The art market is a popular place where modern artists can make decent money for their art. It can be any form of art: fine art, digital illustration, exclusive video, or even audio. But it has a major drawback: it is often used for money laundering and counterfeiting.
Many people, who would like to buy some art, are scared of it. They don’t know if they buy a genuine piece of art or a replica. Also, many art auctions are used for money laundering purposes, partly because dealers are free to raise the price to the point that it looks ridiculous, but still fully legal.
Blockchain and cryptocurrencies are ready to disrupt this market, making it fair for every party involved. There will be no “scamish things” because every interaction will be recorded in a blockchain. And today I want to share with you how crypto can change the art industry for good.
Cryptocurrencies and the Art Market
Cryptocurrencies have become common in every aspect of our lives, including art. Crypto can offer greater security and anonymity, but at the same time full transparency. Especially, if you are selling a physical item and its digital copy as an NFT.
You can track how it changes its price over time. It would be highly beneficial to prevent abuse of power and money laundering schemes. Anyone can track how many owners the item has had over time and how it affected the price.
It will be easier to verify the authenticity of the piece of art throughout its lifetime. Buyers can be sure that they are buying a genuine piece of art. Both parties also get faster and cheaper transactions due to reduced fees. If you buy some art on the marketplace directly from the artist, you can support them by paying more for the same piece of art.
There are already dozens of art marketplaces that accept crypto as one of their payment options. Here are the most popular: Artplode, Maecenas, Artnet, Superrare, Singulart, Blockparty, ArtPro, OpenSea, KnownOrigin, Verisart, Paddle8, and Vellum LA. As you see, there are plenty of physical and digital art options.
But, as with everything in our world, this decision has its own drawbacks. Currently, it still lacks regulation, so we will see more laws directly affecting the art market. Crypto is a highly volatile asset. Yes, even the stablecoins. They are less volatile than other digital coins but are less stable than fiat money.
Crypto is technically complex, so there are not a lot of people who want to use it. There are mainly young tech-savvy users. Due to this, crypto still has limited acceptance, especially in the well-established art market industry.
Cryptocurrencies and Art Ownership
As I said before, crypto is the perfect tool for proving the art ownership of some pieces of art. But how can I be so sure about this? Well, blockchain is a decentralized ledger system that provides a transparent and secure way to record and verify transactions.
Each artwork can have a digital twin that acts as a token or a unique digital identity. And when an auction sells some piece of art, they also transfer this art token from their crypto wallet to the buyer’s wallet. And this transaction will be immediately recorded in the blockchain, proving the ownership.
In short, once some information is added to the blockchain, it stays here forever. No one can change it. If there is a token in the blockchain that “says” that this picture was sold to John Doe in France during an auction in 2023, this information stays there forever.
Even when a criminal-related art dealer tries to modify the sale details, that would be impossible to maintain. Moreover, some blockchains may warn other members that someone has attempted to alter the data. So, it would be a lot easier to track and sue criminals due to abuse of power.
It would be impossible to hack the data because there is no central server due to decentralization. Data is stored in independent nodes throughout the network. Even when someone tries removing data from one wallet, it still stays on other blockchain members. It gives enhanced security for all parties involved.
Some art marketplaces are already using blockchain and cryptocurrencies to create unremovable records of artwork ownership. Vesiart, Codex, and Blockai allow artists and collectors to build authentic records. Artory and ArtChain Global use blockchain to create a permanent record of artworks, including exhibition history and ownership.
Cryptocurrencies and Art Funding
There is a stereotype that true artists should starve. But not anymore. Independent artists can earn decent money with crypto by selling their works directly to customers. They can create a crowdfunding campaign, where users can send money to the artist to help them while working on big projects like books, comics, fine art pieces, etc.
Charity or non-profit organizations can provide grants in cryptocurrency. And it will be easier to track how artists spend that money. That way organizations can monitor how artists spend their grants.
Tokenization of art assets allows investors to buy and sell shares of some artwork. Let’s imagine that Louvre decides to tokenize Mona Lisa and create 1 000 000 tokens for it. They leave for themselves 520 000 tokens to keep the controlling stake. Considering Mona Lisa’s price is approximately $850 million, they sell 480 000 tokens for $1 900 each. That way investors can brag that they own a part of Mona Lisa and earn an interest every time it gets more expensive.
But if we talk about more modern and accessible art, potential investors would be able to buy a token for even $100-200. This decision democratizes art ownership, making it more accessible to a wider audience. They can create their own art and invest funds to ease this process for non-tech-savvy users.
It drastically increases accessibility and provides a global reach and investment opportunities. Faster transactions and lower fees will be a salvation for novice investors that still counts every dollar on their accounts.
Do you want to fund some cool art project or buy an art token? Try Artcoin, Maecenas, SuperRare, or Satoshi Gallery projects. If you want to build a network, use DADA social network/digital art marketplace.
But what about the drawbacks of that way of funding? They are the same as in the previous chapter. Due to technical complexity and lack of regulation, crypto funding still has limited acceptance. Investors should accept those risks if they want to start their crypto investment journey today.
They also should remember that it may be too late to start an investment career when this industry becomes regulated. Lawmakers can create regulations that cut off people with regular income from investments. It already happened with regular art funding, and it can become a case in crypto funding too.
Cryptocurrencies and Digital Art
We’ve discussed how crypto can ease the lives of everyone involved in a physical form of art. But what about the digital one? How can blockchain change their lives?
Artists can tokenize existing and new art pieces, which later can be sold directly to investors or put on decentralized marketplaces where anyone can buy their work without intermediaries like auction houses or galleries.
Micropayments will be highly beneficial to artists that sell easy-to-make art pieces, digital brushes for app applications, or other relatively cheap art-related stuff. It allows the artist to monetize their work on a per-piece basis from fans or colleagues, instead of relying on larger and clumsy payment systems from intermediaries. If you are an artist, try Rarible and SuperRare services to promote and sell your works.
That enables a new level of collaboration in the digital art world. Artists can support each other on this challenging path. It creates new international communities, providing cultural exchange which benefits the whole art industry in the long run.
Cryptocurrencies are already changing the art world, making it more accessible and fair to all parties involved. Investors can build their portfolios even with a few hundred dollars in their accounts. On the other hand, artists can get paid fairly even for their small art pieces like Procreate custom brushes.
Tokenization of art opens doors for crowdfunding of small independent galleries. Multiple investors can equally own a piece of art while it physically stays in a gallery. Blockchain also eases the verification and provenance of art works. Potential buyers can be sure they will buy a genuine piece of art.
But, as with any blockchain-related industry, it is still technically complex for ordinary users. So, the cryptocurrency art industry will need a lot of time to become more user-friendly. However, you can play it to your advantage, and start your art investment career today. That way you can build wealth when the crypto-art industry is still open to anyone!