Blockchain exchange bids to disrupt artworks trading
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Blockchain exchange bids to disrupt artworks trading

In ancient Rome, Gaius Maecenas was a renowned patron of the arts (most notably Horace and Virgil) but today his second name has been co-opted for an interesting new online marketplace that connects collectors and owners of fine art via blockchain technology.

Its Argentine founders say it will lower costs and bring transparency to what they coyly describe as “a traditionally opaque world”. Artworks with a valuation of over $1m can be traded, allowing investors to have a piece of a masterpiece: a liquid asset like a company share or the leg of a racehorse. The eyes of Mona Lisa or David’s locks might be unavailable but for other works blockchain will enable secure, transparent transactions and the exchange will support diversified holdings while providing a chance for owners to part-sell their holdings without losing them altogether.

I swapped emails with Maecenas co-founder and CEO Marcelo Garcia Casil, an entrepreneur who is also CEO of DXMarkets, a startup building blockchain-based products for the financial services industry. For Maecenas, investors must pay a minimum $5,000 and are charged a two per cent fee per transaction; owners pay six per cent of the listed amount for their art work. Casil says that a big auction house would command up to 30 per cent.

This is a big market that, on the face of it, is ripe for disruption and as geopolitics creates unstable economies it’s possible that more wealthy individuals will invest in art. Maecenas is currently seeking crowdfunding with a minimum target of £400,000, for 12.4 per cent of equity, having already gained £200,000 from a Swiss VC, Polytech Investors.

I swapped emails with Casil and the following is a lightly edited version of our exchange.

 

How do you explain Maecenas to a non-techie audience in 100 words or fewer?

Maecenas is an online marketplace that lets anyone invest in a fraction of an artwork, very much like owning shares in a company. It’s a global platform that connects fine art owners and investors directly through an open and secure platform.


How did the project come about?

The vision of a global investment marketplace for illiquid assets was in the founders’ mind from the beginning. However, it was through the Fusion acceleration programme in Geneva that we refined this concept and focused it on fine art.

 

Blockchain is synonymous with banking and financial services. What gave you the idea to apply the model to the art world?

We wanted to make a difference in an industry that was underserved and that could benefit from technological innovation. In that search, we tested and validated many different industries and we concluded that fine art ticked all the boxes. It’s an industry that hasn’t seen change in centuries, it is marred by intermediaries and lack of transparency, and enjoys very little liquidity. The fine art industry is ripe for disruption and we feel that a blockchain-powered marketplace can be the catalyst for positive change.

 

Is this the first attempt to introduce Blockchain to this segment to your knowledge?

Other companies have introduced blockchain to fine art in areas around provenance and digital artworks. However, we’re not aware of any company having used blockchain to enable art investments, so we’re likely to be the first movers, or at the very least one of the first.


Were there any specific challenges to bringing blockchain to this area?

Data privacy is always a challenge when it comes to blockchain systems, given that these platforms have been originally conceived as public networks. We had to architect our system with this in mind to ensure that we could guarantee data confidentiality without having to sacrifice the benefits that blockchain technology brings.

 

The art world has always been troubled by incidents relating to fraud and cartel-like behaviour. Do you see blockchain as a way to restore faith?

Yes we do. Blockchain technology promotes transparency and therefore makes it more difficult for dishonest actors to play their games. We don’t expect changes to happen overnight, but we believe that the art finance industry needs to be more open and fair, and blockchain technology is a step in the right direction.


The art world is also seen as not very techie. How much of a challenge will it be for incumbents to understand Maecenas?

Our initial pitches were dominated by concepts around the technology itself and the benefits of cryptography. This didn’t resonate much with our audience, and very quickly we realised that we had to focus on the core value proposition and not so much in how the technology works. Talking about the issues we address creates much more engagement than explaining how we address them.

 

Do you see Maecenas as changing the demographics and logistics of art ownership and trading, perhaps making it more inclusive in the same way that an E-Trade made it easier for people to trade shares?

Absolutely. One of our goals is to democratise access to fine art. We believe that by significantly lowering the barrier of entry to art investment combined with transparency, openness and a seamless user experience we will see a much wider audience participate in the art market.

 

You have received some funding already but what are your plans to raise more?

We have used the initial funding we received primarily to build our MVP and to validate and refine our concept, both to ensure that it addressed the fundamental need this industry has and to make sure that our approach was appropriate and feasible. We now need further funds to bring the product to market and to accelerate client acquisition while we still have the first-mover advantage.

 

And how big do you think Maecenas could be in revenue terms?

The fine art market is huge. There is an estimated $3 trillion dollar worth of art in safe storage, with global sales standing at circa $65 billion per year. If we can successfully break into this space and get some decent traction we will see revenues in the millions fairly quickly.


Can you foresee other markets that could be ready for the ‘blockchain treatment’?

The first one that comes to mind is real estate. It definitely has all the right fundamentals to be “blockchainised”.

 

What should I have asked you about that I haven’t?

I think you’ve raised very good points and have asked some questions that I haven’t been asked before. One additional aspect of the business to mention is that we envisage, at a later stage, using our platform to support emerging artists and let them reach out to “the crowd” to fund their careers. We’re not set on the exact approach yet, but we’ve played with the concept of “art futures” whereby artists would raise funds from a syndicate of investors for pieces that have yet to be produced. It would work very much like traditional art commissions but through the blockchain and with a financial spin.

 

 

Also read:
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The strange story behind Rembrandt’s 3D-printed final masterpiece
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Bob Dylan’s archivists mine new seams
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Martin Veitch

Martin Veitch is Editorial Consultant for IDG Connect

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