As it’s topical I thought I’d reshare a post I circulated on LinkedIn after attending The Art Tech Summit hosted by Christies on 17th of July, 2018.
The overarching message of the Art & Tech summit promised blockchain was the solution to the art market’s key issues – the lack of transparency, regulation and traceability. It presented a desire for the art market to have transactional transparency and validation of authenticity. It articulated the capability for an artwork to hold a digital ledger of metadata, through blockchain technology, to certify provenance and trace ownership. A solution to the markets inefficiencies.
Over the past eighteen months numerous articles have circulated amongst the hype of blockchain and cryptocurrency, with tabloid headlines ranging from ‘can blockchain clean up the art market,’ to ‘can blockchain eliminate the myth of the starving artist?’ The Art & Tech Summit brought market pioneers and leaders within the field of blockchain and the art market, to share their thoughts on whether the art market is shifting towards a growing consensus that the current trading model was failing and if blockchain could be the solution.
Just in case there are any queries over blockchain technology, otherwise known as distributed ledger technologies (DLT), it is a concept driving organisations and individuals to figure out a digital future. Blockchain records and validates digital transactions with permanence on a secure database, and is widely perceived as an emerging technology which has the promise to deliver the most significant impact. The question is how this can be applied, more specifically for physical objects, and embraced by the art market?
During the course of the day highly regarded speakers echoed arguments presented in ‘The Art Market 2.0’ report, produced by the University of Oxford, Alan Turning Institute and DACS. A report presenting how the UK could set the standard for the adoption of digital art technologies. It outlines how the infrastructure, offered by blockchain, could enable a new trading standard and support further development of software, for example, for the purposes of authentication, provenance tracking and tax collection in relation to art transactions.
The fact blockchain technology is still very much in development, a sentiment shared by many speakers and the audience in attendance, which is important to bear in mind when weighing up the limiting factors highlighted at the summit. Aton Ruddenklau, of KPMG, held the position of blockchain being part of the solution but not THE solution, meaning the application of blockchain requires partner technologies to combat the processing issue of authenticity verification. Verisart faced criticism for failing to prevent incorrect data being recorded on their platform when a member of the public demonstrated the limitations of the technology. They claimed the one-and-only ‘Mona Lisa’ by Leonardo Da Vinci, was theirs!? An obvious fraudulent act. Until we come up with a regulated vetting process for blockchain there will always be a lack of confidence from the public.
What value can be gained from catfish masterpieces? None. When an entry cannot be deleted it is a genuine question what legal precedent can take. It makes me wonder whether the Louvre reacted to the claim on Mona Lisa? Legislation is under development and there isn’t a unified governance on blockchain to-date. Financial services, privacy regulators and data regulators are unified with concern for the adoption of blockchain technologies and are looking at the global implications.
Five key issues were identified in the tech talk ‘Blockchain – Legal Fact and Fiction,’ presented by Jonathon Kewley of Clifford Chance – data privacy, cyber security, artificial intelligence, shadow infrastructure and anti-trust. The fact the concept of blockchain is not GRPD compliant, because all transactions are permanently recorded, was a factor I hadn’t yet pieced together or taken into consideration. Kewley’s departing message, “Tech + Law = Best Friends Forever,” was a cautionary warning very much heard and acknowledged by the room.
The promise of blockchain was likened to the internet in that the possibilities for development are endless. At its core the blockchain concept is for a distributed decentralised peer-to-peer data-network without a central authority. It is the second component of the core principle, for unalterable tracible records of transactions, where we see shifts in adoption of the technology. Anonymity is very important to the art market. Hence why private versus public and centralised versus decentralised platforms were at the centre of the key debates for blockchain platforms. Some art platforms operate on the Ethereum blockchain whilst others have built their own to ensure they can keep certain identifiers anonymous.
Fundamental challenges for blockchain, of verifying authenticity and how to engage collectors who embrace anonymity, were discussed. It was observed whether private or public largely sales operate anonymously. Even public online sales platforms, such as Paddle 8 and Artsy, early adopters of E-commerce in the art market, maintained anonymised transactions. The online market altered the traditional notion of physical engagement with the artist, dealer or work, moving the market towards virtual engagement but the transaction model remained old-school. The key take-away for me was how companies had adopted certain parts of blockchain. A crucial question for art tech developers is how to alter perceptions centred on anonymised transactions if we are to adopt blockchain as intended?
The art market is plagued by fraud, forgeries, illicit business and tax evasion on an international scale, key arguments in demonstrating the need for a radically new model for standardised trade. For proponents of the technology, blockchain is seen as having the potential to introduce smart contracts changing the method of sale, record of provenance and transparency of ownership, to solve problems surrounding authentication of art and its opaque money trail. Opponents take the position that a publicly distributed ledger, an immutable and censorship-resistant database of ownership goes against the entrenched trading model which shrouds transactions in much valued anonymity.
Do I think blockchain is the answer? Possibly! I do think it is too soon to tell. Whilst I embrace the idea of blockchain, I acknowledge the product has yet to prove itself. Until there are ironclad solutions to verification of authenticity and a consensus of market backing, for me, only then will it hold value. What I did find promising at the Art & Tech summit was the enthusiasm of tech start-ups working through solutions for verification purposes to solve the acknowledged limitations of blockchain as perceived today.
"The art challenges the technology, and the technology inspires the art." – John Lasseter