On the surface, CryptoKitties are a digital version of Beanie Babies, but under the hood, they are a Trojan Horse for educating the masses on blockchain and cryptocurrency. With over $12M in sales, CryptoKitties provides the low barrier to entry that will pave the way for markets featuring more expensive digital collectables and artworks. The rise of trendy crypto collectables like Cryptokitties, CryptoPunks, and Rare Pepe will seed the market with crypto-savvy consumers ready to buy.

Blockchain Democratizes Fine Art Investment

If you fancy yourself a "serious" collector of blue-chip art, perhaps you are thinking the blockchain is only about $11.00 digital drawings and cartoon cats and punks. Think again.

In 2018, the company Maecenas will be launching the first open blockchain platform that democratizes access to fine art. Now people who have always dreamed of owning famous paintings can buy shares in a Picasso, Warhol, Monet, etc. On the flipside, galleries, museums, and collectors can offer up works from their collection for bid on Maecenas to raise money for the purchase of future works (while leaving their collection intact). This may sound like a regular art fund, but remember that blockchain cuts out the middleman, greatly reducing the transaction costs. The transaction cost with blockchain is so low that Maecenas can theoretically let you invest as little as fractions of a penny using cryptocurrency without taking the hit of transaction fees. Maecenas shares the use case below on their website. It does a nice job of illustrating the savings that occur with using blockchain versus traditional transactions.

"A Gallery wants to acquire a $3M piece to expand its Warhol collection. Instead of getting a three-year art-secured loan at 13.5% annual interest, it can raise funds from Maecenus investors by listing some of their artwork at a 6% one-off fee. This represents a saving of over $400k in fees for the gallery."

Great for the gallery, but what about the investors? The investors also benefit from the magic of blockchain. Because fees and the cost of transactions goes dramatically down with blockchain, and cryptocurrency can be infinitely divided, Maecenus can transform artworks valued at tens of millions of dollars into tiny digital units that can be easily bought and sold in real time: essentially a stock market for art, but with far less friction or fees.

I am a huge fan of the model because it capitalizes on so many aspects of what makes blockchain so powerful opens up fine-art investing to everyone. My friends and family should expect fractional shares in blue chip art for many birthdays and Christmases to come.

Blockchain Reduces Art Forgery with Improved Authentication, Verification, and Provenance

Perhaps the most obvious use of blockchain (and closest to my heart) is to fight art forgery through the establishment of better authentication and provenance. Since at its core the blockchain is a distributed ledger, it can provide an unalterable record of provenance starting with authentication and ending with the current owner of an artwork.

Verisart certifies and verifies artworks and collectibles using the Bitcoin blockchain. They are fighting art forgery by providing an "airtight" authentication methodology that allows for real time verification of artworks using distributed ledger and image-recognition technology. Their initial target market is authentication for living, working artists. In the long run, they plan on moving toward authenticating older works by working with artists' estates eventually having the provenance for every artwork in their blockchain. (Shameless self-promotion here: If they are in need of a large database of data from catalogue raisonné, I may know someone who can help them out…)

Beyond fighting forgery and theft, blockchain has the potential to protect and support artists by introducing new methods of monetizing their work. Artlery is building the world's "first currency ever to be explicitly backed by the creation, exhibition, and appreciation of art," which they call CLIO, named after the muse of history. The CLIO is designed to support the creators of art, and artists can secure a spot in the initial offering by uploading their portfolios here: artlery.com/artists

How do I Get Involved with the Blockchain Art Market?

My recommendation would be to start simple. Get your feet wet with something as silly as a CryptoKitty, or better yet, support my new friends at DADA.nyc and buy some affordable, unique digital art - I promise you their gratitude will make you feel good about it and you’ll want to buy more. Once you have your MetaMask and Coinbase accounts set up and have your head around how the transactions work, you will be ready to invest in microshares of a Monet or a Picasso when Maecenas goes live in 2018.

For artists, I'd strongly recommend looking into a service like Verisart or Ascribe to protect and monetize your work. I’ve spent the last three years building an analytical art database of known works for our most important artists because I find the current vulnerability of our artistic record to fakes and forgeries deeply depressing. If current artists leverage blockchain technology to authenticate and track their works, we will have a clean, unalterable record of their artworks and can avoid posthumously piecing together a record of their work in a catalogue raisonné. For this reason alone, blockchain may be the most important technology to ever hit the art market.

Update: Many have asked how to tokenize their own art and launch a blockchain art marketplace. We have outlined this in a new article titled Blockchain 3.0 - How to Launch Your Own Blockchain Art Market.

If you are interested in learning more about art on the blockchain check out my podcast, "Dank Rares" where I interview the pioneers in the blockchain art world. You can find it here on Soundcloud and you can also subscribe on iTunes here.

Have an interesting use case for blockchain in the art market that I failed to address? Hit me up at jason@artnome.com and lets chat!