Despite the fact that the first effective use of the blockchain was associated exclusively with the creation of a new decentralized payment system - Bitcoin, it soon became clear that this technology could be adapted to other areas of human activity. Logistics, supply chain management, elections, purchasing, healthcare and, surprisingly, art. However, we should not be surprised, since contemporary art is inextricably linked with the use of new technologies. And it could not pass by such a useful and convenient idea as a blockchain.
Blockchain technology benefits
What exactly does blockchain do for writers, artists and other creators? First of all, the possibility of creating a decentralized creative environment in which the authors will not be limited in the freedom of creativity, and the audience - in the freedom to express their own sympathies, including through material incentives. That means, it will be much easier for the creator of works of art to find their target audience, and then, based on the cryptocurrency donations of this very audience, concentrate more directly on creativity. Previously, for this purpose, it was necessary to look for major patrons and sponsors, and then - to create, guided by their wishes. The decentralized environment provides the artist with true freedom of expression.
Next step. For a significant part of creators, solving organizational issues related to holding exhibitions or selling their creations is a full-fledged test. Therefore, you have to hire intermediaries and various representatives to keep your time, energy and nerves from wasting. Blockchain technologies help avoid this. Smart contacts will regulate the sales process, and the ability to move your creations into the virtual world solves problems with finding an exhibition area, logistics and other organizational issues. The creator gets the opportunity to fully concentrate on creativity.
Finally, the blockchain itself and the projects based on it can be a source of inspiration for someone. Still, contemporary art is not only traditional paintings and sculptures, but also interactive art objects. And here the creators have a place to roam. From "paintings that generate bitcoins" to the creation of digital works of art, which are inherently some form of decentralized networks.
However, the main way to apply blockchain technologies in art is still to optimize trade with the results of the creative process. This was achieved through the tokenization process.
Tokenization of Art Objects
The traditional art market has three main problems:
- Lack of transparency. Trades are held “behind closed doors”, it is not known how prices are set and formed.
- Difficulties with counterfeiting and calculating profits. Even in closed auctions, counterfeits are regularly sold, and as for profits, traditional formulas for calculating investment efficiency do not work with art objects and similar things.
- Trading restrictions and high fees. At a minimum, difficulties in quickly selling the acquired asset in order to get real money. Alas, without an intermediary with connections, this is almost impossible.
But the using of blockchain technologies and tokenization helps to avoid them.
Tokenization is the process of linking real-life things, such as money, stocks, securities or works of art, to virtual equivalents specially created for them. The token is essentially a property right. The use of blockchain technologies makes it unique, indestructible, copy-protected and divisible. All this greatly facilitates further manipulations with the underlying asset tied to the token.
What does all this look like in the case of works of art? First, a specific object is evaluated by a certified curator - this allows you to determine both its value at a given moment and the number of tokens by which it can be "divided". Anyone who wants will be able to purchase a token or part of it further, which guarantees himself partial ownership of the object. All this takes place in a transparent mode since this is one of the main features of the blockchain. Also, these tokens cannot be counterfeited and they are extremely difficult to steal.
What are the benefits for each of the participants in the process? The author gets the opportunity to monetize his work quickly and regardless of the whims of wealthy people. And he won't need any intermediaries to sell his creation. Regular users get the opportunity to purchase real pieces of art. Well, or just partial ownership of them. This is also useful from the point of view of investors, as it allows you to diversify your investment portfolio. It also simplifies the process of interaction with large museums and art galleries - they get the opportunity to exhibit "virtual copies" of a real object without violating copyright and without spending money on logistics.
As you can see, this market will only benefit from the integration of blockchain technologies into it. However, in reality, everything is not so clear.
The future of the blockchain art market
There are several major issues that are making it difficult to implement blockchain on a large scale in the art trade.
- Scalability. The eternal problem of decentralized networks is that the larger they are, the slower the exchange of information takes place in them. For local networks, this is not a problem, but when the number of users starts to reach several hundred thousand, the processes slow down.
- Complex user interface. A person familiar with programming usually does not experience problems during work with any projects on blockchain technology. But for the average user, this can be quite difficult. Even despite the presence of "intuitive interfaces".
- Full decentralization. It is extremely difficult to avoid consolidating assets in the hands of a few wealthy users. So, for example, about 40 percent of all existing bitcoins are owned by one thousand people. If they agree among themselves and increase their share to 51 percent, they will be able to dictate the terms to the entire network. With smaller blockchains, the situation is even more complicated.
- External regulation. The governments of different countries do not stop attempts to take control of the cryptocurrency market. The same can be expected for the blockchain art market. No, on the one hand, official regulation will give the participants additional security. But on the other hand, it will deprive anonymity and seriously reduce the degree of freedom.
- Energy consumption. Alas, most blockchains consume a very large amount of electricity.
- The conservatism of the main players. The largest investors, collectors and art gallery owners are very conservative people who have a hard time accepting innovations.
However, despite all these disadvantages, there is a future for the art market based on blockchain technology. According to data obtained by social analysts in the US and Europe, the millennial generation tends to consider art objects as an extremely profitable investment. And as collateral. And if you give these people the opportunity to freely participate in the art trade, they will actively participate in it. In addition, among this generation, there are especially many collectors who are passionate about collecting various objects - from “achievements in computer games” to digital versions of paintings by certain artists.
So the blockchain art market will have active consumers. And active content producers. And as the experience of cryptocurrencies shows, after these categories, investors of different levels are quickly catching up. Therefore, this idea has prospects, and considerable.
BlockchainAuthor: EXBASE.IO | Jul 30, 2020
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