The global art market is massive, worth an estimated $64 billion and involving over 35 million transactions each and every year.
Over the past decade, its valuation has increased 9%. The reasons for this growth are multifaceted, but at the center of them is the rise of the internet. Online art dealers make finding high quality, valuable art easier and more accessible than ever. And as the industry has grown, more artists are picking up their pencils and paintbrushes.
To a layperson, it may seem as though all of this is a net good. So, what possible negative consequences could result?
The Dark Side of the Art World
While art sales have been steadily increasing, there are some ominous signs just under the surface that signal colossal problems ahead. When art is sold in the primary market, artists must authenticate the work, ensuring its legitimacy. But this isn’t so with the secondary market. As a result, some studies have found that up to 60% of art sold there is counterfeit. And since art is being produced faster today than at any time in history, this problem will only increase.
As the artists who are currently working begin to pass away, there will be a tremendous amount of uncertainty about the legitimacy of works. And since secondary sales do not necessarily require authentication mainly because of the high cost of authentication, this issue will continue to compound for the next twenty or thirty years. Artists will produce significant works, counterfeiters will copy them, and somewhere down the road, utter chaos will reign. The art market could easily see a bubble similar to the one that caused the housing market crash of 2008.
What will happen when the creators of today are gone? Will there be any way to know whether a piece of art is truly original? Or will the market be awash in a sea of counterfeits, with the original piece drifting somewhere in the mix?
A Solution to this Ticking Time Bomb
If the art industry is going to overcome this problem, it has to implement something that can be in effect across the primary and secondary markets. Ideally, it would be wise to come up with a way to ID pieces of art that is genuinely unique and cannot be duplicated.
One of the most recent advances in technology that could meet this need is Distributed Ledger Technology otherwise known as blockchain, the same ideas behind cryptocurrencies like Bitcoin and Ethereum. This tech allows information to be stored in a secure, unchangeable, and highly transparent way. It’s the perfect option for authenticating original data, whether the amount in a cryptocurrency wallet or the ID number of a painting.
In addition, blockchain has the ability to keep an unblemished record of everyone who’s owned a particular piece of artwork. This would make it far easier to trace questionable art to its source and determine whether it’s original or not.
While there are many viable options for diffusing the art world’s ticking time bomb, blockchain seems to have some of the most promise. But even if the art world as a whole doesn’t join the blockchain revolution, they desperately need to come up with some solution.
Otherwise, this bomb will explode. It’s only a matter of time.
Article by the Regestra Team.