Digital dilemma: Will the art market embrace blockchain’s promise of transparency?
Furthering the cause of transparency and establishing trust are the ideals expounded by blockchain enthusiasts, but efforts to implement this technology in order to create a digital registry for artworks will certainly take time. Will the market resist, and will increased transparency improve the market and make it more efficient, or will it scare away vendors and buyers?
“We found that it’s not necessary for everyone to learn the ‘ins’ and ‘outs’ of blockchain to understand the benefits of immutable information,” said Ms Moroney. “Focusing on how this technology can be applied to benefit the art market has led to a real shift in thinking.”
While no one can be forced to be a part of any digital art registry, Artory says research shows that collectors and art world professionals are ready to embrace transparency’s benefits. According to a 2017 Deloitte Art & Finance report, 75% of art professionals and 64% of collectors want the art market to meet standards of greater transparency.
“The art market is rife with fraudulent activity,” and has long been characterized by a lack of transparency, said Robert Norton, CEO of Verisart, a service that allows an artist to issue a certificate of creation for an artwork, as well as allow collectors to issue the same for works they own. “It’s the last major unregulated market.”
One important reason why Artory is pushing for greater transparency is because if the art market doesn’t police itself better, it’s only a matter of time before the government steps in with regulations.
Ms Moroney says that Artory offers two key ways to self-regulate the market. First, to prevent entering fraudulent information into the blockchain not everyone will have the right to register works with Artory. The company will only store in blockchain data that which comes from vetted partners, meaning it records events in the lifecycle of an artwork, but only when due diligence is done to verify the information — transactions, valuations, research or insurance. Second, Artory has a vetting committee of independent art professionals to review potential partners before they and their data are accepted.
Thanks to blockchain registries you will be able see in real time if there is authentic title to an artwork. This is important because provenance is key to value.
“Over time blockchain will become a powerful disruptive element on how the art market operates,” said Mr. Norton. “The art market has been resistant to a centralized database; however, because we are using blockchain to build a decentralized database, where individuals don’t have to share private information such as their identity or the price they paid for the work, we believe that now is the opportunity to build exactly what collectors are looking for, which is to eradicate problems around authenticity and ownership.”