own data and media. Decentralized applications in this scheme are granted permission to access and use this data, effectively pulling the model of the traditional internet inside out. The decentralized application becomes just a tool that the user chooses rather than an all encompassing service which owns their login, profile and data.

As a basis for building a new online art world, challenging vested interests and offering control back to users, artists and creators perhaps this paradigm is more promising?