Blockchain in Art
Collecting art has been one of the world’s most expensive hobbies for ages. And the admiration for one person’s work by thousands or even millions was always the foundation of that activity.
With the spreading of computers and the Internet, the concept of rarity of collectible content had been seriously challenged. There’s no limit to how many eBooks can be issued, and songs and videos being copied and distributed according to the needs.
Any artist would confirm that there is a huge problem with plagiarized, screen-grabbed images on the Internet. Buyers have no willingness to pay for art when they can simply download them. Once the content is copied and distributed for free, the value drops and the prospect of a market for that product disappears. To create and retain value, these digital works of art need to be scarce.
It is all about ownership. People take delight in owning things together with privileges and responsibilities such ownerships bring. Thus, the problem of scarcity and ownership of art in the digital space needed to be solved. And Blockchain is here to help.
Blockchain effectively solves the fundamental issues that hurt the creators’ and collectors’ communities all the time – provenance of authenticity, provenance of ownership, copyright and hence valuation of the artwork.
Time-stamping evidence of ownership of a piece of art onto a trusted registry is the solution. Anyone can add information to this distributed database, but no one can delete an action once it’s committed, and no one owns the overall database. These timestamps can be used as evidence in court to resolve ownership disputes. Since the owner always has access to the tamper-proof blockchain showing the chain of custody and rights, there is no weak link in the chain. Using a blockchain as a trust-minimization scheme in this manner has already been used as evidence in a court of Law, as part of the infamous Silk Road trials. Artists sometimes take a USB stick of their work, mail it to themselves, and keep the envelope sealed, to prove that they had access to that file at that point in time. The blockchain accomplishes the same thing but in a much more convenient fashion.
Blockchain has big potential for trading art, the value of which can be represented as a token and which can be transferred to a new owner without moving the original piece of art from its place of storage. But the strongest use case for the technology is digital art.
Digital artwork can be issued in limited supplies, just like the way Bitcoin is programmed on the blockchain to have a limited supply and immutable records of ownership. And hence these artworks can be kept in digital art wallets and be traded and transferred to third parties like other crypto-assets. It is then the choice of an artist either to sell one certified copy of his artwork with the possibility to always prove the originality of it or to issue a limited series of certified prints.
And it happens so that artists are often the earliest adopters of emerging technology, whether it is the introduction of the printing press, or the invention of the camera. Wherever there is a new tool or technology, there are artists ready to experiment with it. And blockchain is no exception.
The crypocollectibles industry is booming today, with 40+ projects offering cryptographically unique digital assets for all types of tastes and pockets.
It is regarded by majority of entrepreneurs as an effective way to make cryptocurrencies mainstream. This results in art representatives getting additional revenue streams and exposure to new markets and clients․
Cryptoart is collected by the “cryptorich” – savvy technologists and investors who got into cryptocurrency early. The wealth redistribution is bringing to people with diverse interests actually having the money to fulfill them. And the artists that become financially independent as a result of that are freer in their thoughts and expressions.
Brief information on some of the most popular platforms:
Rare Pepe Cards – The massive movement towards crypto-collectibles was born from this project that launched in 2016. It was originally a cultural movement about a character called Pepe the Frog. There used to be a problem with provenance of ownership and with stealing of those memes. Once an artist paired an image of a meme with a digital asset running on the Bitcoin blockchain, thus creating the first Rare Pepe. Later, with an introduction of Rare Pepe Wallet, Pepes became provably rare, sellable artworks.
Anybody is able to submit Rare Pepe artwork to be traded on the platform. In order to filter out spam, the artwork is reviewed by the Rare Pepe Foundation upon submission, to make sure it meets their rules. A submission fee of 200 Pepecash (the internal currency of the platform) has to be paid to the Foundation. Other than that, there are no fees on the platform. The artist decides the number of editions available for sale and the Pepe Card is ready to be sold.
Rare Pepe Cards pioneered the space with an introduction of gift cards that allows gifting artwork to people who do not own any cryptocurrency, and moving a digitally scarce artwork to a physical piece of hardware – Opendime USB stick.
There are Rare Pepe Cards that have been sold for almost 40,000 USD for a single piece. The overall market capitalization of Pepecash is more than 4 million USD.
CryptoPunks – Another interesting example that formed the market is this interesting platform. A gaming company Lavra Labs has designed 10,000 unique 24×24 pixel art images called CryptoPunks. The images are stored on the Ethereum blockchain and can all be viewed within a wallet. Initially, in June 2017, all they were offered basically for free. And then the new owners started trading them for many of them price reaching 10,000 USD, and the record sale was made for more than 14,000 USD for a single CryptoPunk.
A project that started as a free experiment without monetization model now has a market capitalization of 340,000 USD.
Crypto Kitties – The most influential project for the crypto-collectible space and the first with a commercial model in mind. A Vancouver based company called Axiom Zen launched one of the first games to be built on blockchain technology in the world in November 2017. Users can buy, sell, or trade a CryptoKitty like it was a traditional collectible, and the blockchain will track ownership securely. But, unlike traditional collectibles, one can breed two CryptoKitties to create a brand-new, genetically unique offspring.
And this is where the founders are making money. The most efficient collectibles to breed are the ones called Gen0 that are “born” in the system every 15 minutes. The total supply of these is limited to 50.000 CryptoKitties that has been reached in November 2018. All the revenue from the Gen0 kitties goes to the founders after which a 3.75% fee is applied to all transactions taking place on the platform.
The game broke all the expectations of the creators becoming popular worldwide within a week and people trading these crypto-collectibles for more than 100,000 USD, with the most expensive one going for 170,000 USD.
To the moment the total amount in USD for the CryptoKitties sold is more than 27 million USD. And the company raised 12 million USD funding in Series A in March 2018.
DADA.nyc – The project got its start as a collaborative drawing application. The drawing tools are built into the application, and anyone can create and share artwork on the platform. They have created a large and vibrant community of self-taught artists and recently added the ability to purchase artwork by this community via the blockchain.
The artworks are presented in editions. 30% of the profit from the initial sales go to the platform. When an already sold edition is sold again, DADA takes 10% of that transaction as well, and so for every consecutive sale. The artist holds his share in every sale as well – 70% from the initial sale and 30% from the consecutive ones.
Curio Cards – Curio Card’s mission is to create a platform for artists and collectors that benefits artists. The platform is decentralized and running without any fee. Any artist can submit their work to the community for free to be voted on. The process of voting is very interesting by itself. If a community member wants a certain piece of art to be selected, he has to vote by for it real cryptocurrency – Ether. These Ethers are not going to anyone’s pocket, they are instead sent to a non-existing crypto-wallet and lost forever, essentially – burned.
After the voting, for 3 winning crypto-artworks there are tokens issued on Ethereum blockchain. They are added to the gallery where they can be traded by the artists in set editions. For cards that are sold out, the total supply that will ever exist is then in the hands of individual owners. Those cards are no longer available from the Curio Cards site artists, and the only way to get them is to trade with people who currently own those cards. The project is doing well, with over a thousand cards sold and artists making on average $300 – $900.
Foreverrose. And finally, it is interesting to know that the most expensive crypto-artpiece of all times is “The Forever Rose” by Kevin Abosch. He decided to join the boom of blockchain technology with the creation of this piece, which is a unique rose registered with a smart contract from the Ethereum network. As announced, the unique rose – or the only token of the contract – was sold on February 14, 2018 – on Valentine’s Day, for $1 million. The whole revenue was donated to charity