There are no finer art paintings than Michelangelo’s held in the Sistine chapel. Drawn hundreds of years ago, their value might be incalculable. But what if you could buy a small part of it without even physically seeing the painting or touching it?
That’s what a new blockchain project, Maecenas, plans to do. Marcelo Casil, its founder who previously worked as a programmer or analyst for a number of banks, including Barclays and Credit Suisse, publicly says the blockchain platform:
“can turn expensive and illiquid artworks into smaller and more liquid tradable financial units, very much like shares of a company, which could then be traded frequently through an open exchange, providing a great source of price discovery.”
He argues the current art world operates in an old-fashion way and in a monopolistic manner with auction houses able to charge some 30% of the sailing price while investors keep showing increasing interest in art as its uncorrelated with other assets.
Maecenas, which has raised almost $200,000 from a Swiss Venture Capital firm, Polytech Ventures, wants to make that process far easier by launching an online marketplace for fine art investment.
According to their website, checks regarding ownership of the artwork, called provenance checks, are firstly undertaken, with the resulting document produced during due diligence stored on the blockchain. They say:
“We use distributed ledger technology (also sometimes referred to as blockchain technology) to provide a tamper-proof record that guarantees your exact holdings. This record also has a cryptographic certificate of ownership attached to it.”
A representative from Maecenas told Trustnodes that the blockchain they use is “an ethereum fork for now and may move into public ethereum once the network is more scalable.”
This allows them to reduce fees for listing down to 6%, while the artwork doesn’t really change hands. It is safely stored, with full insurance for any loss or theft, but technical ownership has now passed to the owner of the cryptographic asset. Maecenas says:
“Once an artwork is listed on the platform, the art owner becomes the legal custodian of the asset. As an investor, you acquire asset-backed certificates that give you financial participation in the art piece. The certificates are protected by a strong legal framework that guarantees your rights over the asset while it remains in expert hands to guarantee its safety and proper care.”
So you’re not really buying the asset, but a claim to its ownership, making it an asset backed derivative. The owner of the art-work can even sell it, as long as the new purchaser is happy to continue listing the art-work. If not, they have to pay back all the investors.
The art market they targeting is for pieces worth a million dollars or more. In effect turning each art piece into a token that can now be traded with its value going up or down presumably in a manner that tracks the price a physical buyer would have to pay.
That makes it an interesting concept, albeit experimental, and introduces a new area of blockchain disruption, provenance – or the chain of ownership for rare artworks – something which the blockchain could make far more efficient at lower costs.