Lately, I have been doing a good deal of work with two topics that initially do not seem connected: Bitcoin and art authentication. Bitcoin is a virtual currency, and art authentication serves to demonstrate a chain of title of artworks in order to establish market value. Since Bitcoin fundamentally acts as a public ledger of transactions, it could be useful in the world of art authentication.
Here are the basics. Even though Bitcoin is commonly considered as a virtual currency, small portions of Bitcoins (whose dollar value may be negligible) could be used as markers for physical property. This is because every Bitcoin transaction has a unique identifier. So anybody can look at Bitcoin’s public ledger that records all transactions (known as the “blockchain”) and see every single transaction, no matter how small.
In the field of art authentication, a valuable artwork can only really be marketable if a chain of title from the artist’s studio to the current owner can be reliably established. That goal can be frustrated by the introduction of convincing fakes into the market, or of the sale of artwork that has previously been stolen or looted from its rightful owner. In either case, if chain of title cannot be definitively established, madness can ensue, artwork can become unmarketable, and legacy-ending lawsuits can arise.
Bitcoin could serve as a registry of art transactions. When an artwork is created, it can be associated with a particular Bitcoin (or, more accurately a particular portion of a Bitcoin – Bitcoins can be divided into many units). When the artwork is sold, the Bitcoin is transferred to the new owner, who then transfers the artwork and Bitcoin to any subsequent owner. These transactions would all be part of the public record.
Many advocates of Bitcoin – or similar protocols – seek applications of the technology outside of the payment space. We are still at the beginning phases of how this technology could be used, but it occurred to me that the problems involved with art provenance could be addressed through clever application of Bitcoins.
