Start-up plans to use blockchain in the world of fine art
BLOCKCHAIN is a potentially revolutionary technology for all sorts of industries, from finance to food safety, social media and retail.
A start-up plans to use it in the notoriously opaque world of fine art to verify authenticity, one of the industry’s greatest challenges.
Codex has developed a decentralised database for the market for art and collectibles like antique cars and jewellery. This protocol would help bring transparency to one of the most valuable aspects of any item in that category: its provenance. Provenance is the history of ownership of a work. Proving that pedigree is currently a painstaking and long process often done by hand, sifting through paper documents and receipts, and is often inconclusive.
Lack of proper provenance is what helps make it easier for con artists to produce fakes. Without it, many other transactional aspects, like insuring pieces or lending against them, become difficult. Codex announced a $5 million (R58.2m) investment on Tuesday from Pantera Capital, one of the most prominent hedge funds investing in the blockchain. Joey Krug, Pantera’s co-chief investment officer, joined the start-up as an adviser.
Creating a decentralised ledger as Codex proposes would allow both sides of a transaction to have direct access to the provenance information – the identity of the object, its path of ownership and authenticity – all of the things that influence value.
Secret
At the same time, the owner’s identity would be able to remain secret, which is often an important issue for large, wealthy collectors. The decentralised aspect of the blockchain, which stores and verifies coded information across multiple computers, eliminates the costly middleman and the risk and suspicion that sometimes comes when information is held by a single entity.
“Collectors have always balked at disclosing their assets to a central authority,’’ says Mark Lurie, chief executive officer of Codex. “Now, with the blockchain, they can prove ownership without compromising privacy.
“This will enable art and collectibles to flourish as a financial asset class, resulting in a larger, better, and fairer market for collectors, intermediaries and artisans.’’
Codex isn’t the first to see the benefits of blockchain in the art world. Verisart is a Los Angeles-based start-up founded by Robert Norton, the former chief executive officer of Sedition Art and Saatchi Online, launched in 2015.
Its mobile app uses the Bitcoin blockchain to let artists, collectors and dealers verify provenance in real time. Artchain.info, founded in 2016 by Howard Sheerin, is another start-up using blockchain to generate certificates of authenticity.
With offices in San Francisco and London, Codex is backed by Bessemer Venture Partners and FJ Labs. It also has a consortium of industry stakeholders including LiveAuctioneers.com and AuctionMobility.com. – Bloomberg