The Blockchain revolution is unlocking new possibilities across virtually every aspect of our lives. Old-school investors and mega corporations are now betting on cryptocurrencies, thus driving mainstream acceptance.
And sectors like real estate and healthcare are finding innovative ways to introduce Blockchain-based apps and cryptocurrencies. But, perhaps one of the most interesting applications is taking shape in the art industry, which has remained largely averse to change in the face of digital evolution.
The global art industry is valued at around $65 billion. But only 8 per cent of its sales happen online. This boils down to entrenched traditional values and established practices. And high stakes and low liquidity discourages many prospective investors within these legacy options.
It is therefore unsurprising that the pandemic and subsequent lockdowns totally upended the art industry. According to a survey by Americans for the Arts, 62 per cent of artists were completely unemployed and more than 94 per cent suffered lost income.
A sign saying “It’s not you, it’s COVID-19” on a wall in Alserkal Avenue – UAE’s ‘district’ for art galleries – perfectly sums up the status quo. And these factors are proving to be the adoption tailwinds for Blockchain-based tokenization of art.
Tokenization is nothing but digital representation of physical assets on Blockchain. So, tokenized art comes with an immutable registry, enabling it to be bought and sold online, without fretting over counterfeits, provenance, trade restrictions, etc., which are commonplace in the traditional art market.
Especially in light of the pandemic, tokenization is a viable solution. But the benefits do not stop there.
Tokenization brings greater optionality for art investors, in the form of fractional ownership, which is to say, fractions of million-dollar artworks can be traded by investors of all scales on a global digital marketplace. This creates efficient ownership transfers and reduces barriers to entry in both primary and secondary markets.
This results in a fairer valuation mechanism through market-driven pricing, rather than traditional auction and/or appraisal based methods. Increased transparency of origin, copyright records, etc., and greater flexibility – for both artists and investors – promises new ways for a distressed industry.
But Blockchain’s ability to bridge gender disparities in the industry is what makes the most compelling case for this transition.
Be rid of the ceiling
According to ArtNet, women represent just 2 per cent of the art industry. And not only is the market share minuscule, but also disproportionately concentrated among a handful of artists — just five artists account for 40 per cent of the total women’s market share!
Considering the sea change that Blockchain is bringing to the global financial market, where women are largely under-banked or unbanked, particularly in rural areas, tokenization of art could be consequential. Women artists, who haven’t found success in conservative art markets, can now monetize their creations in a level playing field offered by Blockchain.
Not only will this eliminate long-standing inequalities, but also enhance inclusion and opportunities for women from indigenous and under-served communities.
– Reshmeen Hooda is Co-chairperson of IBC Group.