The transition from Art & Blockchain to Art & NFTs
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.
Thanks to the great hype of the moment surrounding Blockchain, people in the sector and some startups, 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 Tokenization of an artwork, the Certification of Digital Art and finally the use of it as a Business Art Solution.
When we talk about the tokenization of a work of art, we are referring to the possibility of securitizing an asset into several parts – be it physical or digital – thanks to the use of connected smart contracts, which regulate the rights of use, possession or commercial exploitation for each part.
Numerous platforms have tried over time 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), namely the difficulty of reselling the shares in the short term and thus creating a profit, with a considerable problem linked to low supply and demand.
A separate consideration goes to the management of the physical asset and therefore the verification of its authenticity, the attribution of its economic value and its preservation, which was often attributed to private owners of 60% of the shares.
On top of this, and more generally, there is the lack of security provided by the proposing platforms, which were often immature start-ups that were undercapitalized and unstructured in their long-term management.
Another line of application for Blockchain is the certification of the authenticity, or ownership, of a work of digital art, for which this technology is ideally suited.
In fact, if on the one hand, it offers the transparency of distributed databases, on the other hand it allows the association, even cryptographic or shared, of a digital file to a smart contract including the now-famous NFTs (Non Fungible Tokens), but not only, we also think of DAOs (Decentralized Autonomous Organizations) and other applications related to the temporal validation called “Timestamps”.
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 decentralized technology is the Art Business Solution with the aim of regulating, tracking, valuing and validating economic transactions between players and professionals in the sector in favour of Due Diligence and Provenance, for the insurance, transport, handling, fruition and sale of works of art.
The Blockchain can therefore be used as a binding, tracking and sometimes regulating technology for a market, namely that of Art Services, which is worth around $20 billion globally, alongside the exchange market which is worth around $50.1 billion according to the latest Art Basel Global Market Report 2021, all in support 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, by the Italian startup Art Backers, which today encompasses thousands of users and works (physical and digital) that are certified daily with the possibility of interacting with a community of Artists, Collectors, Gallery owners and professionals, based entirely on certificates of authenticity recorded on the Blockchain.
While previously 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 online world, they have been forced to think of a new “Post Coronavirus Art”, in particular after Christie’s baptism and the sale of the work “Everydays: the first 5000 days” by the artist Beeple for over 69 million dollars, everything has changed.
Today, people no longer talk about Blockchain, the technology, how it works or the doubts surrounding it, today they only talk about NFTs and how to be part of this world.
The sale of 11 March 2021 has heralded 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 NFTs on a daily basis.
This is the role of innovation for Art, where a catalyst leads to a technology, and its use in a particular sector, becoming disruptive.
This is all part of the game, but the most interesting thing is that what has happened so far with NFTs has nothing to do with the canonical art world: these were established dynamics of the Crypto world.
Now it’s time to talk and write the history and rules related to Art & NFTs!