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Blockchaining the Arts


Visitors admire a painting in France's tienne Terrus Museum, where more than half of the paintings were found to be fakes.

Some in the art market are hoping the blockchain can provide transparency, trust, and security by helping to better authenticate artwork and verify its provenance.

Credit: Raymond Roig/AFP/Getty Images

The furor over fake news is rampant, and the need for technical fixes by social media sites is well known, but one of the oldest kinds of fake artifact—counterfeit artwork—is still without a technical solution.

It may seem surprising, given the capabilities of today's image recognition technologies, but fine art is still widely counterfeited, and there is no technical fix. However, art experts now think they may have found one: the blockchain.      

That fine art forgery remains a problem was clear in April, when an art historian hired to rehang a French gallery's collection of expressionist works made a shattering discovery: 82 of its 140 paintings were fakes (and very poor ones at that). Last summer, in Genoa, Italy, a Modigliani exhibition was forced to close when experts found that 20 of the 21 works on show were forgeries, too, sparking a blizzard of lawsuits. Last  November, actor Alec Baldwin settled a seven-figure damage claim against a New York art dealer after being sold a lookalike painting by the same artist.

It's not just a benign annoyance: such cases are helping to depress the art market, say experts. "Transactions in the global art market are worth over $70 billion per year and that number is growing. But the number of disputes [over provenance] is also growing—and it is one of the main threats to doing business in the art sector at the moment," says Sébastian Genco, an art market analyst at Deloitte in Luxembourg.

Genco was speaking at July's Art+Tech Summit, hosted by London auction house Christie's, where artists, gallery owners, art dealers, and collectors met to hear of technologies that might let them better authenticate artwork and verify its provenance, or ownership history.

It was blockchain—the peer-to-peer, decentralized, encrypted, transaction ledger that first saw light of day as the technical heart of bitcoin a decade ago—that was top of the bill as the technology most likely to help.

A blockchain is a type of database with no central read/write authority, and in which transactions are stored in a never-deleted, or immutable, chain of time-stamped, encrypted data blocks. To those working in a market riven with forgeries, that sounds like a potential recipe for salvation, said Anne Bracegirdle, an associate vice president at Christie's.

When she first heard someone describe blockchain, Bracegirdle recalled, "Despite my then-ignorance, I instantly saw natural connections to our industry's roadblocks, so much so that I really had trouble sleeping, out of sheer adrenalin and excitement."

Bracegirdle said the more she learns about blockchain, "The more I see it making the art market more accessible. If implemented successfully and securely, this technology will result in simpler processes, more transactions, and, most importantly, more empowered buyers, sellers and artists."

Specifically, Bracegirdle believes an art market-wide blockchain could increase art market transparency, trust, and security.  "Imagine there was one place where all information related to the trade of art is stored securely, where anyone can access a full catalogue of details, complete provenance, and sale prices." That data repository also would include invoices of sale and certificates of authentication, she adds.

This may seem a slightly utopian view, but events show deep skepticism is warranted: massive cryptocurrency thefts, and the way some see initial coin offerings (ICOs) as a license to commit fraud, blow blockchain's security claims out of the water. "Every day, we are asked to set up ICOs because people think it is free money," says KPMG consultant Anton Ruddenklau.

Yet notable blockchain success stories like that of EverLedger are encouraging the art market to adopt the technology. EverLedger tracks the provenance of diamonds through their mining, cutting, and polishing phases, right up until they end up in a piece of jewelry. EverLedger's Calagero Scibetta says the company forensically identifies around 40 unique physical and optical properties for each gemstone, and then encrypts each datapoint in a blockchain. "So we're using blockchain as a way to create a permanent digital thumbprint of each asset," he says. They have done this for thousands of gems.

While Bracegirdle's vision of an art-market-wide decentralized authentication ledger that all can contribute to is not happening  (at least not yet),  smaller, closed-user-group blockchain-based art ventures have begun. The first was Verisart of Los Angeles, CA, which launched in 2015 as an invite-only service (based on the bitcoin blockchain) that encourages artists to enter their artwork details and securely store digital certificates.

Another such venture is two-year-old Artory, in London, which provides a curated, blockchain-based registry that creates permanent records for certain artworks and collectibles. Artory works with organizations issuing their own certificates of authentication, such as auction houses and insurance companies, to ensure its ledger is trusted.

However, Verisart's and Artory's services are based on curated, private blockchains. One organization living the distributed dream, however, is Codex Protocol, of San Francisco, CA, which is using a blockchain to store data on fine art, vintage wines, valuable wristwatches, and classic cars. Instead of storing authentication data, however, Codex's ledger stores tokens that represent the item at issue, but which link to key identification metadata stored off the blockchain. An upside of this is that as new forms of ID data become available—like data on the chemistry of the oil/acrylic paint, or the DNA of the wood in the frame—they can be added, so users are not limited to old tech ID formats.

Blockchain's role in art does not end with authentication: firms like Maecenas and Artnome are using it in ways akin to the way digital currencies create a form of value, allowing people to own a fraction of a digitally-created (or artificial intelligence-generated) artwork, much like a people in a sailplane syndicate own a slice of their aircraft.

While the excitement about such arty crypto-opportunities was palpable at the summit, some major barriers to art-market blockchain uptake arose. Chief among them: blockchain's backers are failing to remember that we now have the right to be forgotten.

With a powerful new privacy law in the form of the General Data Protection Regulation (GDPR) now in force in the EU, and enforceable on any company operating there, people now have a right to access, modify, and delete data stored about them. Blockchain data is undeletable, immutability being its chief claim to fame, and so it is not GDPR-compliant.

Deletability, says Jonathan Kewley, a lawyer with London practice Clifford Chance, is now being seen as a fundamental human right, "but blockchain does not cater for that."

Other experts agree. Says Jordan Fried, CEO of Dallas, TX-based Hedera Hashgraph, a firm developing blockchain accelerators, "If someone stores child pornography in a public ledger, you'll want it deleted. Or, if they store some of your PII (personally identifiable information) in one, you'll want that removed. But blockchains don't let you do that."

William Skannerup, CEO of VeridenKey, a London-based blockchain identity verification developer, has one answer. "Our golden rule is no PII on the blockchain whatsoever, not even encrypted or hashed. Using a bit of sleight of hand, any PII that's been verified actually sits off-chain, and is instead only referenced to the blockchain."

Does this PII offloading process eradicate blockchain's security advantages? It is an open question, one that surprised some summit-goers, including Christie's CIO Richard Entrup. "The fact that blockchain is not GDPR-compliant immediately takes it off the table for a number of our applications," he said, adding that Christie's has invested too much in achieving GDPR compliance to risk GDPR fines, which can be up to 4% of a firm's turnover.

While GDPR compliance is one outstanding issue, the sheer size of the fakery problem the art market faces is also an underestimated one, says Julian Radcliffe, chairman of the London-based Art Loss Register (ARL), which maintains a database of stolen paintings, and artworks known to be forgeries, for police forces worldwide. Over 27 years, ALR has helped recover £100 million in stolen art, and put more than 30 people behind bars.

"I think you have no idea of the costs involved in checking on people who might give you misleading information," Radcliffe told blockchain enthusiasts at the summit. "We now spend four times as much checking data than we do entering new data in what is a very expensive and labor-intensive operation. Blockchain could, one day, be very helpful, but it will not replace the huge verification effort this task requires."

While GDPR and verification issues may dampen enthusiasm for blockchain as a salve for art's problems, Hedera Hashgraph's Fried is confident "There are ways to fix the art market's problems that do not involve blockchains."

Paul Marks is a technology journalist, writer, and editor based in London, U.K.


 

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