Editor's Note: This article comes fromMengyan Finance (ID: Meng-eyes), reprinted by Odaily with authorization.
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Editor's Note: This article comes fromMengyan Finance (ID: Meng-eyes)Mengyan Finance (ID: Meng-eyes), reprinted by Odaily with authorization.1) A major problem within the industry is centralization.2) Blockchain features will greatly reduce or even completely eliminate fraud.This article will explain in detail how disruptive blockchain technology integrates finance, technology, and law to create a perfect solution for the emerging "digital renaissance".
In the art world, where a work of art can sometimes fetch millions of dollars, one might naively think that the generally applicable technical, legal and financial standards that support the back-office processes of such transactions are already in place.
Yet the paintings offered on the market, such as da Vinci's Salvator Mundi, often require outdated procedures to sell them. Not to mention the Mona Lisa, which has a valuation of more than $2.6 billion, although it is impossible to buy.This particular piece, "Salvator Mundi," was eventually sold to Saudi Arabia's Crown Prince Mohammed bin Salman for more than $450 million. And this also leads to another major problem in the industry, which is centralization.That said, only high-net-worth individuals can afford the extraordinary prices for artwork. So, where is the social and cultural value here? What about the core intention of the original creation? Fortunately, blockchain, and the companion tokenization enabled by developers, will address these and other issues in fraud-prone industries.Art Industry IntroductionThroughout the world's history and economic upheavals, one stable, consistently dominant concept has been: the commodity that humans make for aesthetic purposes in visual form, often referred to as art.
However, determining overall market capitalization is quite challenging due to opaque regional segmentation and the fact that almost anyone can make art. Some art is good and some is bad, but it depends on the angle, like at Art Basel, even the bananas on the wall were sold for hundreds of thousands of dollars.
So one can't really make a final call on what the industry is worth. It fluctuates between 70 billion and 800 billion, depending on the definition of art.Applied arts and fine arts range from traditional sculpture and painting to film, photography, graphic design, performance (although this will be fairly difficult to tokenize), animation, and even video games. From 2017 to 2019, the average sales of artworks in various industries around the world are shown in Figure 1 below.Human history can be depicted as a chronology through masterpieces. Each period of civilization has its own unique development trends. While it was once a "high culture" story, recent developments have changed the paradigm, making it more widely accessible to the masses.Current Art Industry IssuesFirst, this illiquid industry can be said to be highly localized. This is true both from the point of view of artists following their respective cultural traditions, and from acquiring certain items that are only sold in elite circles and for investment purposes.Additionally, acquiring art requires extensive paperwork, requiring signing and exchange, as well as physical storage and shipping. For example, it would cost about $2,500 to ship an average painting from Denver to New York.Huge warehousing and insurance costs are a big reason, and why this industry has yet to become a true asset class. Not to mention being economically fit for the current ongoing phase of the Fourth Industrial Revolution.Of course, art galleries and auction houses are eager to significantly reduce pain points by implementing hardening structures. But when it comes to the maintenance and preservation of art, even the most ambitious minds in the industry can only limit it to a certain extent.Consistent with the extent of the criminal activity, art forgery is ubiquitous: in 2011, for example, a painting believed to be from the 17th century sold for an estimated $11 million at the prestigious Sotheby's auction house. It wasn't until 2016 that it was discovered that the painting was a synthetically altered fake rather than a valuable historical representation.
As mentioned earlier, most of the high-net-worth individuals dominate this special market, while the relatively rare fund market is strongly dominated by Chinese institutions. As a result, a wide range of retail investors are often shut out and almost never approved. In addition, this art investment often requires a physical meeting to conduct business.
Especially now during the COVID-19 pandemic, as transaction value relies heavily on the physical presence of galleries or auctions, this aspect has become even more important. In addition, the general lack of standardization in determining the price of certain items and the transaction process has also created a serious liquidity problem for the industry.Last but not least, the lack of transparency in the industry is due to the perpetuating gray areas, as well as the staggeringly large black markets that are often used to trade art under the noses of the authorities and law-abiding collectors Taste.You can say that the current art market is definitely not in line with the all-round digital economy that we are gradually leading to. But which technology is best suited to the needs of this industry? The answer is simple - blockchain technology. More precisely, tokenization."secondary title"blockchain and artThe disruptive technology of blockchain can bring significant benefits to the above problems. Professor Xiang Yang, Dean of the Digital Research and Innovation Capability Platform at Swinburne University of Technology, Australia, is a pioneer in this field.In addition, dedicated blockchain conferences around the world, such as the 2018
Ethereal Summit - Blockchain and Ethereum Conference
, will shift the focus to the integration of these two different industries, for example, holding live auctions for the tokenization of paintings. In general, there will be a significant increase in press conferences on combinations of these topics.It is not without reason that heated discussions around blockchain and tokenization are heating up in this space. The following sections will explain the benefits from the perspective of various market participants: Artists can leverage blockchain’s timestamping functionality to verify art.By applying blockchain technology to their business, they can also benefit from incorporating historical art ownership and sales data. Online auction houses enabled by blockchain authentication will bring higher market exposure to artists and enable them to obtain appropriate prices for their works.Standardized Pricing Model
