Early next year, aficionados of fine art will get the opportunity to own a piece of a rare Picasso, according to organizers of a blockchain fine art investment platform.
Although blockchain backers have long touted the idea of using the technology to allow users to purchase fractional stakes in valuable illiquid items such as artwork, Maecenas is adding a new twist. Once ownership shares of the Picasso have been sold and recorded on the blockchain, the physical piece of art will be kept under wraps until its new owners decide what to do with it.
“We are exploring a more radical approach to the tokenization of physical art, which involves making the artwork inaccessible for a certain amount of time,” Maecenas founder and CEO Marcelo García Casil tells ThirtyK.
Tokenizing Real-World Assets
The concept of “tokenizing,” placing records of the ownership of real-world assets on a blockchain, where they can be bought or sold, is not new. In fact, tokenizing shares of assets is considered an important blockchain use case in fields ranging from real estate and private securities to video games and collectibles, including fine art.
Like cryptocurrency, rare artwork has emerged as an alternate store of wealth and an investment vehicle in recent years, resulting in record auction prices that have priced most people out of the market.
Last month, for example, the newly launched blockchain platform Harbor offered investors 955 shares of a tokenized real estate asset, a $20 million high-rise serving as private student housing for students at the University of South Carolina, in order to help the property owner “raise capital from a potentially broader and more global investor pool,” Harbor CEO Josh Stein said at the time.
In similar fashion, backers of tokenizing fine art say the ability to buy fractional ownership in rare artwork with tokens, which are tamper-proof and permanently stored on the blockchain, will democratize the fine art market Fine art has even more in common with the blockchain world than you might think. Like cryptocurrency, rare artwork has emerged as an alternate store of wealth and an investment vehicle in recent years, resulting in record auction prices that have priced most people out of the market.
Earlier this fall, Maecenas used its blockchain platform to auction a 31.5 percent share of an Andy Warhol painting, 14 Small Electric Chairs, for $1.7 million. However, the coming auction, called Project Phoenix by organizers, is different. The process will be fully decentralized, creating a unique ERC-721 token representing the Picasso on the Ethereum blockchain, as well as a limited set of ERC-20 tokens representing the fractional ownership shares sold during the auction. Smart contracts will give the fractional owners a say on whether to sell the physical painting or make it available for public viewing at some point in the future.
“We envision having a voting process through the governance smart contract,” García Casil says. “As an analogy, you could think of the ERC-721 as the certificate of incorporation of a company, and the ERC-20 tokens as the company shares.”
García Casil declined to disclose the name of the specific Picasso artwork to be auctioned, but there’s another famous name involved in the project: blockchain backer (and presidential candidate) John McAfee, who has called Project Phoenix “a groundbreaking blockchain application.” The Ethershift token exchange is also involved, but Maecenas’ García Casil says it’s too soon to say if the approach represents the future of fine art on the blockchain.
“It’s too early to say if this will be the model for future investments,” García Casil says. “I think the more sensible conclusion that one could make would be to take this as a stepping stone in our journey to democratize the art market.”