In 2019, blockchain will continue to be deployed in new ways – and in sectors not always associated with the adoption of new technology. Santander estimates the blockchain could save the banking industry $20 billion by 2022.
Demand for blockchain skills in the freelance job market has grown by 6,000 per cent in the past year. In both public and private sectors, blockchain is beginning to bear fruit in the form of greater security, smart contracts and easier logistics management. In the coming year, the art market will join the party, deploying blockchain in innovative ways.
A decentralised and distributed digital ledger has clear applications for buying and selling of art, an industry worth $63.7bn in 2017. Blockchain’s cryptography will keep online transactions secure. Transparent trading histories will speed transactions and help prove ownership, demonstrating that a seller has the right to trade. And by allowing more trading to take place digitally, blockchain will open up the art market to a wider range of people.
At present, proving a piece’s provenance relies too heavily on trust, on outdated, paper-based systems and on single, authoritative bodies. As such, art fraud remains a major issue. At least half of the works examined by the Fine Art Experts Institute in Geneva are fake or have been attributed to the wrong artist.
In 2019, blockchain will play an important role in countering this – offering a permanent record of a piece’s history from initial authentication to present ownership. London-based startup Verisart, which creates blockchain-based digital certificates for artworks and collectables, is already working with contemporary artists to create a secure provenance for a piece of art from the moment of its creation. New York-based Artory and Bidpoc, based in Shanghai, are doing the same. Expect this to become standard practice for new artworks as they enter the market.
Older pieces will need to be verified as genuine by a specialist or the artist’s estate before being linked to blockchain certificates. This will be a slower process, but expect uptake to increase as buyers and sellers appreciate the guarantees such certification offers.
For digital art, of course, the opportunity is immediate. Due to the ease of replicating these works, attributing them within the blockchain from the offset maintains their scarcity. Ascribe, founded in Berlin in 2014, is one of a number of startups that use blockchain to enable digital artists to maintain control over where and how their work is seen, copied and distributed. It also provides a platform for digital artists to license their work and receive royalties for reuse.
Blockchain will also change the way collectors own art and use the art they own. A 2018 report published by the Oxford Internet Institute, the Alan Turing Institute and DACS, which campaigns for visual artists’ royalty and ownership rights, argues that blockchain could allow more art to be owned jointly by a number of people, or to be used as collateral against loans.
Some banks do lend money to collectors against the value of the artworks they own, but they are often hesitant to do so as the illiquidity of the art market (the relative infrequency that artworks come to market) means that estimating a piece’s value is hard. What’s more, there’s no guarantee that the bank will find a buyer for the artwork if the creditor is unable to pay off the loan. Blockchain will address this by making the market more liquid.
Blockchain is now being explored across the art world. Verisart is working with New York-based ArtSystems, which supplies software to galleries, and utilises a blockchain-based certificate that galleries can use to catalogue the items in their collections.
In July, London-based Vastari, a museums consultancy, jointly ran a blockchain-focused Art + Tech Summit with Christie’s. And in 2018, the world’s first cryptocurrency art auction took place – using the Maecenas platform, buyers were offered the chance to own a fraction of Andy Warhol’s 14 Small Electric Chairs, valued at £4.2m.
At present, just five per cent of the $500bn blockchain industry is focussed on the art market. But that will change in 2019 as blockchain increases the speed, transparency and volume of art sales globally – and, most importantly of all, democratises the sector so that we all, artists, collectors and viewers, can benefit from its riches.
Ed Vaizey is a member of the UK parliament and served from 2010 to 2016 as minister for culture, communications and creative industries
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