Contemporary artist Philip Colbert, whose colorful, high-spirited art is finding buyers around the world, had been toying with the idea of creating his own catalog system to prove the authenticity of his expanding body of work.
“I had a dealer in Japan who had been telling me I needed to have better forms of certification for my artwork, because people are buying art as an investment,” said the British artist, who appropriates pop culture images in his paintings, fashion and furniture. “Art is a currency in a way; at the end of the day when they come to auction, the provenance is a very important element of their value.”
Then he met Rob Norton, the founder of Verisart, a U.S.-based startup that’s using blockchain, the ledger technology underlying Bitcoin, to verify the authenticity of artwork. It’s a problem as old as art itself, said Norton, and artists have long been unreliable when it comes to documenting their own work. As far back as the 17th century, Rembrandt’s dealer complained of his client’s poor record-keeping, Norton said.
Traceable Record
Blockchain creates an immutable, traceable record of every transaction, whether it’s art changing hands or Bitcoin. Widespread adoption of the technology could give a boost to the market for art online, which has yet to explode. Online sales currently account for only about 8 percent, or $5.4 billion, of the global art market, according to a report by UBS Group AG and Art Basel released this month.
Trust -- or lack of it -- is at the core of the challenge, with potential buyers balking at the possibility of spending considerable sums on works whose provenance can’t be fully verified. The value of fake art sold is almost double the real thing, said Norton, the former chief executive officer of Saatchi Online and Sedition Art.
Last year, three men were charged in New York with making counterfeit Damien Hirst prints and selling them online for more than $400,000, according to ArtNews. The arrest followed a sting operation by undercover New York police officers, who purchased two of the pieces, which were advertised as “limited edition” prints online, alongside fake certificates of authenticity and purchase receipts.
When it comes to art, “there’s a higher hurdle of trust that you have to clear, you have to know that what you’re buying is real,” said Norton. “Art is the second-largest unregulated market after illicit drugs and it’s significantly overshadowed by fraudulent activity. You can accelerate trust and liquidity by providing better standards for verifiable, global certification.”
More Startups
The 800-pound gorillas have already arrived. Google, Microsoft Corp. and International Business Machines Corp. are all developing blockchain-related projects, a market already worth more than $700 million and growing rapidly. Such demand is fueling several startups that use blockchain to verify artwork.
Codex, based in San Francisco and London, is going after the collectibles market, for everything from art to jewelry to antique cars. It has drawn investment from Pantera Capital, a hedge fund that invests in blockchain technology and cryptocurrencies.
Newly minted crypto-millionaires and billionaires will be natural art buyers, according to Pantera. Codex is also working on an application called Biddable that will allow cryptocurrencies to be used to bid in art auctions.