Blockchain and fine art:how the technology could change the art market

Barbara Kruger,Who owns what?1991 / 2012

What a fantastic work of art!I want to buy it, but…

— Is it authentic?

— Who owned it in the past?

— Where has it been exhibited?

Typical traceability issues

Art market needsopacity transparency&

— Lack of documentation

— Paper records

— Fragmented databases

— Information silo

— Privacy requirements

— Social media

— Online sales and auction records

— Image search

— Valuations and financing

— Museum databases

E.g., Banksy / Pest Control, a handling service acting on behalf of BANKSY that determines whether he has created a certain piece of artwork and issues a paperwork if he did.

E.g., Gerhard Richter / Website

Size of fraudulent art market:

$6 billion annually80% of fraudulent activityis made up of forged and fake works

Fraud thrives in the absence of the ability to run real-time verification of provenance

Fraud thrives on opacity

80%$6 bln.

80% of hesitant online art buyers* want

* According to Hiscox Online Art Trade Report

authentication certificates to become standard practice for art and collectibles sold online

more background information about the artist and the object

Fraud erodes trust,and lack of trust harms online sales

The solution: blockchain

The technology lies behind Bitcoin, the most popular cryptocurrency in the world

Decentralized architecture builds distributed trust

Creates permanent and immutable record of transactions

Tamper proof records secured by cryptography & timestamps

What is blockchain?

Incorruptible digital ledger originally programmed to record financial transactions.

1

How does blockchain work?

Once information is recorded in the blockchain, it is there forever. All records share cryptographic standards and the same decentralized ledger.

Someone requests a transaction

4 The transaction is combined with other transactions to create a new block of data

3 The network validates the transaction

6 The transaction is complete

2 The requested transaction is broadcast to a peer-to-peer computer network

5 The new block is added to the existing blockchain

The blockchain may be used anywhere

Trackingownership

Transfer assetsincluding real estate

or securities

Limitingthe voting fraud

Applying blockchain to the art market

The blockchain distributed ledger can trace the journey of artworks. If this technology is used in the art market, all events in the lifecycle of an artwork are recorded and traceable.

Each piece is assigned a unique cryptographic ID from which its complete history can be retrieved

Certification

Provenance

Registry

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No more fragile documentation related to the provenance

and movements of a piece of art: certificates are live and endorsable

Only creators can issue certificates of authenticity. Collectors can create records and ask authorities to endorse their records.

Artist Shipper Gallery Previous owner Insurer Collector

$

Privacy settings Social proofs via Instagram

Government ID

Domain name

Thumbprint verification and touch ID

Artists, galleries and institutions could be verified in one or more ways

Collectors are anonymous and can control privacy settings

Benefits

Buyers get real time verification of provenance and title visibility

Auction houses and marketplaces can contribute to valuation, consignment and loan data

Collectors can register works without exposing identity

Artists control title and inventory records reducing potential for unauthorized activity

Certificates easily customized

New certificates could support real-time verification of provenance

Before After

Certificate of Authenticity

Roy LichtensteinTitle: Les Nympheas

Year Painted: 2012

Size: 51 x 63 inch

Medium: Acrylic on canvas

_______________________

Artist Signature

This artwork is one-of-a-kind authentic, original work.All copyright and reproduction rights are reserved by the artist.

Les Nympheasby Roy Lichtenstein201251 x 63, acrylic on canvas

Current Owner023FE4J9LCOD3R287AEE675FN3AD

Blockchain Address135pFj2Kv7x115DUGgrke89GLh008g

URLhttps://www.exante.eu/...

2013-03-12 04:45:32CONFIRMED

_________________________

Artist Signature

Certificateof Authenticity

Thank you for watching!

Portomaso Business Tower,Level 7, PTM01, ST. Julians, Malta

+356 20150000info@exante.euwww.exante.eu