​Blockchain Gets Artsy: How the Technology Could Help Secure the Art Market Against Fraud

Desireé Duffy  |

The art world might have a new advocate: blockchain technology. The scope of application and the effectiveness of blockchain technology across many industry types is being seriously considered, based on the type of advantages blockchain can deliver. This means the world of art may be able to utilize the technology, too.

We all know blockchain technology has its share of skeptics. However, there is no doubt blockchain is quickly emerging as a business solution, not just within the financial industry, but also in healthcare, supply chain management, insurance, real estate and creative industries such as music, publishing, and yes, the art world.

How Blockchain Works

Let’s take a quick look at how it works. The foundation of blockchain technology is based on a distributed ledger system which exists as a network or chain of blocks. The linked blocks hold data and information; they come together as a chain of transactions. Since each block of data comes with a timestamp, the space to alter or corrupt the data is virtually impossible.

This attribute of blockchain technology is what lends it the kind of accountability and transparency advantage that is missing in many business solutions.

Challenges in the Global Fine Art Market

Fraud and the counterfeiting of fine art are the two biggest concerns for the multi-billion global fine art industry. A big worry for the industry is the increase in replicas and fake pieces of art coming into circulation in place of the original items which customers have procured for millions of dollars.

There is a year on year increase in these numbers. The use of blockchain technology could however, help revolutionize the art world by bringing in greater transparency in the money trail. It could address some of the larger issues of art authentication. By comparison, it might be like watching a Blackhat, Transformers, Star Trek Beyond, or Horrible Bosses type movie – it has the potential to be that outstanding and transformational.

By introducing blockchain technology in the art market, the space for improving provenance (record of ownership and authentication proof) can be dramatically enhanced. What this essentially means, is that now provenance documentation, which currently relies heavily on one central authority, could actually be better served through multiple established market players.

Decentralization Is the Key to Reliable Information

The massive selling point of blockchain technology is that it is based on a system of decentralization. In the present context, this is important for the following reasons:

  • Reliance on a third party to store information is negated.
  • Transactions costs are lowered as there is no need for middle-people.
  • The technology is based on the principle of open-source, which means it can be further enhanced.
  • It is a better system for data sharing on transactions while ensuring collectors anonymity.
  • The creation of a single point of real-time access with respect to provenance documentation in addition to ensuring that any data is virtually tamper-proof.
  • Real-time and quick access to provenance also helps optimizing the insurance process or borrowing against work.

All Public Art: Incorporating Blockchain Technology to Secure the Art Market

With the aim of improving transparency, enhancing accountability, and contributing to the efficiency and productivity of art professionals, All Public Art developers started looking at a technological solution which could enhance the process of trading fine art between artists and art collectors.

Since 2015, a beta version of the solution has been in place on the All Public Art platform. The main area of focus for this technological solution will be to ensure not just transparency, but also improving security within the online marketplace, which means the chances of counterfeiting and fraud could be greatly minimized.

In addition to securing greater information about artists and proof of authenticity for the art pieces, the blockchain solution will also help to protect artworks, artists and collectors against the sizable matter of price manipulation and reduce space for bribes and kickbacks.

The challenge for All Public Art is substantial and comes mostly from within the industry vis-à-vis artists and collectors. Since blockchain technology is still in its infancy, as far as adoption of the technology within the art market is concerned, convincing artists and collectors of the tangible advantages the solution offers is a challenging task.

What’s Next for Blockchain Technology in the Art World?

Blockchain technology could be the platform for creating a comprehensive and incorruptible database of artists and art pieces, thereby securing the art world from the kind of criminality it has been subjected to in the last few years, or even decades. To ensure that the global art community is exposed to the information surrounding blockchain, All Public Art is implementing various programs, events, and will be participating in art fairs around the world. There is currently a buzz about the power of blockchain within the art world and All Public Art’s initiatives are designed to bring awareness to the incredible impact that blockchain can have with a platform created to usher the art market into the next wave of technical innovation.

What do you predict for the future of blockchain and the art world? Share your thought in the comment section below.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer



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