How can we even begin to conceptualize the idea that a work of art can be tokenized?
In truth, it is really no different from tokenizing anything else, including shares in a company, like Swarm Fund is already doing. First, the art would need to be appraised as valuable art always is. Next, the equivalent value would be calculated in whatever digital currencies the seller wants to represent ownership of the work.
In short, tokenizing art is the same as tokenizing shares in a company. One argument to watch out for, however, is that this is something novel to the global business space.
Some may disagree strongly but the case can be made the tokenization of shares in a company or in this case, a work of art, is nothing more than digitizing the entire investing process to the point where none of it involves traditional money.
Still, the truth is a bit hazy as the Blockchain industry is truly in its early stages.
Because this is true, we are left with the question: how does doing so truly change the investment process?
On Wednesday, an Andy Warhol painting worth millions of dollars was tokenized and then sold on the Blockchain. Through understanding how this played out, it could be said to be easier to understand how the tokenization of assets actually offers investors a new avenue to follow.
First and foremost, the full work was initially appraised at $5.6 million. 800 users signed up for a smart contract auction in order to see how much Crypto could be raised as collateral in relation to this full valuation. It should be noted that from the beginning, only 49% of the painting was made available for this auction. Thus, from the beginning, the entire asset was never going to be tokenized and it appears that the creators of the auction intended to treat it almost like a pilot.
In the end, the auction resulted in $1.7 million or a 31.5% stake being the highest stake in the Warhol work, in question and by all accounts, the 49% was allocated to 100 of the users involved.
Over the course of the auction, everything was decided by a smart contract, which basically means that no human actors were directly involved in the allocation of funds and the resulting Crypto was distributed automatically. In other words, computer code decided how the auction was run as well as how and when it ended.
Overseeing this entire process was the Crypto firm, Maecenas, which bills itself as the “platform that democratizes access to fine art.” In general, Maecenas is an ERC20 based project, which means that it runs on the Ethereum network, even though it also has its own token, which is represented by the acronym, ART.
In the end, according to CCN, the winning 100 participants were given digital certificates that are tied to the Ethereum blockchain, to represent their ownership of the painting. To recap, tying ownership to the Blockchain in this fashion essentially amounts to a foundational use case of the technology, which includes using it as a ledger for something other than transactions with currency.
By: BGN Editorial Staff