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Investors usually do not invest much in fine art, why? Because investing in art requires high amount of money combined with knowledge and time. Thanks to the introduction of art tokenisation everything could change. If you are interested in exploring more topics on developments between the art market and new digital tools, read more on: How digital is creating new smart ways to collect - The big question of the blockchain for the art market

What is art tokenisazation?

The process of tokenisation involves the fragmentation of the asset property in thousands of segments called token. A single token can be easily compared to a share of a company. In fact, the value of the artwork can fluctuate depending on the market movement. 

How does it work?

First, the artwork will be valued by a certified curator in order to define the number of “pieces” in which it would be divided.  Then the process of tokenization begins. Certificates containing the intrinsic value and proving the authenticity of the artwork will be stored on the blockchain. Tokens, which number were previously defined, will be issued, with each carrying a monetary value and representing ownership. The token issuer will start trade the “shares” on the market. Token holders will be granted proportional ownership to the artwork. Investors view the art sector as a potential investment option to enlarge and diversify their portfolio. 

 

 

What are the advantages? 

In the last years we have seen emerge a revolutionary concept in the industry of art involving blockchains and cryptocurrencies. Thanks to tokenisation they found a way to convert a fiscal asset onto blockchain and gaining the different advantages of this new technology without losing the real value of the good.

Usually the price of an artist work is strictly related to its carrier, but this link is broken at the point of sale. What if blockchain could create alternative ownership model? In that way artist could benefit from its ongoing performance. In addition, the system of blockchain can store information about an item’s identity and ownership history. In this way we could finally solve provenance problem and build a safer market. Tokenization started a process of art democratization. More investors can access the fine art market without having to spend all their capital in one piece of art. This new system allows them to diversify more their portfolio and save on auctioneers’ fee on buyers’ premium.

In conclusion, the process of tokenization allows investors, collectors, museums and galleries to have a higher transparency, increase liquidity and lower transaction costs. At the same time, art can provide a way into the world of blockchain and lower the high barrier of engagement created by the complex system. 

 

Stay Tuned on Kooness magazine for more exciting news from the art world.

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