If art is your passion, hobby or intellectual exercise, it might soon become a more secure and accessible investment than ever before. It’s a widely held view that art as an asset ‘is an integral part of a well-diversified portfolio.’
Let’s see how things are set to change, as the established art world is headed for a rather large shake-up.
Blockchain or DLT technology will potentially open up investment in art masterpieces to the world, by allowing anybody to purchase tokenised portions of these otherwise very expensive creations. They could also (quickly and easily) sell these tokens on to other buyers. Of course, this similar fund-raising or investment capability is now creeping into other areas, including real-estate, where tokens increase in value as properties are developed – but they can be owned by multiple investors in advance. As locations become more attractive, or people rent or visit, tokens may increase in value over time. Energy and gold tokens are other assets headed in this direction.
The Decentralised Marketplace
Not only this, but all the ownership and transaction information are registered transparently and securely onto blockchain (a decentralised ledger). Tokens themselves can either be stored with the buyer in their secure digital wallets (with keys held externally or in the cloud) or possibly with a custodian company.
Digital and Real-world Collectibles
Alternatively, a buyer could purchase a piece of art as one huge, rare digital token itself, also registered and identified on a blockchain (like Ethereum). This works great if the art has been created digitally, but what if it’s an oil painting? Well, this corresponding real-world creation could hang up on your wall, having also been linked, or certified, on the blockchain, via companies that will record the ‘DNA’ of the painting and make it identifiable via the blockchain.
Therefore these days, any art collector should be looking to attain the digital, tokenised item itself and also (if there is one) the associated real-world creation. This could dramatically reduce the potential for any forgery, theft, or the possibility of any thieves selling items on.
Likewise, the next time you peruse a (real) art gallery and fancy a vibrant sea-scape painting, make sure you ask for the following:
- Does it come with an associated digital tokenised image version in max. quality? (So you can also print a photo-quality one out sometime, at max size+quality)
- Is the above token image (and the real-world item) linked and registered on a blockchain? Ie… certified not just with a certificate, but also a blockchain-based one.
Only then can you can walk out of the gallery comfortably owning two unique but related, registered rare things: one digital and one real. Also, you will now be globally registered as the current owner, and will be obliged to keep the two safe and secure. Moreover, you will also be able to sell these items very easily yourself, without even needing a gallery. You can use your back garage and invite the locals round with their smartphones.
Thanks to Bitcoin and Ethereum
Bitcoin is demonstrating how there is now the secured capability for digital scarcity to exist in the form of its cryptocurrency, or fungible units of value.
Then came Ethereum ERC-721 tokens that can make unique, identifiable items – i.e, digital images can become one-of-a-kind non-fungible rare items or ‘crypto-collectible‘. Once ‘minted’ onto the Ethereum blockchain, these items also include all their associated ownership or marketplace history. Of course, there will be other kinds of tokens, that link to their native blockchains. However, Ethereum is very decentralised, so it’s a safe choice.
However, what are the other implications of, effectively, anybody being able to become an art dealer? There could be a pretty large competition emerging. Ironically, if everything is suddenly scarce digitally, then scarcity itself may become uninteresting. That’s really just saying that to succeed as purely a digital artist might become more difficult if it’s not effective or useful online or in some context. Meanwhile real-world art – its tangible presence and power to affect – may likely retain value if it promotes real pleasure, debate or relevance to the shifting times.
At any rate, I think this sort of background is important to appreciate when looking at the following projects…….
The Art Token (TAT)
This project offers investors a way to invest in art simply, by purchasing the TAT token.
This has a smart website and the project is well supported. The Maecenas platform ‘makes it possible to build and manage a liquid portfolio of art-backed instruments, thereby eliminating the costs associated with investing in physical art.’
The decentralised marketplace, made possible by the ART token, reduces fees to a mere 2% in comparison to the 20% auctioneer’s fee.
Collectors and galleries can easily and affordably sell portions of their artworks to investors, enabling them to acquire new works for their collections.
This project deals with the certification side of any art or collectible, time-stamping and encrypting onto DLT.
This project aims to handle putting ‘DNA’ of art onto the blockchain, effectively linking real-world items to digital, blockchain-based identification.
As of writing, the website isn’t functioning well and there don’t seem to be many updates. Will update at later date.
This is an interesting project. You can browse and purchase pieces of carefully created physical artwork, that also act as offline or ‘cold storage’ bitcoin wallets.
You can add bitcoin at any time simply by scanning (via your smartphone) a QR code that is hidden or within the artwork itself, thus sending money to it. You can only retrieve the money by detaching a sticker on the back and entering the secreted private key into a wallet application online.
This is great if no-one knows that it’s actually a bitcoin wallet, and it’s true that it’s ‘cold storage’. However, my issue with these pieces is that if anyone was to discover the paintings were in fact wallets with private keys on the back, then they could just be stolen!
Read about how it works, in their own words.
‘Where Games and Art Collide’: It’s a little more work to get one’s head around this project, that uses the EOS blockchain.
Read an interesting article on this project at HackerNoon
Visit the website
Games as Art
Don’t forget that a large use-case for tokenisation and crypto-collectibles include in-game items, certificates of achievement, puzzles with hidden value, cards etc.
As famous video games fade from use, many players remain attached to various creations, for example weapon ‘skins’, maps, trading cards. Their value may increase where other players who remember stay interested, and such tokens may even be able to feature or ‘live again’ in future games or virtual settings.
A major project – and coin – to look into is of course, Enjin. Their new token standard ERC-1155 is now available to mint by anyone, especially game developers.
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