BLOCKCHAIN TECHNOLOGY IN THE ART MARKET
BAM! is actively looking to find real-world applications for Blockchain, the technology behind the cryptocurrency Bitcoin, and Blockchain is fast emerging as the technology expected to have the most significant impact on online sales. As more Art sales move online, there will be increasing demand for Certificates of Authenticity as well as the need to perform real-time verification of provenance.
A networked digital ledger such as a Blockchain could help keep track of a work of Art’s movements without relying on a paper-based—and at times insecure and inaccurate —system of recording provenance. With the networked digital ledger, all purchases will be logged with the information becoming decentralized and therefore not open to contest. No matter how many times a piece of Artwork is bought and sold, the original purchase and the purchases of future owners of the work are documented and unalterable, creating a trusted provenance.
For buyers, this means the entire journey and full history of a piece of Art would be accessible to view in a secure environment, similar to what we see in the UK with house purchases, i.e. UK’s land registry.
When it comes to insurance the benefits of blockchain are clearly evident. Works of art are especially problematic when it comes to seeking compensation for loss or damage. Fulfilling claims involves gathering evidence of the authenticity of a piece, its history of ownership (provenance), its transaction history across owners, and market valuations over time. The loss of or incomplete supporting documentation can dramatically slow down or completely negate insurance claims payments in the event of a theft or other catastrophe.
For example, in 2012 when Hurricane Sandy, the most destructive cyclone in the Mid Atlantic’s history, tossed thousands of artworks into the sea, years later owners of these artworks were still awaiting for their insurance claims to be settled.
Looking to the future, blockchain may provide a more efficient way to insure works of art providing customers with the ability to secure compensation for damage or loss of their works in the blink of an eye — instead of in months or years. Using the network technology of Blockchain, participants in the network will have instant access to a ledger that tracks all transactions in a transparent and secure way meaning provenance and value can be easily verified.
Look out for further updates on these exciting developments. Blockchain is set to transform the world of online art sales!