Fundamental problems faced in the market
But for investors, two of the fundamental problems in the market are a lack of transparency and a lack of liquidity. Now, a new art investment platform is promising a unique solution by creating an online marketplace where owners, collectors, and investors can meet without intermediaries to trade in real time. It is taking the idea of art funds, where art pieces are evaluated in financial terms, to a new level by giving investors the opportunity to have fractional ownership in artworks.
Maecenas will use blockchain technology to tokenise and digitally allocate single pieces, or portfolios, to several co-investors who can trade with other parties though an art exchange. While the owner retains 51% of the piece’s value, the remaining 49% can be traded, transforming the dynamics of the market and bringing much greater granularity to art investing. Prices will be market driven and faster digital transactions will create more data points than ever before, allowing investors to monitor the evolution of pieces in a way that has never been possible.
A secure and open global platform
This will democratise the fine art market, creating a secure, open global platform. Blockchain technology has been used to bring greater transparency to the provenance of artworks; last spring, at the ICT summit in Luxembourg, Deloitte Touche unveiled its ArtTracktive proof of concept, which provides a distributed ledger for tracking the provenance and whereabouts of fine art works. But this is the first time blockchain is being used to make art investment an easier, more transparent proposition. Lowering the barriers to entry will widen access to the market.
At the Affordable Art Fair in London, works by more than 1,000 artists are on display, ranging in price from £100 (US$130) to £6,000 (US$7,822). Getting investors involved at the bottom end of the market is important, but creating the first real-time trading market for fine art is a more ambitious vision, opening up all sectors of the market and allowing anyone to own a share of a masterpiece.
That could be a catalyst for change in a market that has remained largely unaltered for 300 years. Just about every sector you care to mention has been disrupted by technology – now it’s time for art investors to reap the benefits.