I started writing this text for my site (fbls.win) wondering how to explain in simple terms, for newbies, about the use of blockchain by the art market. I decided to share here because I think it could be useful for more people. I tried to be as brief as possible, avoiding technical language.
Why blockchain?
The Blockchain technology provides valuable resources to store any type of digital record. As a decentralized network, no one has full control over it. The information is recorded cryptographically and it is immutable, can not be edited or erased. The network is transparent: all the information is available online and can be checked and confirmed by any individual.
Years ago Bitcoin solved the double spending problem. Means that you can not send a coin and still keep it to yourself. Each coin, or fraction of coin is unique and can not be duplicated, even without a central server to control this information. Another major innovation of blockchain technology was the introduction of the smart contracts on Ethereum network in 2015. The idea existed for years, but its implementation is recent. We can briefly define these contracts as terms of agreement directly written into lines of code. They allow additional automated capabilities for the management of digital assets.
All these characteristics make this type of network not only useful for digital currencies, but also to represent any kind of asset, even physical ones. Another feature important to mention here is the ease of fragmenting ownership of an asset among different parties.
Non-Fungible Tokens - NFT
Unlike the currencies, a non-fungible token (NFT) is a special type of token which represents something unique, with exclusive characteristics. Possible use cases are numerous, from gaming items to real estate ownership.
For the art world, it is an excellent technology to prove authenticity, provenance, supply, ownership. A token can represent a physical art piece, like a sculpture, as a certificate of authenticity, or be the art piece itself. The tokenization also provides fast, easy and secure ways to negotiate, distribute and store art pieces.
In other words, the blockchain technology not only contributes for the work of artists, but also hinders criminal actions, such as thefts, forgeries and money laundering, the dark side of the art market.
