Latest figures from the Tetaf art market report, released by the European Fine Art Foundation, show that in 2016 global art market sales amounted to an estimated $45 billion, up 1.7 percent from 2015. The U.S. remains the largest country in the world art market, with 29.5 percent of the market share, followed by the U.K. and China with 24 percent and 18 percent, respectively.

Yet, while the industry remains a profitable one, it is slowly changing. One that is considered difficult to enter and resistant to change, a few sector players are aiming to bridge the modern digital world with the luxury arts sector.

Two art galleries are taking a blockchain and cryptocurrency approach. Eleesa Dadiani, is the founder and owner of Dadiani Fine Art in Mayfair, London. Marcelo Garcia Casil is the co-founder and CEO of Maecenas, a decentralized art gallery that aims to democratize access to fine art investment.

Dadiani & Partners

In July 2017, Dadiani’s modern fine art gallery became the first in the U.K. to accept seven different cryptocurrencies as payment: bitcoin, ethereum, ethereum classic, litecoin, ripple, dash and NEM.

Dadiani told Bitcoin Magazine that the decision to introduce cryptocurrencies wasn’t an instinctively demand-driven decision; rather, it stemmed from a desire to encourage demand and merge the two markets together.

“On a practical level, introducing cryptocurrency will broaden the market, bringing a new type of buyer to art and luxury,” she said.

Through her recently launched Dadiani & Partners — the U.K.’s first and only luxury asset and commodity exchange for cryptocurrencies — Dadiani is hoping to unlock the potential of the digital currency market for high net-worth (HNW) investors and consumers. Acting as an intermediary, Dadiani & Partners will enable HNWs a platform to purchase luxury goods in digital currency. Dadiani says that there has been an increase in demand with the number of people seeking the purchase of assets in cryptocurrency.

“Many bitcoin millionaires are unable to cash in their digital currency as the banks won’t convert large amounts of cryptocurrency for cash,” she added.

Passionate about cryptocurrencies, and the blockchain that underpins them, Dadiani believes that they will have a profound impact in every sphere of business and our everyday lives.

“The technology will allow us to reclaim power, paving the way for decentralized, peer-to-peer transactions without the intervention of an intermediary,” she added. “This is a revolution that goes far beyond the art market.”

Since introducing the acceptance of digital currencies the art gallery has sold a number of pieces. Going forward, all of the art, across all the exhibitions, will be available to purchase in the available digital currencies. Dadiani says that the artists are onboard and keen for their pieces to be sold this way.

“Any of the pieces we sell can still be purchased via conventional fiat currency, but purchasing via cryptocurrency enables buyers to purchase peer-to-peer, person-to-person, without the intervention of a centralized authority,” Dadiani said.

It’s hoped that by further globalizing the business and broadening their customer base, Dadiani Fine Art will appeal to bitcoin millionaires who are looking to purchase assets via cryptocurrencies.

“Digital currency is being embraced by people of all ages, creed and class, and as it’s happening in other sectors, there is no reason why the gap between the modern digital world with the luxury sector cannot be bridged.”

Maecenas

Investment in the art world can be an expensive proposition. Named after Gaius Maecenas, an ancient Roman patron of the arts, Maecenas, is attempting to remove this barrier by letting anyone buy shares of fine art. Through its blockchain-driven platform, Maecenas divides artwork ownership into fragments and connects art owners with investors where shares are bought and sold.

“By turning masterpieces into tokenized tradable assets, Maecenas democratizes access to fine art by letting a much wider audience invest in multi-million dollar artworks which would otherwise be out of reach,” Casil said to Bitcoin Magazine.

Buying access to the artwork’s investment value does not mean buying access to the actual artwork itself, however. According to Maecenas, art pieces are not put on display; rather, they are held in purpose-built art storage facilities, ensuring the work is safe and looked after. If there is a demand in the future, then they may introduce an art-leasing facility where art lovers can temporarily hold the piece of art for a fee. The fee would then be distributed among the shareholders as income.

By injecting liquidity and transparency into the fine art market, the platform claims to be adding aspects to the sector that have been missing. Determining a fair price of an illiquid asset is now made possible via the blockchain through the conversion of small and liquid tradable financial units, creating tamper-proof, digital certificates denoting ownership. These are similar to shares of a company and can be traded on an open exchange.

Through the implementation of a Dutch auction process, Maecenas permits investors to submit private bids stating how many shares of the artwork they want to own and what price they’re willing to pay for them.

“The Dutch auction smart contract then handles all the bids and uses a well-known algorithm to determine the optimal price for the artwork shares,” Casil added. “This process is transparent and discourages price manipulation.”

Maecenas’ ART utility token functions as a clearing and settlement mechanism for all transactions of artwork on the Maecenas ecosystem. Participating in Dutch auctions, leasing artwork or performing any other sensitive platform operation is handled via smart contracts that require ART tokens to operate, says Casil.

“In the case of the auctions themselves, the token represents the investor bid and commitment, and a dollar value equivalent of the tokens is escrowed in the contract for the duration of the auction.”

For instance, if an investor wants to bid $50,000 for an artwork, and ART is worth $2, then 25,000 ART tokens must be submitted to the smart contract to reflect the bid.

To ensure the work is authentic, Maecenas has an internal team that checks the full provenance of the artwork including certificates of authenticity, condition reports, insurance policies, certificates of storage and valuation reports. Independent reputable experts will also assess and appraise the artwork. The documents produced during the due-diligence process are then protected and stored securely on the blockchain.

Maecenas recently completed their token crowdsale which raised 50,744 ETH. They are aiming to launch their platform in the first quarter of 2018.