Last month in New York City, legendary auction house, Christie’s, set a world record by fetching $323.1 million for the Ebswoth Collection of works by American Modernists masters Edward Hopper, Willem de Kooning, Jackson Pollack, Georgia O’Keeffe, Alexander Calder, Joseph Stella, Charles Demuth, Charles Sheeler, and others.
Not only did the auction shatter records for the highest prices ever secured for a collection as well as for 13 individual artists, but it also was the first art sale of this magnitude recorded on the blockchain. Partnering with Artory, a blockchain-based registry that tracks provenance for art and collectibles, Christie’s is leading the way in bringing mass adoption of the blockchain to the art world.
With its inaugural Art+Tech Summit earlier this summer, Christie’s gathered speakers from ConsenSys, Cryptopunks, Deloitte, KPMG, Clifford Chance, Victoria & Albert Museum, The Serpentine Galleries, Bloomberg, and The Financial Times to discuss the nonfungible tokenization of art and collectibles. More than just for CryptoKitties, the art market is finding salvation on the blockchain with immutable copyright registration and proof of provenance that certifies authenticity, and can thwart forgeries and unlock value of assets previously considered illiquid.
Pixels as an asset class
Starving artists are also beginning to see the potential for creating financial products from art, or vice versa, making art from speculative financial products, as the SEC might one day see it.
At FinTech On The Block in San Francisco last week, Brooklyn-based British artist Eve Sussman spoke about 89 Seconds Atomized which fractionalizes her last artist proof for her acclaimed piece, 89 Seconds at Alcazar, which has been featured at the The Whitney and MoMA. Exploded into 2,304 atoms, the work is being initially offered at $100 fiat or ether-equivalent per atom with each containing 400 pixels of the complete frame and a 10 minute run time. Consensus by its community of owners is required for the piece to be seen in its entirety again. If only part of the community votes, then the piece can be shown with holes making Sussman’s expression of the collective experience of owning blockchain-based art an interesting experiment in the space.
Another example of fractionalization involves the sale of works owned by museums or private collections where the physical property never leaves the owner. Typically the owner retains a majority interest (e.g. 51 percent equity) in the piece while selling a minority interest (e.g. 49 percent) to investors. Over the summer, Andy Warhol’s 14 Small Electric Chairs was tokenized by its owners, Georgian art dealer Eleesa Dadiani and Maecenas, an online investment platform based in the UK. According to its Medium post, “The beta auction raised US$1.7m for 31.5% of the artwork at a valuation of US$5.6m.”
On the surface, fractionalization sounds like the democratization of art that makes it possible for anyone to own a piece of the masters, but whether any of these token offerings are ultimately deemed art or unregistered security, caveat emptor, know what you’re buying—you can’t hang a fraction of a Warhol on your wall.
Up next, Art Basel Miami
This week, 77,000 artists, celebrities, collectors, institutional investors, family offices and fans will descend on South Beach for the epic rave that is Art Basel Miami. This year, amidst appearances by Christo, Calvin Harris, Kaskade, Die Antwoord and Zedd, programming will be ripe with talks about problems blockchain can solve and where the pain points are for adoption in an industry has thrived on secrecy, not transparency, for hundreds of years. Modern Consensus will be on the scene covering the show.