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How will blockchain change the art market?

Debate over the role of technology in the art market has exploded this year. Portion, an auction house that accepts only cryptocurrency, was launched last month. Before that there was the emergence of Codex Protocol, a new registry for fine art, wine and collectibles based on blockchain technology. Even the 252-year-old auction house Christie’s has got in on the act. At its inaugural “Art and Tech” summit this summer, it explored questions that had more to do with new technologies than Old Masters.

“What is blockchain, really?” was the title of one event. Will artificial intelligence one day be able to appraise art and antiques? This was another question posed by art valuation website Mearto to its clients in a survey in March. Fifty-five per cent of respondents thought the answer was “probably” or “definitely” yes.

Art valuation is based on many factors. Mearto listed 10, from artist and subject to provenance, condition and, finally, the market.

“You may be in possession of a beautiful work of art but if nobody’s interested in buying it, unfortunately it doesn’t hold much monetary value,”

the site says.

The underlying issue is taste. For an industry bound by tradition, things are moving — relatively — fast.

Discussion has centred on two possible ways forward. Some in the industry are pro-blockchain, a decentralised digital ledger to which data is added in chronological “blocks”; some lean more towards the power of AI. Anne Bracegirdle, a photography specialist at Christie’s, is among blockchain’s evangelists. She sees it as one way to put more information into the hands of clients who are frustrated with the market.

“They will ask things like, ‘This piece sold for £50,000 last week and now it’s selling for £30,000. Why?’ ” Bracegirdle’s vision is of a single blockchain-based industry-wide registry that would record provenance, ownership, condition and value. “Clients could understand the market themselves,” she says. Right now, no complete record of fine-art ownership exists. Using a “total registry” idea, consumers could also judge for themselves how much an artwork might be worth.

There could be potential benefits for the art market too: greater transparency and trust, more secure data storage. However, such a registry would need immense amounts of data, much of it relating to pieces hundreds of years old. The investment, and workload, would be huge. Jess Houlgrave, co-founder of Codex Protocol, believes in even greater democratisation. She thinks that anyone — not just art experts — should be able to add data to Codex’s registry of artworks.

The technology itself could be used to “verify the identity of the person adding something” — a good solution in an industry that is “all about reputation”, she says. Not everyone is convinced. Noah Wunsch, Sotheby’s vice-president of digital strategy, believes it is still too early to tell what part blockchain might play in the art market. He wants to establish whether nanotechnology could be used to connect a physical object — be it a painting, sculpture or vase — to its entry on a digital registry. The link between object and online record “is a big part of the conversation that is often missed”, he argues. Without it, blockchain is not worth the hype.

AI, Wunsch argues, is better developed for immediate consumer needs. Indeed, Sotheby’s paid an undisclosed sum in January to acquire Thread Genius, an image recognition platform that uses machine learning to personalise recommendations of art to clients. Wunsch is sensitive to the idea that automation could replace a specialist with years of market experience. “I think we are going to find out in the coming years whether the algorithm will be able to price art,” he says.

But he points to the success of other algorithms as a sign of how things might change. “We didn’t think that a machine would be able to guess what music you might like.” For the moment, and without much industry consensus, neither AI nor blockchain looks set to replace human taste and judgment. But, as Wunsch points out: “The algorithm is never complete. It gets smarter and smarter.”

Aneta Larkins

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