Blockchain sparks an art world evolution
The proliferation of art galleries and museums in the last few decades changed the world of art substantially. In the earlier years, artists were dependent on fairs and a few patrons to showcase their work and earn livelihood.
Another revolution is in the making. Powered by blockchain technology, it builds a new system where all stakeholders, from artists to investors and art consumers, have their fair share.
The School of Athens by Raphael
How a blockchain-induced revolution in art is benefiting all stakeholders
Blockchain has helped resolve pressing issues plaguing the art industry. It has provided artists more control over publishing, distribution and monetization of their artworks. Fans, on the other hand, get direct access to their favorite content without the need of intermediaries.
With its goal of decentralization, blockchain enables art to break the shackles of centralized systems that only benefit a narrow group of people. Organizers of an art fair, for instance, will work for themselves and not for the benefit of artists or aficionados.
In a decentralized ecosystem, however, decisions are taken collectively for the common good. Everyone has a say in the proceedings, depending on their stake. Voting is conducted on proposals and only what has been accepted by the majority will be implemented.
Such an ingenious decentralized ecosystem engages the art world by leveraging the power of blockchain technology. It offers artists, investors, and art collectors a self-supporting platform where members can participate in the creation, financing, and promotion of exceptional works of art. Artists are offered funding for their work while holders of the cryptocurrency have the potential to make profits on the secondary market.
Tokens, the access to a decentralized ecosystem
To access a decentralized autonomous organization, DAO, members require tokens. They offer community members exclusive perks such as the right to participate in ongoing projects, to earn rewards and passive income from the staking of their tokens, and the potential of making profit from the secondary market.
Role of NFTs and smart contracts
Blockchain components like NFTs (non-fungible tokens) and smart contracts make the art world more transparent and secure than it has ever been. NFTs allow artists to sign their work irretrievably, ensuring it is never plagiarized. As NFTs are stored on the blockchain with an identification code, they become as unique as a fingerprint. It doesn’t matter whether an artist is just starting out or has created a buzz in the mainstream, NFTs help them maintain their unique identity.
Use of smart contracts eliminates the need of a third party. The smart contract is a self-executing code in line with the agreement between various stakeholders. Transactions resulting from the execution of the code are trackable and irreversible. The transfer of tokens between the artists and collectors happens directly via smart contracts. This includes the percentage of profits for artists, even on future sales.
Process of tokenization
Thanks to blockchain, fine art creation can be converted into digital assets (NFTs). This helps users and investors get their full autonomy while ensuring the security of transactions, increase in assets’ liquidity, and the reduction of costs. Transactions are peer-to-peer and token holders have great opportunities to make profit on the secondary market as well.
A blockchain-based platform makes it better for all stakeholders:
DAO members
All members of the DAO have a collective objective — maintain a sustainable art ecosystem. For this purpose, they discuss various proposals among themselves and conduct voting. Within a DAO, there are generally various incentive-mechanisms in place to promote members who have contributed proactively.
Artists
This blockchain-based solution gives emerging and celebrated artists the opportunity to launch and expand their career via decentralized fundraising, while directly promoting their work to a global audience. This increases exposure, reputation and valuation of art.
Collectors
Collectors get easy and secure access to fine art, while taking advantage of features such as premium selling of artworks or priority purchasing. They can later sell their NFTs in the secondary market to liquidate their assets.
Wrapping up
Disruptive technologies like blockchain have unlocked the limited options of the classical art world, optimizing art consumption while introducing transparency and automation. This brings in tangible improvement in the experience of the stakeholders, enriching the industry as a whole. Regardless of how many hands an artwork has passed through, it can be traced back to the original artist, which brings in an unprecedented level of authenticity.
Decentralized organizations like Aera have demonstrated how a decentralized ecosystem can transform the art world. Ingenuity of a blockchain-based ecosystem creates a modern and efficient way for all stakeholders to participate in the art world. Artists are able to showcase their work to global audiences with ease and enjoy greater opportunities without having to devote their time to marketing, thus enhancing the quality and quantity of their work.
This blockchain-induced revolution has created an optimized ecosystem for all stakeholders — artists are funded, art collectors access a transparent and secure market, and global audiences experience timeless art.
— Story originally published on DataDrivenInvestor by Dilip Kumar Patairya