In recent Artnome articles we covered the arrival of the "blockchain art market" and offered a definition of "CryptoArt." In this article we look into blockchain's potential to improve provenance, a record of ownership and proof of authenticity of an artwork. The blockchain, like provenance, is a ledger, a list of transactions. However, unlike traditional provenance records and databases, blockchain information is decentralized. Why does that matter?

It stores information without the need to trust a third party It’s a low-friction, no-cost method for working artists to register work as it is produced It enables the sharing of data on transactions while retaining anonymity for collectors It’s open source - anyone can build on it It creates a single point of access for currently disparate provenance documentation Its storage of provenance makes it tamper-proof It provides worldwide, real-time access to provenance documentation Easy access to provenance speeds up art transactions such as insuring and borrowing against works It reduces transaction costs for art-market transactions by removing the middleman It includes hashes of related documents such as photographs, past appraisals, receipts, and restoration records that can be stored as metadata off-chain

Why care about blockchain Provenance?

Three years ago I read the book "Provenance: How a Con Man and a Forger Rewrote the History of Modern Art." As both an art nerd and a data nerd, my takeaway from the book was that the lack of a single database of our most important artworks has lead not only to forgery of artworks, but also forgery of the supporting documentation, aka the provenance. If you are not an artist, collector, or dealer, perhaps you are thinking, ‘Who cares?’ But this goes far beyond just impacting artists, collectors, and dealers.

The history of our most important cultural treasures - our art - has been deeply compromised due to the lack of a singular registry or database crossing the works of all major artists. Estimates range from 10 to 20 percent of all art either being forged or misattributed. Appalled by this, I spent the better part of my discretionary income and time for the last three years building the world's largest analytical database of known works by our most important artists and conscripting a small army of art nerds to help me grow it. I've always known this problem is too large to solve alone, so I am overjoyed by the number of solutions spinning out of the recent blockchain frenzy.

The Codex Protocol for Blockchain Provenance

One of the newer and more innovative groups is the Codex Protocol, a blockchain-based, decentralized title registry for art and collectibles. Protocols are essentially systems or sets of procedures and are like social-media platforms in that they only work if they can achieve escape velocity through early adoption. Codex is coming out of the gate with a strong industry consortium including Lofty, Auction Mobility, and Live Auctioneers. They are also backed by well-known investors Bessemer Venture Partners and have Brook Hazelton, president Christie’s America, on their advisory board.

Codex has an interesting roadmap for a diverse set of blockchain-based tools for the art market. I recently spoke with Codex Co-founder & COO Jess Houlgrave about Codex Protocol's suite of blockchain solutions. Jess explains:

“Codex Protocol is designed as industry infrastructure for art and collectibles. So it's fine wine, classic cars, jewelry, fine art, anything else that sort of fits into that category of items. And the really distinct thing about this category is the primary value driver is provenance information - it's the ownership, the identity of the object, the authenticity of the object, where it's been shown, all of those things that kind of contribute to the identity is a really big important value driver. And at the moment in the industry, a lot of that information isn't really held in any one place. It's very hard to access, it's very hard to research. And without it, that makes doing a whole load of other things, like insuring items or lending against items, very difficult. So what we want to build is really the infrastructure that the entire ecosystem can use. So Codex becomes a decentralized kind of title registry and store of provenance information for objects. And it's designed to be open source so that anybody will be up to build on it.”

As Houlgrave explained it, "Codex itself isn't designed to provide that provenance information.” Codex believes that the art market ecosystem already has great ways of finding and verifying provenance. They believe the real problem is that the the provenance research and documentation is often disconnected from the art object itself. In that way, future buyers and sellers are often starting from scratch in provenance research rather than building on previous research and documentation.

Houlgrave and Codex aim to solve this by issuing a non-tangible ERC721 token which represents the item, to which important metadata can be linked. The data itself will be stored off-chain, but there will be a link so that any provenance information that's attached can be uploaded and linked to the token that represents the item.

I believe the open-source nature of the Codex Protocol should really help with adoption and growth, but "fine wine, classic cars, jewelry, fine art" is a lot of territory to cover. Without data, blockchain is just a blank distributed ledger. The Codex team are open to several methods of provenance data being added to the blockchain through their protocol. One major source will be auction house transactions. Codex envisions the majority of tokens being issued by auction house partners. Each time a sale is made and provenance research is conducted, that documentation can be paired with a token on a public, decentralized blockchain. This way the provenance travels on with the artwork serving as a store of value for future owners of the work.

Of course, there have been provenance databases for a long time, so you may be wondering what makes this different? Decentralization. Codex acknowledges that the art trade has been around for hundreds of years and will continue to be around for hundreds more. In that time span, the Codex team could dissolve, but the really important part is that the provenance would still be available since it would still exist decentralized on the blockchain.

Verisart and Blockchain Provenance

The Codex Protocol team are not the first to look at the use of blockchain to help solve the art world's provenance problem. Verisart has been offering free and permanent certificates of authenticity to artists, enabling them to list their work on the blockchain since 2015. Verisart is a "platform to certify and verify artworks and collectibles using the Bitcoin blockchain." Their service is free and makes it easy to generate permanent certificates of authenticity for artists. The solution combines museum certification standards, distributed ledger technology, and image recognition to improve provenance and guard against fraud.

The founder of Verisart, Robert Norton, brings an impressive list of past accomplishments, including having served as CEO for both Saatchi Online and Sedition. I connected with Robert and asked him what he thought makes Verisart unique:

We (Verisart) were the first to provide blockchain certification for physical artworks and we work with some of the world’s best-known artists. We have a product that has been up and running for almost three years. And we have a partner program which has just launched and that's really getting traction. The partner program is really driven by people who are selling editions and multiples online, which is a growth area for ecommerce, and it’s an area that we believe is helped by digital certification using distributed ledger technology.