Blockchain has applications in nearly every industry you can imagine, and the art world is no exception.
That’s great news for the art world, but it also means that people with no blockchain — or even tech — experience will have to start learning the ropes in order to make the most of the innovations.
I remember how steep the learning curve was when I was getting into the blockchain industry, and the best way to start is by learning the basics. That’s why I’ve put together this list of need-to-know terms for people in the art community who are interested in the blockchain space.
It’s the first in a two-part series to help educate the art world about this emerging technology.
Blockchain — A distributed digital ledger of data, which allows for the recording of processed transactions onto it in a transparent, automated, and hyper-secure manner. The data can only be amended via consensus and cannot be removed.
Consensus — A collective decision reached by a group. In a blockchain system, data is upheld by all nodes in a network, as opposed to a single node or server. Consensus occurs when the participants of a network agree on the validity of a transaction, and once this has occurred data is added to the ledger.
Cryptocurrency — Digital currency that is not issued by or tied to a central authority and uses cryptography to enhance its security.
DAO — Decentralized autonomous organization. These organizations rely on smart contracts to determine what can happen within the system and are run on a consensus-basis.
Decentralization — The concept behind blockchain technology. The idea is that no one person or entity has control. Rather, transactions are facilitated and recorded through consensus of the many participants in a network.
ERC 721 Token — Proposed Ethereum standard which allows the creation of non-fungible (non-divisible), tradeable tokens, also known as NFT’s.
ERC 20 Token — The standard which allows the trading, spending, or gifting of a token on Ethereum, which can be divided into fractional parts of the original ERC 20 token.
ERC 891 Token — An extension of the ERC 20 token. Provides “pseudo proof-of-work,” or PPoW.
Gas Price — This is the amount it costs to actually run a transaction or contract on the Ethereum blockchain. Think of it as a transaction fee that incentivises people to continue registering information. The fee is usually set by miners.
Hashing — The process of adding data to a blockchain. It begins with an input of any length and produces an output of a fixed length.
Hodl — An intentional misspelling of the word “hold.” It refers to holding a cryptocurrency rather than selling it.
Nodes — The different computer servers in a blockchain network.
Private, public, and permissioned blockchains — Public blockchain networks are accessible to anyone. A private blockchain is internal to a client, so it’s not available for anyone outside of the members to use. A permissioned blockchain lies in between the two — it may be public-facing, but admission requires a password or another form of verification before entering the network and it has the most flexibility in security provisioning.
Public and private key — Two corresponding cryptographic keys associated with a unique data set. The public key is available for anyone to see. The private key acts as the sender or receiver’s password and is what allows for the decrypting of data that was encrypted using the public key.
Satoshi Nakamoto — The mysterious creator of bitcoin.
Smart contracts — A blockchain protocol that automates a business transaction. It’s similar to setting up an automatic payment on your credit card. On a specific day each month, funds are automatically withdrawn from your bank account to pay off the balance built up by your transactions. No website login or confirmation required.
Token-curated registry — A decentrally-curated list that also provides an economic incentive for token holders to be fair and impartial curators of the list.
Tokenization/Token — Tokens are digital representations of any asset. This makes them ideal for finding new ways to monetize art. Utility tokens provide access to a service or resource while security tokens are for tradable assets.
Wallet/Hard Wallet — A digital wallet is where you store cryptocurrencies. A hard wallet is an offline digital wallet that is used for taking crypto funds and storing them offline as a security measure. A hard wallet could be as simple as a USB drive.
zk-SNARK — A zk-SNARK is a form of cryptography that proves possession of certain information without revealing that information and without any interaction between the prover and verifier.
Blockchain for Art Terms
Artist resale rights — The ability to collect a tax or monetary payment as an artist when your work is resold.
Authentication — The process of validating or proving that something is one particular thing and not something else.
Certificate of Authenticity — A tamper-evident, secure, and unique one-to-one link between a physical work of art and its immutable digital record on a blockchain (our version, at least).
CryptoSeal — A blockchain-registered, tamper-evident seal containing an NFC chip embedded with a unique identity. It’s the physical portion of the physical-digital link for artwork provenance and tracking.
Digital Identity — A unique identifier that exists in the online world.
Digital Scarcity — A deficiency that is created when a digitally-native item is offered in limited quantities and cannot be used or duplicated without permission from the author. The higher the scarcity, the higher the value.
Fractional Ownership — The ability for multiple parties to invest in or own a single work of art. An artist can use this concept to liquidate finished pieces more easily in order to make new art, grow their reputation, and potentially increase the value of their work. Institutions can also use this to raise funding with their existing inventory and permission of rightful owners or artists. It is accomplished through tokenization.
Peptide Mass Fingerprinting — Anti-forgery technology that analyzes animal proteins to identify a sample’s “fingerprint.” Forgeries can be detected by comparing the fingerprints of known works to artwork of unknown origins.
Physical-Digital Link — A one-to-one link between a physical asset and its identity on the blockchain. This link is essential to securely authenticating artwork because it eliminates the holes in purely digital or physical systems of authentication and provenance.
Physical Scarcity — The concept that value can be created through the verification of a single physical item using a unique identity with our one-to-one physical-digital link. For example, using one of our Certificates of Authenticity with an artwork will note that this artwork is the only one of its kind over its lifetime.
Provenance — The entire record of ownership and history of a work of art, which is used to help determine its authenticity and value. This record reaches from the artist to wherever the work ends up — a gallery, auction house, collector, museum, or elsewhere.
Synthetic DNA — Anti-forgery technology that lets artists attach minute pieces of synthetic DNA to their works immediately after they complete them. The DNA can then be scanned by a dealer, gallery, museum, or anyone who needs to verify the authenticity of the piece.
Thanks for reading!
Did I miss any key terms or have feedback on our definitions? Please reach out and let me know! My team at Blockchain Art Collective would love to hear from you.
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