What does blockchain mean for art museums and could it bring transparency to the art market?
March 06 2019
By Lauren Styx
Whether you follow trends in technology, banking, or digital art, chances are you’ve heard of blockchain. This digital record-keeping technology is relatively new but has taken the world by storm with its ability to ensure more secure, transparent, and accessible transactions across the globe. Innovators and problem-solvers are paying attention to this technology and its potential for improving systems in many industries, museums included. So, how can this technology be applied to the museum space? Right now, experts are investigating blockchain’s potential in a number of areas including decentralizing information, managing collections and donors, creating new digital markets, and tracking provenance.
What is blockchain?
People often erroneously equate blockchain technology to cryptocurrency. While they are connected, they aren’t synonymous. Blockchain is the digital ledger technology that made cryptocurrencies like Bitcoin possible. Bitcoin’s ledger was actually the first usage of blockchain, but the technology is capable of much more than just cryptocurrency transactions — especially when it comes to museums. To understand the potential of blockchain in the museum space, it’s important to start with a solid handle on how the technology itself works.
The name makes for a perfect jumping-off point. Blockchain is a digital record-keeping technology consisting of “blocks,” or digital pieces of information, that are then connected by “chains,” or public databases. These chains create a decentralized network and eliminate the need for a trusted third party, such as a bank or corporate database, rendering all stored info publicly verifiable. This means, when accessing information from the blockchain, you can be confident the data hasn’t been altered. Imagine these blockchain transactions in the same way that you make phone calls or use Facetime. The interaction is one-to-one; you don’t need a middle man to complete your exchange. The concept would be the same, then, for example, to send money to a relative living in another country. Using the blockchain that transaction would be direct, you wouldn’t need to subvert through a bank or third-party cash app. The exchange is secure and trustworthy.
Any information that is stored in the blockchain isn’t owned by any one person or company, but rather belongs to and is verified by the collective that has access to it. As new info is saved, it is immutable and added to the blockchain instead of constantly updating existing data entries. So, information stored in the blocks is nearly impossible to change, making it extremely secure. Imagine it like an Excel spreadsheet that keeps a record of each of its individual cells and timestamps any changes being made for all users to see. New information stored in the blockchain is also verified by certain computers with access to the blockchain, which is why the technology is considered more transparent and trustworthy, as well.
Blockchain and Museums
Some systems within the museum industry are long overdue for a revamp, whether that’s in regard to ease of use, accuracy, or accessibility. Blockchain could be the key to bringing both historic and contemporary institutions more fully into the modern age.
Adding value to the digital art market
For many people, it can be difficult to understand and see value in digital art. If you can’t hang it on the wall, why would you buy it? If it’s digital, can’t it just be copied? Or deleted? These are exactly the issues that can be solved using blockchain technology.
One of the best use-cases of blockchain and digital scarcity thus far came in the form of a cat—more than 1 million cats, actually. Cryptokitties, a game-like service from Axiom Zen in which users buy, breed, and sell digital cartoon cats, is built on blockchain. A designer coded a template for the digital cats, and the code for each individual kitty determines the cartoons’ physical attributes — just like human DNA. And in the same way that human DNA functions, these traits can only be replicated in offspring. So, whether you’re buying a Cryptokitty, or breeding one with another, you’ll always come away with a one-of-a-kind cat. This type of scarcity in the digital world is new, but it’s long existed in the physical world for collector’s items like baseball cards, beanie babies, or works of art.
Digital scarcity is new because, until now, anything you’ve shared on the Internet is a copy. With the advent of blockchain and games like Cryptokitties, this no longer need be the case. Because Cryptokitties are built on the Ethereum blockchain, they cannot be copied. If you buy the cat, you own the code.
“There was this problem before … that digital art is a computer file,” Zettler said during the summit panel discussion. “It can be replicated and redistributed at infinite. If something can be replicated and redistributed with no authenticity of the original file, then where’s the resale value to a collector? If there’s no resale value, then why are you going to invest large sums of money to buy it? Our vision for the solution is using the Ethereum blockchain as a record of ownership in which one piece of artwork goes into one contract that mints tokens underneath it, and each token represents a digital print.”
If scarcity can be applied to digital works in the same way it’s applied to paintings and sculptures, this opens a door for museums to provide patrons access to these digital pieces. Digital artworks can be displayed in the physical world in a number of ways, including smart canvases, which only display a work if you can prove ownership through a token or private key. And as museums incorporate more virtual reality into exhibitions and experiences, these environments offer another way to make works of digital art more easily accessible to patrons.
Another feature of blockchain is the ability to enforce “smart contracts,” which are terms coded into the blockchain that can execute themselves when specific conditions are met. Bernadine Bröcker, CEO of Vastari, reminds that these are not legal contracts — they’re much more basic. She explains that the contracts follow an “if this, then that” formula. When a person creates a smart contract, he or she is telling the computer — through code — how a certain chain of events should happen.
“It’s not a given, it’s a protocol,” Bröcker says. “What are the rules of that blockchain that then make that happen? The only way that those rules will be valuable is if you have the right people using the technology that you’re building.”
Smart contracts could be useful in a number of situations. For example, they would simplify and secure the process of buying and selling of works, especially when it comes to royalties. For example, a smart contract could say when Artwork X is purchased, a designated percentage of that sale is paid to a specific party or parties. Because this smart contract is tied to Artwork X, it is automatically carried out with the transaction and eliminates the need for a third party to verify — no more messy record-keeping. This also ensures that records are continuously kept, royalties are never overlooked, and everyone gets their fair share.
Connecting with the physical world
A major cost for museums is insurance. Whether a work is imported to or exported from a museum on loan or as part of a traveling exhibition, insurance for that journey comes at a high cost — and it can be a headache to track. Despite the various levels of risk throughout a work’s journey to its final destination, insurance is often priced for total loss. Now, imagine there were a trustworthy way to track a work so that the price of insurance changes throughout that journey and correlates with the level of risk at any particular point. Blockchain has the potential to achieve this level of security and transparency by updating the status of the work in real-time.This could also eliminate the need for a member of an institution to accompany a work on its voyage, saving the museum even more money. This concept has become a reality as shipping giant Maersk announced the creation of TradeLens, “a blockchain-enabled shipping solution designed to promote more efficient and secure global trade” that is the result of a collaboration with IBM. Ninety-four organizations are already on board to participate.
Tangential to this issue is the task of provenance tracking. If you’re a buyer considering the purchase of a work, you might have questions concerning the work’s authenticity, who owned it in the past, and perhaps where it’s been exhibited. Blockchain technology can resolve this issue by providing simple and accessible answers to these questions. Storing any information about a work in the blockchain creates a decentralized ledger that’s available in perpetuity. There’s a helpful video here that illustrates this concept. This information can then be permanently tied to the physical work through a smart tag, for example, attached with glue containing synthetic DNA that only matches that work, like a fingerprint. Several companies are exploring solutions for physically connecting the blockchain to the work in hopes of preventing fraud.
Increasing the potential for collaboration
In the same way that blockchain can make the purchasing process less complicated for a buyer, it can also increase the potential for collaboration within the industry. An up-to-date and accessible ledger would make it easier to find and share pieces of art or artifacts owned by collectors. Imagine if collectors could indicate on the blockchain whether they’re open to a museum or gallery borrowing their artwork. Curators could easily refer to this information when planning an exhibition, saving everyone time and resources. This would also lessen the time spent on seeking out the work in the first place, and museums and collectors alike would be on the same page in managing collections, exchanges, and collaborations.
Enhancing the visitor experience
The founders of Wunder.Art, David Dehaeck and Nathalie Haveman, urge us to think outside the box — literally and figuratively.
“Blockchain will allow for decentralized distribution of new media art forms, be it moving image, still image, VR/AR/MR or sound art,” Dehaeck says. “It will revive the 16th century concept of the ‘wunderkammer’, who were the predecessors of our current museums. Blockchain allows a museum experience wherever and whenever — what will make the difference is the expertise and quality of the art. The moment museums start thinking outside the museum, anything is possible.”
The “wunderkammer” he mentions were sixteenth-century European “cabinets of curiosities,” rooms full of exotic and novelty objects — essentially, decentralized museums in their own right. Playing off of this idea, WUNDER Museum doesn’t differ much at all from other top museums when it comes to expertise and quality. But blockchain gives it that wunderkammer feel thanks to increased accessibility — you don’t need to visit a central location to view the works on exhibit. The museum is the first “Art-as-a-Service, Art-as-an-Asset infrastructure at the intersection of digital art, patronage and fractional ownership,” according to WUNDER’s website. This decentralization not only makes the museum more accessible, but could also create a new level of quality control and competition in the digital museum space.
“As museums will shift part of their attention and efforts to providing decentralized access for digitally native artworks, then the difference will be solely on the quality of the works in the collections and ecosystems,” Dehaeck says.
WUNDER works like this: Museum patrons pay a monthly fee to access curated exhibitions of digital native works for 30 days through the WUNDER website. The museum also offers an opportunity for partner distribution channels that could be anything from a lobby to a flat screen to a conference room. Any space in which people gather can serve as a museum space. Imagine how many more people and investors your museum could reach if it were accessible outside just four walls and transported to screens, tablets or VR headsets anywhere in the world.
Fostering greater profitability and investment
WUNDER Museum is a great example of how blockchain can increase profitability and investment. Per their website, WUNDER provides the digital tools necessary to empower both patrons and artists to connect with one another, and that ecosystem makes it possible for digital artists to achieve an online global audience, as well as the regulated and liquid market they deserve.
WUNDER is built on blockchain and its specific patron protocol operating system monetizes the digitally native art forms by offering asset-backed tokens. These tokens represent the fractional ownership of the master copy and hold value creation from a global network of temporary access holders. During a patron’s 30-day subscription, he or she can simply view the works, or purchase fractional ownership for specific works they’d like to have permanent access to. This purchase makes them a lead angel patron for that work, which means not only do they benefit aesthetically from the work, but also from dividend rewards through revenue from Art-as-a-Service channels.
Through the patron protocol, the master copy of a digital work is tokenized into eight shares, two of which are reserved for the artist themselves and WUNDER, respectively. This leaves six shares available for the market, i.e. museum patrons who can then access the work whenever — and wherever — the want.
“The patron protocol is all about creating value for all stakeholders,” Dehaeck says. “The use of blockchain allows us to do this with novel ownership and revenue-creating models. Any market that opens up to transparency with trust in transactions and ownership will increase liquidity. Our main concern is to provide the tools to artists and institutions to make great new media art accessible — to give the artists that create these works an alternative to faster funding, increased channeled distribution leading to faster sales (product to consumer), and at the same time creating value from ongoing rent, allowing to create patrimony beyond just sales. Our mission is to create an ecosystem that enables this for the artists.”
WUNDER’s partner distribution channels and fractional ownership capabilities create new access points for investors. In this way, blockchain offers more diversification and creativity in investment. In July, London gallery Dadiani Fine Art partnered with blockchain platform Maecenas to auction fractional stakes in Andy Warhol’s 14 Small Electric Chairs (1980). This was the first case of luxury art being sold in cryptocurrency. Because the work was tokenized in this way, more investors had access to the work, and each fractional ownership was secured through smart contracts on the blockchain. This sale marks the beginning of a shift in investment trends and possibilities.
Blockchain as art
The culture that comes along with blockchain has taken on a life of its own, and the CryptoArt movement is real. During the Christie’s Art + Tech Summit, panelists talked about how they are integrating blockchain into their practice and using it as a medium in and of itself. We already touched on Cryptokitties here, but Matt Hall of the R.A.R.E. Network, who identifies more with the tech side of blockchain’s role in the art world, talked about another example during the summit: Cryptopunks, which was the first instance of rare digital art on the Ethereum blockchain. Cryptopunks are unique, collectible 8-bit characters that can be bought and sold within their own marketplace. No two Cryptopunks are exactly alike — the 24×24 pixel images are generated by an algorithm and each can only be owned by one individual. Only 10,000 of these Cryptopunks were created, and each individual character’s proof of ownership is stored on the blockchain. Thus far, the total value of all Cryptopunks sold is 863.91 Ethereum, or $117,482.85 USD.
Another speaker at the summit, Kevin Abosch is an artist whose contribution to the CryptoArt movement was his work IAMA Coin. This unique project also connected to the physical world in that Abosch successfully tokenized himself.
Through a smart contract on the Ethereum blockchain, Abosch created 10 million pieces of virtual art that were ERC-20 tokens. After creating the tokens, he then had his blood drawn and used that blood to stamp 100 pieces of paper with the generated contract address those 10 million virtual works. In doing so, he effectively created a link between the digital and the physical world, and those physical works would have no value without the digital pieces of art. Collectors began contacting Abosch about purchasing the works, the pieces are now in circulation, and the project has taken on a life of its own.
Abosch likens using blockchain to using paint, in that both are effective media for creating art. It’s difficult to imagine now, but perhaps there will come a time when cryptoart is as common and understood as the paintings we find in museums and galleries today. These systems and examples illustrate how blockchain, in its early stages no less, has permeated the art and museum markets and could be here to stay. While there are still plenty of bugs to be worked out, blockchain seemingly presents endless opportunity for shifts toward a more secure, accessible, and transparent industry.
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