“smART” Art Explained – Solving the Issue of Fraud

August 08, 2018

“smART” Art Explained – Solving the Issue of Fraud

Continuing the series of how the use of blockchain in the art world solves a wide range of issues in the art industry, this post covers the problems of fraud and counterfeits.

Blockchain Fever Hits The Art World

For those following the art industry you will likely have noticed a significant rise in the number of blockchain and cryptocurrency related announcements connected to the art world. In the last few days alone, Mayfair based art gallery the House of Fine Art (HOFA) announced they are to sell an entire collection for purchase in cryptocurrency, and “14 Small Electric Chairs” by Andy Warhol was billed as the first piece to go under the hammer in the world’s first fractional cryptocurrency art auction.

If nothing else, the art world appears to be embracing the world of blockchain and cryptocurrency – albeit with a somewhat disjointed approach. Selling art in exchange for cryptocurrency is all very well, and not a bad idea from the vendors’ point of view – it enables sellers to verify buyer funds before allowing them to bid in an auction environment. Offering fractional ownership in a piece of fine art arguably makes investing into art more accessible to the everyday investor.

More than just the money

Initially it would appear the attraction for galleries is an additional potential revenue stream, combined with the novelty factor however, the potential behind the combining of blockchain technology with high value collectibles is considerably more than just revenue – the problems of counterfeits, stolen works and questionable provenance can also be dealt with.

Granted, attempting to register, record and log every piece of art throughout history is a mammoth task, and certainly not one that will be completed anytime soon – however, for artists currently producing work, the ability to create a permanent, immutable proof of provenance for each and every piece they produce, including any limited edition print runs of the originals is extremely attractive. It bolsters the artist’s credibility and instills more confidence in buyers, collectors and galleries alike because they are able to independently verify the art they are looking at is genuine on a blockchain.

Dealing with forgeries

Whilst a number of ideas have floated around over the years to deal with counterfeits, none so far have become mainstream or standard practice in the industry. It is surprising how many reproductions have ended up on display in major galleries and museums around the world that have since been proven to be very high quality copies.

This was one of the many reasons Thomas Crown Art was created – to provide a service for artists that would ensure even if a piece of their art was copied, it would be easily identified as such by a potential purchaser.

Copying Artwork Is Now the Easy Part

Art forgers can make a fantastic living churning out high quality hand painted reproductions – that situation is no different now that it’s ever been – however, if an artist’s work has been “walletised” by Thomas Crown Art, the quality of the forgery is the least of their problem if they wanted to sell it as an original. All artwork and prints are recorded onto the blockchain with their own unique smart contract – the ownership of the artwork is then controlled solely by the owner of the artwork via the QR code on the artwork and the artwork certificate. Of course the next question is usually “what if someone copies the artwork and the QR code and the certificate? “ If that were to happen, the contract could still verify as genuine on the blockchain – however, there are additional things the forger cannot copy – the private key for the smart contract of the artwork, and the smart contract factory address. Even if the forger had access to the private key – the smart contract certificate generator address (which creates all of the smart contracts) would still not match the original.

Dealing with theft

In the case of stolen walletised artwork, the owner has the added benefit of being able to update the blockchain record for the work as “destroyed” prior to transferring any funds stored on the artwork to an alternative wallet address. Artwork updated to the destroyed status (only possible by the current owner) is an irreversible transaction rendering the artwork useless and non-transferable or accessible by anyone (even Thomas Crown Art).

 





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