When blockchain arrived on the scene as the technology powering Bitcoin, the first cryptocurrency, few would have imagined the extent of its potential. Blockchain is immutable ledger technology which records transaction history in a non-hackable or corruptible way.
That record is also spread between multiple computers, negating any ‘single point of weakness’ security concern. Most importantly, it works without the need of any third party administration.
Cryptocurrencies aside, the technology has many potential applications from medical records, supply chain management, finance and manufacturing. The art world may not be renowned for its early adoption of the latest technology but is now also reported to be on the verge of a blockchain revolution.
In fact, it shouldn’t really be a surprise. Blockchain’s greatest strength is its quality as a ‘trust protocol’ that carries records that cannot be tampered with. The greatest problem that the art market contends with is the often opaque ownership history of pieces and the verification of their authenticity. Blockchain can carry the entire history of a piece of art such as certificates, ownership documents and sales records in a way that would erase any of the doubts that often hamper trust. In what ways can blockchain improve the art market?
Art insurance is one obvious area where blockchain records can make a huge difference. Axa Art say that an all too familiar scenario is a fire engulfing an art collection and taking documents of ownership stored in the same location with them. All documents of ownership and provenance held securely on the blockchain would make settling insurance claims relatively easy.
Buying and selling would also be a much smoother process if all ownership and provenance documents were held securely on a trusted blockchain system. This would also provide the history of a piece’s previous sales and even the context of other works by the same artist and/or comparable pieces.
Digital art is also a growing sector of the art world and blockchain provides a solution to the problem of copies being made. A digital artist can store and transfer an original piece on the blockchain and a buyer has security that theirs is the only copy, or at least the only copy with verification of originality. Digital artists can also use the blockchain to produce a small number of copies, in the same was as photographers can produce limited edition prints. Fractional ownership of works of art is another intriguing possibility raised by the application of blockchain.
Auction houses such as Christie’s are currently exploring where the use of blockchain could improve their processes. There are still several unanswered questions such as who verifies the destruction of a piece of art in a fire or other accident? If a third-party authority is required in such cases is a blockchain solution really all that different from the traditional processes? However, while not a magic wand for all the art world’s ills, it is already clear that the latest technology in the world of blockchain will have immensely useful applications. One of the oldest industries in the world will almost certainly see a revolution powered by one of its newest technologies.