Tokenization solution for Art
Business impact
Tokenization is the process of converting rights to an asset into a digital token on a blockchain[1]. It provides a way to enable efficient ownership transfer and secondary market that decreases friction in such a conservative industry as fine art. Market is growing by two-digit percentage every year and recently reached $63B[4]. 20%+ increase in auction sales worldwide[2], but only 8% of total art auction sales are online[3]. In order to sustain that growth, industry should be digitally transformed.
Art market challenges
Due to the fact that the way to do business hasn’t changed, art market has inherent problems:
- Lack of transparency.
- Provenance / copyrights / ARR / trade restrictions are all difficult to track.
- High fees and low liquidity.
- Industry isn’t ready for digital economy.
An old way of doing business will result in a situation when competition would disappear almost completely.
Our approach - blockchain technology as a way forward
Benefits from the usage of blockchain technology:
- Creation of immutable registry of art, certificates, copyright records, etc.
- Efficient secondary markets with instant liquidity and low fees.
- Increased transparency for investors and painters.
- Reduced costs of onboarding.
- Flexible and extendable infrastructure.
Distributed Lab utilizes benefits of blockchain by providing the ability to create a fully integrated solution. We offer a new revenue streams for galleries and marketplaces via our TokenD platform that will help you to launch fast.
Future trends in art industry
There are also three important trends that will play a significant role in the upcoming years.
- Online peer-to-peer trading/exchange. Blockchain-based ownership tracking ensures secure transactions, allowing for private investor-to-investor trading.
- Fractional ownership. Tokenized artwork can be owned by multiple investors. Fractions of million-dollar artworks can be traded on a global marketplace. This provides investors with liquidity and a market-driven price discovery mechanism.
TokenD - an innovative software solution for galleries and marketplaces
TokenD[5] is a blockchain software platform for creating your own tailored solutions that provides the necessary set of features for tokenization and online trading of art items. It allows launching a digital marketplace for art with the following functionality:
- Ability to list artworks and register painters and buyers.
- Provide them with a direct sale, auction or exchange functionality.
- Store information in the internal registry and track provenance, copyrights, etc.
- Enable innovative features such as fractional ownership.
Key benefits of TokenD platform
Unique benefits of TokenD platform are as follows:
- Full control over your own system.
- Seamless creation of the digital registry of artworks between partnering galleries.
- Fast time to market (days/weeks) and affordable solution price.
- Simple process of onboarding new investors, partners, and best painters.
Case study (Large Art Marketplace)
An art director has realized that managing information of the art sales is not scaling fast enough. An art director understands that people who are used to flexibility of e-commerce will be annoyed with the old-fashioned industry. An art director wants to get advantage over their competitors and implement features that will attract the new audience.
With the TokenD platform, the new solution for the marketplace has been rolled out within 1 month.
It contains all the standard functionality to list and sell art as well as innovative features such as support of digital currencies, online auctions, fractional ownership.
Within three months of using the Distributed Lab TokenD solution, the Agency has:
- Decreased time spent managing new registrations.
- Improved auditability of ownership transfers .
- Attracted more investors that were interested in instant liquidity.
- Decreased fees for each operation but increased revenue due to significant traction among investors who use internet to trade.
Practical steps to drive the digital transformation of the art industry
- Set up a workshop with demo of PoC
- Buy TokenD software
- Enable online access to the inventory and auctions through APIs
- Provide possibility for private and fast transactions with digital currencies
- Enable secondary market trading
- Enable fractional ownership functionality