It was 2016 when people started talking about Art & Blockchain at the first conferences on the subject, where the prospects for applying this new technology to art were all in the making.
Accomplice to the great hype of the moment about Blockchain, people in the field and some start-ups, including our Italian Art Rights, investigated the concrete application of the technology to the “physical” and traditional art world.
Some events in particular in 2018, such as the Deloitte Art&Finance in Luxembourg and the Christie’s Art+Tech Summit, have been solid points to identify what are still the three main uses of Blockchain for the Art world. The Tokenisation of an artwork, the Certification of Digital Art, and the use as a Business Art Solution.
When we talk about the Tokenisation of a work of art, we refer to the possibility of securitising an asset into several parts – be it physical or digital – thanks to connected smart contracts, which regulate the rights of use, possession or commercial exploitation for each part.
Numerous platforms have tried to apply this condition to physical works, one of which is Maecenas, seeking to assimilate investment dynamics typical of the stock market and financial markets to assets linked to the art world.
However, to date, none has managed to emerge successfully due to problems linked to the liquidity of the Second Market (the sales following the first), i.e. the difficulty of reselling the shares in the short term and thus creating a profit, with a considerable problem linked to the low supply and demand.
Separate consideration deserves the management of the physical asset and, therefore, the verification of its authenticity, the attribution of its economic value and its preservation, often attributed to private owners of 60% of the shares.
More generally, the lack of security provided by the proposing platforms, often immature start-ups with low capitalisation and little structure in long-term management.
Another line of Blockchain application is the Certification of the Authenticity, or ownership, of a work of Digital Art, for which this technology is ideally suited.
If on one side, it offers the transparency of distributed databases, on the other, it allows the association, even cryptographic or shared, of a digital file to a smart contract including the now-famous NFT (Non-Fungible Token). We also think of the DAO (Decentralized Autonomous Organization) and other applications related to the validation time called “Timestamp”.
If up until a few years ago, the solution encountered some obstacles, linked above all to the meagre value of the Digital Art market, after the explosion of the NFT market and more generally of Collectibles first, and Crypto Art later, the attention of artists and operators in the traditional art market has rapidly increased.
The latest application for this decentralised technology is the Art Business Solution to regulate, track, value, and validate economic transactions between players and professionals favouring Due Diligence and Provenance for the insurance, transport, handling, fruition and fruition sale of works of art.
The Blockchain can therefore be used as a binding, tracing and sometimes regulating technology for a market, like Art Services, worth around $20 billion globally, in addition to the exchange market worth around $50.1 billion, according to the latest Art Basel Global Market Report 2021, all in favour of authenticity and trust in the market.
Companies such as Artory, Verisart and Art Rights are among the few that have today created a concrete network of users between physical and digital; in particular, Art Rights, from the Italian start-up Art Backers, which today encompasses thousands of users and works (physical and digital) certified daily with the possibility of interacting with a community of Artists, Collectors, Gallerists and professionals, based entirely on certificates of authenticity recorded on the Blockchain.
If before, there was a diffidence and a more general and typical reluctance to change on the part of those working in the sector, with the ongoing pandemic, the lost physicality and the need to resort to the web forced them to think of a new “Post Coronavirus Art”; in particular after Christie’s baptism and the sale to over 69 million dollars of the work “Everyday: the first 5000 days” by the artist Beeple, everything has changed.
Today, people no longer talk about Blockchain, the technology, how it works, or its doubts. Instead, today they only speak about NFT and how to be part of this world.
The sale of 11 March 2021 has decreed the breaking down of technological barriers to entry by the industry who, feeling validated and reassured. First by Christie’s, then Phillips, and finally Sotheby’s, and now by so many other artists and gatekeepers in the sector in recent months find themselves involved in discussing Art and NFT daily.
That is the role of innovation for art, where a trigger makes a technology or its use in a particular sector disruptive.
That is all part of the game, but the most exciting thing is that what has happened so far with NFTs has nothing to do with the canonical art world: they were established dynamics of the Cryptocurrency world.
Now it’s time to talk and write the history and rules related to Art & NFT!
Article originally appeared on the newsletter called DeFi Today.