Buying and selling art has been considered a social symbol, highlighting one’s status and splendor. Even though it is considered to be a novelty by most, the total sales for the art industry stood at a whopping $45 billion in 2016, up by 1.5 percent, according to data provided by the TEFAF Art Market Report. Now, some believe that blockchain technology, hailed as the next significant technological disruption, could revolutionize this billion-dollar industry as well.
Technology and the Art World
It is common knowledge that many classic art pieces belonging to the medieval and renaissance era are sold for millions of dollars. In the case of Da Vinci’s painting Salvador Mundi, for instance, the buyer dropped close to half a billion dollars for the purchase.
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Leonardo da Vinci's masterpiece Salvator Mundi achieves $450,312,500, a #worldauctionrecord for any work of art sold at auction.
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More importantly, the negotiations during these kinds of purchases include several rounds of aggressive bidding by potential buyers. Not only that, but the buyers are often located all over the world. Already, we begin to see how some form of technology could streamline this process.
The specific hurdles facing this process, however, are the characteristics that make a piece like Da Vinci’s so valuable. For a rare piece of artwork, the piece is unique and original. It can neither be shared nor collectively owned, unlike the trends taking over the music industry.
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Since blockchains can be used as immutable ledgers, records that are written to them cannot ever be modified. Furthermore, when an artwork is traded, the updated data can also be pushed to the blockchain.
Simply put, an original piece is never lost, and thus a duplicate can never emerge and be sold for the same price.
In the past, there have been instances when a clone of an original painting has sold for millions of dollars, unbeknownst to the buyer.
In some other cases, the original painting gets misplaced and is then picked up at a garage sale for pennies before its new owner realizes its actual worth.
Keeping Originality Immutable
To combat these issues, each art piece can be given a unique identification number, much like the way we have unique cryptocurrency wallet addresses. Once an artwork’s past ownership records are updated, along with the details of its creator, it becomes effortless to locate and gather information about a piece.
The work could also be verified by an expert who would issue ratings as per the pre-existing global standards. The approach would make it easier for probable buyers to arrive at a valuation of any artwork in question.
Art galleries across the globe can also use smart contracts to host auctions, which would give bidders the liberty to participate regardless of their location.
The collectible can then be securely transferred to the highest bidder in exchange for details of the transaction. All other galleries and auction houses would also receive a copy of the contract through the same blockchain-based network.
There could also arise the possibility that an item is being sold by auction houses in both, England and America simultaneously. In this case, the smart contract will automatically award the item to the highest bid that comes in a given time.
Blockchain technology, some believe, has the ability to flatten the global artwork business and minimize any challenges posed by geographical boundaries
Some crypto startups have already entered this industry, in fact.
Manchester-based KnownOrigin.io is one such example of a venture that is already using the innovation to provide more people the opportunity to own rare artworks.
Meacenas is another decentralized art gallery to be launched later in 2018 that claims to be the first blockchain platform to democratize access to fine art.