How ownership of art works on the Maecenas blockchain platform
From July 25 we were delighted to launch our beta auction on the Maecenas blockchain platform. The auction of Andy Warhol’s 14 Small Electric Chairs on Maecenas generated international attention and represents a watershed moment for art on the blockchain.
The beta is still ongoing, so if you want to start using the platform yourself and participate in future auctions, it’s not too late to sign up — just follow the instructions here and be sure to fund your wallet with ART tokens, Ethereum or Bitcoin.
You can also find out more about the technology that underpins the Maecenas platform, as well as our underlying philosophy, in our briefing documents.
What happens, though, once you’ve signed up, placed a bid and successfully become the owner of a fractional digital share in one of the world’s most famous artworks? What do you, as an investor, get for your money, and how are your ownership rights protected?
Here’s how we solve the issue of ownership for artworks sold on the Maecenas blockchain platform.
Who owns a piece of art when the blockchain becomes involved?
Firstly, the original owner of an artwork sold in a Maecenas auction will remain in control of the piece. This is because — for now — sellers can only list up to 49% of of the economic interests of their artworks.
Next, ownership of the artwork is transferred to a Special Purpose Vehicle (SPV) prior to the auction itself. The shares of this SPV are then sold so investors can participate in the economic interests of the artwork.
It’s important to stress that Maecenas is simply a decentralised auction platform that can be used by art traders, collectors, gallery owners and others for a number of use cases. By using blockchain technology to underpin transactions, we ensure this activity is as transparent as possible — and by using an SPV, we ensure investors’ economic interests and ownership rights aren’t contingent on Maecenas existing (so there’s no threat of Maecenas disappearing overnight).
As for what happens to the physical artwork: this may be stored by the original owner in some circumstances, but more commonly will be kept by a third-party in a purpose-built secure facility (such as a freeport). Our hope is that investors will then be able to arrange private viewings of the artworks in which they own shares, as well as collect dividends when the artworks are leased to galleries and museums for profit.
Art on the blockchain offers greater security
That Maecenas is built with blockchain technology means that transactions are secured by the incredible power of the blockchain ‘ledger’, making the Dutch auction process private yet more transparent than you would find in a traditional auction.
The nature of the blockchain also makes transactions and other key information tamper-proof, which will also have a positive impact on other matters such as the overall valuation of artworks and helping with some issues surrounding provenance.
Originally published at blog.maecenas.co.