- Cryptocurrencies and their underlying technologies are becoming increasingly popular in the world of fine art.
- Contemporary artist Lincoln Townley and established auction house Christie’s both now accept cryptocurrency as payment.
- Platforms like the Blockchain Art Exchange are also using distributed ledger technology to try and guarantee authenticity and protect ownership in the million-dollar market for digital art.
- The pandemic has accelerated adoption: the Blockchain Art Exchange says it has seen month-on-month sales increase to 400% in June from 47% pre-pandemic.
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In June, a Picasso painting was sold for cryptocurrency for the first time.
Swiss luxury goods firm Idoneus acquired the painting “Danse du ventre devant homme impassible” (or “Belly dance before impassive man”) for an undisclosed amount. Idoneus used its own “IDON” token to make the purchase, and said it is pioneering the use of its cryptocurrency for luxury purchases.
The sale of a Picasso for cryptocurrency exemplifies its widening acceptance in the art world, estimated to be worth $64 billion globally in 2019 by Art Basel and UBS.
Now, artists and collectors are not only trading in cryptocurrencies but using the blockchain tech that underpins them to try and determine authenticity and ownership.
Reduce fraud in the art world
One platform trying to digitally guarantee the provenance of art is the Blockchain Art Exchange.
Launched by crypto enthusiast and art curator Sascha Bailey, son of the famous fashion photographer David Bailey, at the end of 2018, the platform allows artists to tokenize their digital artwork.
The theory goes like this: By tokenizing the work using blockchain’s distributed ledger technology, the transaction is permanently recorded on a shared database without any need for third parties to authenticate it. Once recorded, no one can alter the entries.
This means that collectors are not just trading a digital image, but a virtual certificate of authenticity, according to Bailey. The main appeal of this is that it helps to protect buyers against fraud. Experts estimate that around 20% of the paintings in major galleries could be fraudulent.
Another potential advantage is protection of the ownership of the artwork beyond the lifetime of the platform.
“Even if the gallery that you bought it from shuts down, then you still own the artwork,” explained Bailey. “You wouldn’t expect a gallery to come to your house and burn your artwork after they close down. Whereas, with digital artwork, until now, that’s kind of what happened.”
This is currently only around a million-dollar industry, according to Bailey, but it has grown rapidly and he expects this to continue.
The pandemic has accelerated adoption.
The Blockchain Art Exchange saw month-on-month growth in sales of 400% in June, compared with only 47% pre-pandemic.
Many people in the traditional world of fine art who were previously on the fence about the technology have now decided to buy in, according to Bailey.
Contemporary artist Lincoln Townley is creating his own ‘art coin’
Contemporary artist Lincoln Townley, who is famous for his figurative portraits of Hollywood stars like Meryl Streep, also sees potential for blockchain in the art market.
“This hasn’t even scraped the surface yet,” Townley told Business Insider. “It’s very, very deep waters that no one seems to be that happy to set sail in. Well, I certainly am. I look at myself as having the biggest ship out there.”
He added: “There’s a very big market for people that are looking now into alternative investment, but asset-based. The ones that take on the cryptocurrency as an investment are, I wouldn’t say they were gamblers as such, but they take on more risks.”
Townley first sold a painting for bitcoin in 2017 and is working on his own blockchain-encrypted ‘art coin’. His entire new collection, Universe, can be bought using cryptocurrency.
Embracing blockchain has been part of a wider digital transformation undergone by Townley’s studio. He is about to launch a virtual reality gallery that will exhibit his works and studio online in their entirety, with information on the process of creating and curating his art.
This way, he can cut out the middle man — the art agents and galleries — who take 50% commission on sales and are often responsible of upwards of 40 artists. When he wants to sell a piece, he sends the details to curated WhatsApp groups of his collectors. From the first message to receiving payment, it can take less than 24 hours.
According to Townley, this is all evidence that the traditional “stuffy” art world is in decline. He said: “The model doesn’t work anymore; it’s dead, it’s over, it’s gone.”
Opening it up to a new wave of investors who are interested in the tech as well as the art, is transforming the industry.
Crypto is highly risky, highly variable and not regulated
As with much of the wider crypto space, the people advocating for blockchain-led change in the art world are often driven by an ideological affinity with the movement.
For crypto artist Vesa Kivinen, his initial interest in blockchain came from a disillusionment with the handling of the global 2008 financial crisis and what he sees as the failure of the existing monetary system.
Like most crypto adopters in the art world, he sees blockchain technology as a way of democratizing art.
“It’s giving an opportunity to new voices to come into the industry that would otherwise have a very terrible time trying to get in with their expression into the legacy art world,” said Kivinen.
Bailey, Townley, and Kivinen are all aware of the risks of relying on a technology that is largely unregulated. With the market still very much in its infancy, it’s a “bit like a gold rush of the Wild West,” said Kivinen.
As with cryptocurrencies, buyers using these platforms put themselves at risk of being scammed.
“At the moment, everyone in the industry is incredibly well-behaved because everyone is early adopters,” said Bailey. “I do think there is a potential for misuse as with all technology. But I think the pros for the people who want to use it legitimately outweigh the cons massively.”
Bailey says platforms like Blockchain Art Exchange are still accountable to customers. “We still hold the responsibility of what comes on [the platform],” he said. “Unlike with bitcoin, where there is no party to hold accountable.”
And traditional art institutions are buying in.
In December 2018, British auction house Christie’s auctioned the Barney A. Ebsworth Collection, the first art auction of its price level to be recorded on the blockchain.
“Christie’s leadership is reflected and supported by continued investment in digital platforms and initiatives that work for our clients,” a Christie’s spokesperson told Business Insider. “It is early days and this was a pilot blockchain project for this reason. We’ll see where this might lead but this sale has been a great starting point for us all.”