Cryptoeuphoria and Art Market #4

In the previous parts of our material, we explained the theory of blockchain, talked about attempts to introduce it into the world of art, and also examined how blockchain can help the art market in practice. In the meantime, the equator of our story has been left behind, and we are smoothly moving towards the end of the material. Today we are going to take a short pause and answer the questions that our readers might still have:

• Will the blockchain save the market from counterfeiting?
Answer: no, it will not. The information about counterfeit works can be initially entered into the blockchain provided with the same true certificates. Another point is that this information cannot be deleted! And this is quite positive: scammers will think thousand times whether it is worth publishing deliberately false information in an open, decentralized network. Today, the counterfeit works market is largely based on the collectors' lack of special knowledge and, accordingly, their inability to analyze the documents accompanying the work. And the placement of papers in the public domain would help increase literacy, and verification would become easier. Thus, the market will begin to cleanse itself of unwanted elements - informational and human.

• If blockchain is so omnipotent, why is it not used everywhere?
Answer: blockchain is not an operational system which starts working as soon as it is installed. Blockchain is a system for recording, storing, and verifying data. This is an ordinary code from the point of view of programming. You need to establish platforms with convenient interfaces and a broad user base in order for everything mentioned above to work. And these are investments into art startups, which are being developed in large quantities today (and in even larger quantities are expecting for funding). In other words, it goes about the willingness of the market and the trust of investors.

• Will the blockchain make the market more transparent?
The answer is potentially yes. You just need to understand that "market transparency" is available to some extent to any of us: we just have to calculate the figures ourselves, compare them, and draw conclusions. The transparency of the blockchain lies primarily in the access to information. Is there only one intermediary in a deal with a piece of art or ten? How marketable is the required price? Have the signatures of experts on the submitted document been confirmed? Has the artist held one hundred exhibitions proudly representing him in his portfolio? All this takes time in everyday life! Blockchain can reduce this time to seconds, provided that the information is loaded and taking in mind its ability to work with a large amount of data.

• What professions are going to disappear from the art market with the introduction of blockchain?
Answer: unnecessary and burdensome. First of all, these could be unnecessary intermediaries. It would be difficult for art dealers who do not have their own exhibition spaces — neither physical nor virtual. For the rest, the blockchain will not affect the companies — intermediaries in related services, just logistics companies will add delivery tracking to the blockchain in time, insurance companies will update policies, etc. The companies will have to become more responsible - or make way to their competitors at the market.

• Will the art market increase the implementation of blockchain?
The answer is yes, and this applies to all segments. When a buyer of a $2,000 work sees that the details of his purchase are entered into a separate register and carefully stored along with blue chips, he/she will buy more, primarily young artists. When a visitor to an art fair receives a full package of documents for a painting, while pointing the phone at it, including the marketing forecast, it will be easier for him/her to part with $50-100 thousand. When a major collector gets the opportunity to track the capitalization of a collection amounting to more than US$10 million, he will be more active in the market processes, and not just be giving out numerous interviews. Investors would attract more significant capital to the art market, when they see the transparency of assets and the mechanism for their indexation, for now they invest into art 0.1% out of 100% of the money at their disposal. And do not forget about crypto investors: as soon as they pour digital capital into the art market, collectors would have free money, which they would be more willing to spend. What will happen to prices at the art market? That is right, they will grow up. And the market will go along with them.

• Can the blockchain function without cryptocurrencies, if they are outlawed some day?
Answer: Yes, it can, but - by analogy with a car — only in the first gear. However, when cryptocurrency is legalized in major countries, the art market will not be able to stop this avalanche. And cryptocurrencies will allow the blockchain to flourish like a peacock's tail - vigorously and brightly. And the cleansing of the ranks of unscrupulous players at the art market will begin.

The blockchain story resembles the space flight of a multi-ton Space-X spacecraft, launching a one-ton vehicle into orbit. The girls unanimously gave "likes" to the event, the guys instantly rushed to build spacecraft. Who has left to sweep the streets? The same is with the blockchain: as soon as information about "unprecedented earnings based on mysterious technology" spread in the masses — someone plunged into mining, others - into hyping, and the rest — into hating. "And who will think?" we are asking. The penetration of blockchain in all spheres of our life is inevitable, no matter how hard its opponents resist, like the vinyl adherents, who have long denied the emergence of digitized music. And it is very good that several stages of purification will have passed by the time of the widespread adoption of the blockchain. Those who used art as a beautiful cover have already been left behind, today the ranks of companies that are tired of expecting for cautious investors are being cleansed, and the legalization of cryptocurrencies will bring the time for the separation of lurking fraudsters from businessmen open to technologies. So far, the blockchain keeps the art market on a leash: first and foremost, by the financial potential of investors, and only then — by the prospects of legalizing and purifying the art ecosystem. And soon it will start pulling on the leash. And then we will see if the market has enough grip.

The last portion of the material deals with the emergence of NFT — non-fungible tokens, as well as some assumptions are going to be made about how NFT would develop in 2022.