As interest in blockchain has grown over the past few years, most people in the art world have been focused exclusively on NFTs. People have debated the true value of Beeple’s $69 million NFT, Everydays — The First 5000 Days, ad infinitum. Others have discussed (and argued) over the legitimacy of the whole industry, unsure of what makes an NFT different from simply copying and pasting the image of their choice wherever they want it. For many people, blockchain is nothing but a scam used to fleece unsuspecting art lovers.
But that’s because they’re only looking at a snapshot of the technology in its infancy. Blockchain is so much more than vanilla NFTs. It’s more than JPEGs or PDFs or any other kind of file. It’s an entirely new paradigm. And the opportunities that it makes possible are simply unprecedented. That’s what makes them so difficult for newcomers to wrap their minds around.
The real value of blockchain technology for the art world isn’t just in the sale of NFTs. It’s in the way it could revolutionize the way artwork is sold and tracked. This is especially the case thanks to smart contracts.
What are Smart Contracts?
Different blockchains offer different features. And one of the most valuable recent features is that of smart contracts. These are pieces of code embedded within the blockchain that only run when certain conditions are met.
Innovators in a variety of industries have been exploring these possibilities, including those in finance, law, gaming, and more. But it’s the use cases within the art industry that should interest artists, collectors, and galleries.
If an artists tied a piece of physical artwork to the blockchain, they could setup a smart contract that automatically paid them a royalty on any subsequent sale of the artwork. Likewise, he could create a rental system that made the artwork available for a certain predetermined period of time, and then automatically returned it. Once the underlying infrastructure is in place, there will be no end to what could be possible with smart contracts.
Smart Contracts Simplifies Transactions
One of the most valuable benefits that smart contracts will offer artists is a simpler, more streamlined transaction process. Since smart contracts are setup on the blockchain and instantly run when their conditions are met, there’s no need for an intermediary. Transactions can take place without the need for an escrow account or any other third-party. Blockchain will make it possible for all art sales to be completely decentralized and peer-to-peer. By cutting out the middle-man, artists will be able to retain more of the money from each sale.
Smart Contracts Leave a Perfect Sales Record
One of the other advantages of smart contracts and blockchain is the immutable record it leaves behind. Once a transaction has taken place, it’s permanently recorded on the blockchain. This means that determining provenance is as simple as looking at the smart contracts that have run over the artwork’s journey. Collectors can finally buy new pieces with confidence.
Smart Contracts Minimize Disputes
Smart contracts will also minimize the number of disputes that arise from art sales. Smart contracts on blockchain keep a perfect record of every sale. This means that neither artists nor buyers must keep paper records to verify ownership or sales. Likewise, there’s no need to worry about one party reneging on a handshake agreement. Everything will be clearly recorded and enacted through the smart contract.
So, the next time you hear someone arguing about the practicality of blockchain technology, remind them that it has the potential to forever change the art industry for the better. And that’s true even if the value of every NFT on the planet drops to $0.
