How the blockchain is changing the art sector – an interview with 4ARTechnologies CEO
The art sector is not exactly known for its high level of digitization. The costs of middlemen, fraud and logistics processes are enormous and run into billions worldwide. The Swiss art start-up 4ARTechnologies wants to overcome these shortcomings with the help of Ethereum Code technology. In contrast to many other blockchain start-ups, 4ARTechnologies already has a lot to show and is valued at 500 million euros by the auditing company PwC. The CEO and founder of 4ARTechnologies, Niko Kipouros, told us in an interview how high the cost savings are through optimized blockchain processes for the art market and what one can think of tokenized art.
The interview was first published in the December issue of Kryptokompass .
Why is a company like 4ARTechnologies needed that wants to revolutionize the art sector with the help of blockchain technology?
Blockchain alone is not a solution for the art market. So far, no one has succeeded in finding a really standardized approach that can represent the art industry in its entirety in a practical manner. There have always been applications with a blockchain component. But we were the first to create this holistic approach that distinguishes 4ARTechnologies.
Part of this is securing information and documents on works of art using the blockchain, among other things. The fact that we made the step into the art market is mainly due to the fact that we can map all processes via mobile phones. This is the first time that a smartphone can be used to authenticate works of art. This is done via digital fingerprints of objects and material surfaces that we connect to various storage media.
The blockchain serves as a backup medium through which all digitally processed transactions are then hashed again on the blockchain. Thus, all information is unchangeable and valid, even in many years. That wasn’t possible before.
Your product is aimed at three groups: gallery owners, artists and insurance companies. What are the biggest pain points of the individual actors?
We address the entire art market. Our system starts with the artist. He can digitize his works and feed the data into the works catalog. The next stop is the gallery owner. This first change of ownership is extremely important in the art market. The next station is usually the collector. And he has a big problem today: the large amount of art forgeries. Experts assume that between 30 and 50 percent of all works on the market could not be real.
So collectors do not know exactly where the works of art come from and whether they are real. By transferring the digital protocols secured by the blockchain, collectors can provide evidence that their work is genuine.
On the other hand, transport also plays a major role. Around 20 million works are exchanged between the museums every year. We are talking about extremely high assets here. It is customary for the lender to bear the costs of transport. But this also includes a status report that is made manually. All of this could already be done digitally today, thereby saving enormous costs.
Can you give us more figures to give us a better idea of the savings potential?
There is great potential for cost savings, especially with these status reports. We have over 250 million changes of ownership in the art market worldwide every year. A condition report is required for 20 percent of these plants and costs at least 150 euros.
It costs gallery owners between 6,000 and 15,000 euros per exhibition, of which there are hundreds every year. Here alone, the savings potential is enormous and can deliver a good 70 percent cost saving.