The Art of Blockchain: Part 2

In our last blog post, we began to explore the impact that blockchain will have on the art world, especially regarding Provenance, Authenticity and Investment.

That was only scratching the surface, and so after his lecture at New Art Academy in Manhattan on Dec. 14, we caught up with blockchain expert, Sherone Rabinovitz, to help us delve deeper and better understand the coming changes and what the art world might look like in coming years.

What else can blockchain do for the art world to make it a better place?

For starters, Rabinovitz adds that it can be useful for compiling and recording information about the exhibition of an artwork:

“… when and where it was displayed, for how long, and even how it was transported from point A to point B; how many hands — and whose hands — touched it along the way, etc. All this can be recorded in that highly secure and immutable manner for which the Blockchain is known.”

Even more revolutionary, blockchain allows for instantaneous access to this information to anyone in the world. It’s precisely this “democratization of information” that can seriously alter the fundamental functioning of the art world, helping to peel away the mist of secrecy that has long held sway.

“As far as efficiency goes, one of the basic tenets of the blockchain is that it is decentralized and distributed. It would no longer be shrouded in secrecy, kept under wraps by the hands of a few power brokers — be they auction houses or other special interest groups.”

But couldn’t someone seek to manipulate the market by establishing a blockchain that contains false information and data?

Blockchain undoubtedly excels at preventing already recorded data from being tampered with, re-written and possibly falsified. But if that recorded data was already false to begin with — well, blockchain can’t help you there. But by the same token, because of the distributed and decentralized nature of the blockchain, the truth will eventually catch-up — because it would be crowd-sourced over time.

“Blockchain is at the end of the day just a tool. It’s a brilliant tool for sure, but its still just a tool, which is to say that like all tools it can be both used and misused.”

Ok. Fine. Sounds good. But let’s take a closer look at Tokenization. We already saw how it can help raise capital, but are there any other benefits?

“Tokenization is a new vehicle for raising money — as well as enticing action. It’s an instant marketplace. It’s also about attention, a buzz, and creating a marketplace where none existed before. And then the Network Effect takes over. You’d never get that with one single buyer. Remember, instead of one buyer you’re now suddenly dealing with perhaps 1,000 buyers — or 10,000 buyers. That’s an entire marketplace. It’s an exchange. Created overnight.” (Ex: Maecenas, CEO and Founder Marcelo Garcia Casil, allows fractional ownership of the artworks using Blockchain Technology).

Finally, most likely there will be resistance to blockchain from many top market players. Why should the proverbial old guard want to change? They are already prospering with the current business models and practices in place. Right?

“It might take a year, 5 years, or a generation, but eventually blockchain will catch on. Even if there’s resistance from individual actors or businesses, sooner or later Technology has a way of engulfing everything and everyone. If you don’t upgrade — just to stay compatible with the upgrades happening around you — you’ll fall off the radar. You’ll disappear and be left behind.”