Blockchain and the Art Market: A Match Made in Heaven?
Blockchain proponents will oftentimes follow the same narrative: blockchain is a disruptive technology. But what a lot of people are focusing on revolves around finance; perhaps the close relationship between blockchain, Bitcoin (the world’s largest cryptocurrency by means of market cap) and a lot of other cryptocurrencies, for that matter, are what’s strengthening the association.
The truth, however, is that blockchain technology has a tremendous number of applications well beyond the financial sector.
Today, we take a look at something that might not seem, at first glance, to go hand-in-hand: art and technology. You might be surprised at how blockchain can essentially transform the art market in a lot of different ways.
The Art Market is in Need of Disruption
There are quite a few things which are in desperate need of improvement in the art market. Verification, centralization, falsification, lack of transparency, lack of connectivity — all of these, and many more, are issues currently riddling the market.
So why blockchain? How can it help fix all of the above and truly disrupt the art market, which hasn’t seen much in the way of innovation for the past few centuries? Let’s have a look.
Centralization — An Overlooked Problem
One of the ways in which blockchain most radically disrupts Fintech is by making the expensive, inefficient banking middlemen obsolete. In fact, blockchain can perform the same service to the art market.
Behind the art scene’s faces of passion and glamour lies the fact that a substantial amount of contemporary artists are having a hard time surviving exclusively off their art earnings, regardless of how good their work actually is. The passionate, starving artist is a stereotype as old as time, but these days it seems to be harder than ever to make a living.
The main reason for this are the patrons and galleries, who serve as centralized sources of income, the middlemen of the art world to use fintech terminology. In other words, these actors function just like large, centralized corporations, who are able keep artists on the payroll in order to make massive financial gains.
As soon as a corporation signs a retainer contract with an artist to promote or sell his work, the patron will take the bulk of the profits. At the same time, galleries and auction houses will also take money straight out of the artist’s pocket.
What the person responsible for the artwork in the first place is left with, is an inconsiderable portion of the entire profit.
Just as it does in Fintech applications, Blockchain can alter the entire art market through its distributed, decentralized nature. Art lovers and artists can now interact directly in a secure and transparent environment. Or, to put it simply — the middleman becomes completely unnecessary.
Authenticity — A Critical Challenge
One of the art market’s most serious challenges, especially for works where the artist is no longer among the living, is to verify its provenance and authenticity.
According to a 2014 report by The Fine Arts Expert Institute (FAEI) in Geneva, over 50% of the artworks investigated were either counterfeit or were not correctly attributed to the original artist.
Blockchain can change all of this. What is more, it can change it effectively. As a decentralized, public ledger of records which are securely linked through cryptography, blockchain allows for complete, traceable, transparent, and effective monitoring of a certain art work throughout its entire life span, regardless of whether or not its author is still with us.
Art Tokenization — A Game Changer
Blockchain technology also allows for art tokenization — something that can completely change the dynamics of investing in art. People who participate in the art community are looking for various opportunities to invest and tokenizing provides an accessible way to do that. Tokenizing essentially means turning a physical thing into a digital asset, which can be divided up. This allows for the spreading of ownership of an incredibly expensive artwork among multiple token holders, opening up new options for investing, as well as access for art collectors and museums.
Tokenization allows investors to participate without having to go all the way. In other words, you don’t need to purchase an entire work of art at a prohibitive price.
To sum up just a few of the benefits, here’s what we have so far:
Blockchain technology can:
- Bring unparalleled transparency and traceability to the art market
- It can, once and for all, help fix the authenticity issues and falsification attempts
- It can connect art lovers and artists directly, hence getting rid of the deeply-rooted auction house system
- It can allow accredited investors, collectors, and museums to participate, even partially, in virtually any work of art they want to
What’s AERUM Place in All This?
In order for all of the above to be possible, you would actually need a fast, stable, and scalable blockchain infrastructure. This is where AERUM steps in.
AERUM’s blockchain solution is not only blazing fast, but it also provides on-demand scalability. In other words, you needn’t worry about whether you’d require 1,000 or 100,000 transactions per second — AERUM will cater.
It’s also particularly compatible with Ethereum, providing easy integration and transfers through cross-chain atomic swaps.
What do you think of blockchain disrupting the art market? Don’t hesitate to let us know in the comments below!