The art world is turning its attention towards cryptocurrency. Art and cryptocurrency, it seems, could be kindred spirits—artists and collectors alike are beginning to see the synergy between the two.
Once iconoclastic and inaccessible, cryptos are fast earning a reputation as a viable way to buy and sell art. The ‘first ever’ blockchain auction held at Dadiani Fine Art—where a multi-million pound Andy Warhol will be partially sold for cryptocurrency—demonstrates the shifting tides. In a nod towards its imminent legitimacy, the gallery’s proprietor Eleesa Dadiani, known as the ‘Queen of Crypto’, has already begun to accept cryptocurrency as a means of payment.
Dadiani claims the new form of digital exchange will change the art market forever and open it up to a greater number of people, if not the masses. This digital upsurge, spearheaded by cryptography and other rarefied concepts, signifies a centuries-old institution is on the brink of revolution.
Blockchain, too, is making its mark on the art world, with some claiming it can aid the provenance of a given work. ‘Blockchain creates an immutable, traceable record of every transaction,’ explains Marcelo García Casil, CEO of Maecenas—the world’s first art investment blockchain-based platform.
‘This provenance trail provides the trust needed in a currently largely unregulated market. It can provide better standards for verifiable, global certification.’ Blockchain, García Casil elucidates, can provide a single, worldwide, real-time access point to the storage of tamper-proof provenance documentation. Perhaps, as he suggests, authenticating artwork via blockchain will soon become common practice—the CEO and crypto enthusiast likes to imagine a world where any artwork not registered on a blockchain would be considered a fake.
In the information age, it pays to be digitally astute. That much is clear. But how can conventional connoisseurs and collectors unravel the enigma enshrouding the (often-elusive) world of digital currency? How are digital assets used in art sales? And, more importantly, why?
Arts & Collections sat down with Marcelo García Casil to find out.
Arts & Collections: Hi Marcelo, thank you for talking to us. First of all, what is cryptocurrency?
Marcelo García Casil: Cryptocurrency is digital money. It uses cryptography to ensure that transactions are secure. One of the most well-known examples is bitcoin.
A&C: Why should collectors of, and investors in, fine art be interested in cryptocurrency?
MGC: Cryptocurrency’s underlying Blockchain technology is the ideal tool for the art world thanks, in large part, to its transparency and ability to connect buyers and sellers directly. Cryptocurrencies provide a bridge between the closed-off fine art market into a decentralized open source world where many more will be able to become a part of this exhilarating market.
A&C: It is often said there are similarities between cryptocurrency and art; can you elaborate on this? How are they linked? Why do they go hand-in-hand?
MGC: There are many similarities between the two. For one, the value of both fluctuates based on market sentiment. Investors in both, of course, hope that their holdings will appreciate in value over time. There is a lot of synergy between the two worlds. While cryptocurrencies have high volatility, fine art is seen as a steady store of value. Together, they help investors achieve a well-balanced portfolio.
A&C: Why are more people starting to invest in and use cryptocurrency?
MGC: It’s partly due to a greater sophistication of investors with a better understanding of financial investment, and also more knowledge of technology. Cryptocurrency has been called ‘email for money’ because it makes it easy to transfer funds digitally, without having to physically hand someone cash or a cheque. The same way email and text messages can be used in place of sending hand-written letters. People see the efficiency and value in that.
A&C: Will this digital investment method ever go mainstream, with major banks getting involved?
MGC: I think it’s just a matter of time. Google, Microsoft and IBM are all developing blockchain-related projects; it is a market already worth more than $700 million and growing rapidly. Over the past few years, many of the largest banks have also been investing millions of dollars in research into how they can integrate blockchain technology into their existing offerings. This includes Barclay’s, Bank of America, JP Morgan, Credit Suisse and Wells Fargo, just to name a few. Banks that refuse to progress with the times will find their technology becoming obsolete and eventually phased out.
A&C: How safe is the technology? Is it susceptible to artificial inflation from bots, or mining?
MGC: No system is infallible, but it is much safer than the existing system that we have in place. By design, the effort and cost that it would take a hacker (or anyone with nefarious intentions) would be far greater than an attack on existing centralised systems, and even if they manage to succeed, the benefit they stand to gain is minimal and unlikely to outweigh the cost.
A&C: What is a blockchain?
MGC: A blockchain is a digital ledger—a way of recording all transactions chronologically. This growing list of records (called ‘blocks’) is linked and secured using cryptography. Many blockchains are also decentralized—meaning that instead of only being stored on one computer, the same data is duplicated publicly on a network of computers so that it is not managed by one central authority.
A&C: How can blockchain technology help to ensure the provenance of a given artwork?
MGC: Artwork provenance is all the accompanying documentation that confirms its authenticity. Since the blockchain is a ledger—a list of transactions—it is a low-friction and low-cost method for keeping record and proof of authenticity. The blockchain can provide a single, worldwide, real-time access point to the storage of tamper-proof provenance documentation.
A&C: What role will blockchain play in confronting the art forgery market?
MGC: Since many people are now buying art as an investment, they are looking more closely at the certification and provenance. Blockchain creates an immutable, traceable record of every transaction, whether it’s art changing hands or Bitcoin, and this provenance trail provides the trust needed in a currently largely unregulated market. It can provide better standards for verifiable, global certification. I would like to imagine a world where any painting or sculpture or any artwork that’s not registered on a blockchain would be considered to be fake.
A&C: Are there any artists whose art, itself, is inspired by cryptocurrency? Does the concept of cryptocurrency work as an artistic subject matter, and why?
MGC: I’ve seen some really stunning pieces that feature or reference cryptocurrency, as a theme. Artists draw inspiration from everything in the world around them, and the concept of crypto-assets is definitely a feature of our time. It’s very exciting and opens up a world of opportunity—I imagine it is this excitement that fuels their creativity: to capture the zeitgeist in a work of art.
A&C: Are cryptocurrencies more popular among the millennial generation? If so, why?
MGC: Yes, the majority of cryptocurrency users tend to be millennials who are the first generation to have grown up surrounded by technology and the internet. They are used to using technology as part of their everyday lives—ordering food, online shopping, hiring taxis, booking hotels and tickets—it only makes sense that their payment method can also be made digitally. So millennials are usually more digitally fluent and comfortable with cryptocurrency, but they are definitely not the only ones in the space. The top three cryptoinvestors, according to Forbes, are in their 40s and 50s, with a combined crypto worth of over $10 billion.
A&C: Do you think there will come a time when we all hold these currencies?
MGC: There are currently already about 28.5 million bitcoin wallet addresses, and the number keeps growing. Some of the places with the greatest growth in adoption are China, Korea, South American countries and African nations—like South Africa, Ghana, and Nigeria. At present, most investors buy cryptocurrencies to hold as an investment (like gold bullion), hoping for a future price increase. To a lesser degree, there are people who use it for day-to-day spending, to buy coffees or pizza, etc. If usage becomes pervasive enough, I think it will become a ubiquitous payment method that a lot of people will use out of convenience. Not everyone will use it, just like how some people have never had a chequebook or have never applied for a credit card. Cryptocurrencies will find their own place in the economy.
Read more on Arts & Collections about the Maecenas and Dadiani Syndicate sale of a multi-million pound Andy Warhol and see, also, Cryptocurrency: The Future of the Art World?