We all know the importance of giving and receiving flowers. More than two million roses are produced each year for Valentine’s Day alone. Last year, however, a group of art investors were involved in a slightly more unusual exchange of roses when they bought what is believed to be the world’s most valuable crypto-artwork.
Conceptual artist Kevin Abosch created a digital work, Forever Rose, which he sold to a collective of ten investors for cryptocurrency valued at $1 million. Every buyer received one tenth of the virtual rose as a token on a blockchain. The token is theirs to keep, sell, or give as a gift.
Kevin Abosch is one of a number of conceptual artists who are exploring the potential of blockchain in the art world. He previously created a physical and virtual work, IAMA Coin, which involved him having some of his blood imprinted as a blockchain address, effectively turning his blood into a crypto-currency.
This may be a glimpse into the future of art. There is clearly huge potential for blockchain to change the way art is sold, paid for and stored. For digital artists in particular, whose work is potentially more easily forged or replicated, blockchain could reduce fraud, establish proof of ownership and facilitate a secondary market.
But what does blockchain mean for physical artworks that were created decades or centuries ago?
For buyers and sellers of art, a secure blockchain registry can give greater transparency and an immutable record of the provenance and ownership history of a work of art. But, as the saying goes – garbage in, garbage out. The blockchain is only as robust as the data that is entered into it.
This means that for blockchain to truly gain traction in the art world, the records need to be expanded and for more dealers, auction houses and art data providers to become involved. The potential for an immutable trail of a work’s provenance provides a massive opportunity to get greater clarity during the claims process if a work is stolen or damaged.
But it isn’t just on the claims side that blockchain could revolutionise art insurance.
It’s important to remember that each piece of art is unique, and we, as underwriters, use various experts to help us to understand the many facets that add into a work’s value.
Art underwriters need to be sure that the piece of work they are presented with is authentic – not a fake – and that its provenance can be trusted. Once the underwriter is comfortable that a work is genuine and has not been stolen, then he or she – using expert advice on the work’s value – underwrites the piece of art.
Once we set a premium, we essentially are saying that we believe the work to be genuine. And – as a regulated industry – insurers also need comfort about the ownership of the piece. We need to know that a work of art is not being bought or sold as part of a money laundering scheme or to fund illegal activities, for example.
If blockchain can give greater clarity and certainty about the provenance of an artwork, then that surely must be something underwriters can harness to help them price a risk.
It isn’t quite so simple as it sounds, however. If the work is created by a living artist who uses smart contracts and sells their work via a blockchain, then there can be a degree of certainty as to whether the work is genuine and of its provenance. But certification could be trickier for older works.
Sometimes, even the world’s pre-eminent scholars cannot agree on whether a work is genuine or not.
The recent dispute around the authenticity of the Salvator Mundi painting of Christ in Renaissance dress, currently owned by the Louvre Abu Dhabi, is a great example of this. The work, long thought to be a copy, was authenticated as a Leonardo da Vinci by the National Gallery in London in 2011 and the Dallas Museum of Art in 2012.
The work had been heavily overpainted, which led many experts to believe it was a copy for many years. But now, while there is a degree of consensus that the work is genuine, some scholars continue to believe that Leonardo himself painted just a fraction of the work- if any - with the rest likely completed by a studio assistant.
Even when the authenticity of a work is fairly certain, it is not a simple matter to create a link between the blockchain and a piece of art created before blockchain was invented.
For blockchain to take of in the art world, there needs to be a way to create a link between the physical asset and its certificate of authenticity in order to use blockchain to validate works and help underwrite them.
There is a great deal of buzz currently surrounding art and blockchain. And art insurers and other professionals are engaged in many conversations with start-ups working to find ways to put blockchain to use in both the claims and the underwriting side of our business.
This is not a commoditised off-the-shelf industry, so it will perhaps take time to devise a way to make this work. In the meantime, we are open to discussion and excited about what the future might bring.
