Technology is now reshaping our world. There is no exception for the art world. To embrace the latest trends in technology, Christie’s has initiated a summit focusing on the potential of using blockchain in the sector. Will this ground-breaking innovation have an impact on the art market? Why is Christie’s, as a leading auction house, so eager to explore the use of this new technology?
Christie’s held a one-day conference on using blockchain for the art business
A blockchain is a decentralized, distributed and public digital ledger that is used to record transactions across many computers. The data is stored in cryptographic blocks that form a time-stamped and immutable chain. It is considered a reliable and trustworthy tool because the record cannot be altered retroactively without the alteration of all subsequent blocks and the consensus of the network. Bitcoin is a widely-known example of this new technology.
Imagine a bank stores all its account data on a single database server. No matter how well-protected the database is, a single node in the system can be easily pinpointed, which makes it vulnerable to hacker attacks. Data stored in the database can be altered by unauthorized parties. Besides, the cost of maintaining a fault-tolerant system is very high.
Now with blockchain, data is stored and verified in a decentralised record-keeping way. Instead of a single computer, data is saved in numerous places in the chain in which not one single entity has control over all the processing. In this case, information is kept in a secured chain which is impossible to alter. Since the information is saved in the network where records are linked using cryptography, it is therefore not affected by any hardware problems or hacker issues.
To consider the possibility of using blockchain in the art business, contemporary art could be a potential market to start with. In the contemporary art market, many artists are still actively creating artworks, so collectors and professionals can verify the authenticity with artists themselves. Besides, provenance and ownership of artworks of contemporary art are easier to trace. It will be beneficial if every single transaction is kept in an unalterable book-keeping record. For digital art, information can be saved and extracted using blockchain more seamlessly. What about physical art? The technology could faciliate the process by using image recognition to match the artwork on offer to those in the digital ledger.
teamLab’s digital work Universe of Water Particles was sold for HK$1.9m in Hong Kong last year
What about works of art like antiques and classical paintings? Still, blockchain has its limitations in the art business. Even though information stored using blockchain is verifiable and unalterable, there is no way to ensure that all information is accurate. Take a piece of antique as an example, it has been kept in the collections of numerous collectors or art dealers since it was created hundreds or thousands of years ago. It will be difficult to trace its origin and record of ownership because many of its previous owners are deceased or untraceable. Hence, the whole process still requires the help of specialists and connoisseurs to determine the authenticity, date, condition and provenance of a work of art.
Wucai Fish Jar from Jiajing period was sold for HK$210m at Christie’s last year
During the summit, a specialist from Christie’s gave a note on blockchain, ‘More transparency equals more trust, more trust equals more transactions, more transactions equals stronger markets’.
This statement can be justified in some sense. Let’s say a small gallery is trying to sell a painting. Compared with well-established auction houses or galleries, this small gallery may find it difficult to earn the trust from customers. People may question the authenticity and provenance of the painting even when the gallery provides a pile of certificates and receipts as a solid proof.
If all the information about the artwork and every transaction are transparent to the public, and the record cannot be altered, it makes information more accessible to art dealers and collectors. They will be more confident in making purchases. By looking through past records, they can gain a better understanding of the market trend for particular artists or art genres.
Christie’s Art + Tech Summit
However, it can be a great challenge to find the right balance between transparency and opacity of the market. This is especially true for the art world, where many art dealers and collectors wish to remain anonymous. They prefer not to disclose selling prices. So certain sensitive information is not likely to be available even if blockchain is widely adopted in the art world.
The main idea of blockchain is to create a decentralised, self-contained ecosystem, subsequently rendering the role of centralised agents unnecessary. However, there’s still room for discussion about building a completely decentralised network in the art business because the process involves a lot of administrative work.
For example, if one needs to register a painting by Leonardo da Vinci using blockchain, a third party is still indispensable in order to record information like transaction receipts, photos of the artwork, certificates issued by specialists, exhibition records, as well as other legal documents. Otherwise, the whole system will lack credibility, which only makes it harder to gain trust from users.
Christie’s Art + Tech Summit
If the above process is undertaken by a third party, who will gain access to confidential information, certain rules or codes of conduct must be set out like what auction houses are doing right now. Then again, blockchain can’t serve as an easy solution to the problems regarding market transparency.
During the summit, some people said that they believe blockchain offers new business opportunities which will unavoidably reform or shake up the art market. On the other hand, some cast doubts on whether the time is now ripe for such innovation. Despite holding different viewpoints, all speakers share a common ground: it is a question of 'when', and not 'if', blockchain will have an impact.
Christie’s Art + Tech Summit
The conference could be an implication of Christie’s recognition of the potential of blockchain. By exploring the integration of blockchain into the art business, the auction house can get a head start over an untapped market.
There are issues to be resolved concerning privacy, cybersecurity, infrastructure and competition. If a leading auction house with rich resources starts tackling these daunting jobs at an early stage, it will definitely set a smoother path for the application of blockchain into the art business. In return, pioneers will possibly rise as dominate leaders in the field when the market is becoming more mature. We will have to keep an eye out and see if this venture is worth the cost and trouble.