Blockchain and (digital) art, a happy marriage?

In early June 2018, an artwork by Andy Warhol was sold via blockchain. This happened during the first ever crypto art auction in the world organized by the blockchain platform Maecenas. Is this the beginning of a promising marriage between art and blockchain or just a short but exciting affair? We delved further into this topic.

What exactly is blockchain?

A mega ledger

Blockchain technology became widely known thanks to Bitcoins, but can also be used for other currencies or goods. However, how exactly blockchain works is still a mystery to many people. Not surprising at all, because it is quite a complicated technical concept. We therefore try to explain it as simply as possible.

Blockchain can be compared to a traditional accounting ledger. It is a large database in which all transactions – of a currency or property – are kept in chronological order. The database is updated every 10 minutes by adding a block (collection of most recent transactions). Each new block is substantively linked to the previous block via the individual transactions. The whole is therefore a chain of blocks in chronological order, hence the name blockchain. This construction makes it possible to trace the history of each digital 'coin' (who paid what with it and when).

The diagram below shows how blockchain works:

Everyone owns

The big advantage of blockchain is the lack of an exclusive owner, such as a bank in the case of cryptocurrency. In fact, just like the internet does not belong to anyone and everyone can use it freely. Blockchain is thus a decentralized and open peer-to-peer network where ownership is shared equally among all members. Because the currency or goods are not stored in a central physical place, but spread through the internet, blockchain is also a secure and unhackable technology.

Another advantage is timeliness. Everyone who participates (with Bitcoin for example) and therefore carries out transactions will receive a copy of the ledger. Because new transactions are immediately updated in all existing copies, everyone always has access to current data.

 

How do art and blockchain go together?

Shares in physical works of art

So what about that Andy Warhol painting? It is still imaginable that you can digitally split coins into microcoins and distribute them among many people, such as with Bitcoin. But how do you divide a painting according to the blockchain principle? The answer is: in stocks. Indeed, you do not become the exclusive owner of the artwork, but you buy a share in the ownership of the painting. Kind of like a publicly traded company.

“14 Small Electric Chairs” – Andy Warhol, 1980

Maecenas, the blockchain platform behind the sale of Warhol's painting “14 Small Electric Chairs” (1980), linked secure digital certificates to the artwork. The certificates together constituted a 49% ownership interest in the painting. The minimum sale price was set at $4 million. Buyers could pay with cryptocurrency including Bitcoin and Ethereum.

The solution for digital art trade

Blockchain only becomes very interesting when it comes to digital or internet art, which is increasingly attracting the attention of art collectors and museums. Digital art can take various forms; for example, it can be a digital image, an animation or an entire website that is freely accessible via a URL. The big challenge, however, is how to guarantee the value of a digital artwork. You can already feel it, blockchain seems to be an excellent solution for this, for the following reasons:

1. Blockchain guarantees authenticity and solves the problem of copying. Digital images can in principle be easily and infinitely copied. This makes the original lose value. Blockchain technology allows the artist to attach an encrypted digital certificate of authenticity to the artwork. The certificate cannot be forged. The buyer therefore has the certainty that it is an original work by the artist. In this way, the value of the original work is always preserved.

2. Ownership is always registered via blockchain transactions. Thanks to blockchain technology, the transaction history and origin of the artwork is easy to trace.

FXD Treatment by Lee Barry. Original on display/for sale via Monegraph.

4. Because all sales are centrally documented, the artist does not escape his compensation when the works of art are sold on. Artists therefore lose less income.

3. Limited Edition Assurance to Buyer. In the case of works of art that are offered in limited edition, this information is also included in the certificate. If a digital image is offered in 200 copies, each copy will receive its own serial number and can be traced individually via blockchain. Because everything is publicly registered, the artist cannot expand the edition later. This preserves the value of the original print run.

Digital artwork www.thisismyemptyroom.com , collection Museum Voorlinden

Conclusion: blockchain art market is here to stay

Current developments indicate that the relationship between blockchain and art is an enduring one. This crypto technology in particular to be the ideal solution for the growing market of digital art. Do you make digital art yourself or do you want to invest in it? Here are some interesting websites to visit:

Monegraph – platform for selling digital art

maecenas – blockchain art auction platform

Verisart – secure digital art certificates

artlery – creators of CLIO, the first cryptocurrency based on art creation

 

Author: Dzenita Camo

Cover photo: Museum Voorlinden

 

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