Embracing Authenticity in the Digital Era: A New Perspective for Modern Consumers

This article highlights a key discussion from last October’s family office investment summit.

Recently, Lisa Gelles, the executive director at Howard Insurance, shared insights at the Tenth Family Wealth Report Family Office Investment Summit. She was joined by Courtney Booth Christensen of Winston Art Group and Nanne Dekking, CEO of Artory. Here’s a summary of their main points.

Lisa Gelles

Courtney Booth Christensen

Nanne Dekking

Introduction

Blockchain isn’t just about cryptocurrencies. It has important uses in the art world, too. Its transparency and security can help tackle issues like proving authenticity and ownership of art pieces.

Valuation Challenges

Not every piece of art holds value. Even some famous works don’t necessarily appreciate over time. Investors need to know which artworks are worth purchasing. Here’s where the art market can be tricky:

Standardized Pricing

Art lacks a clear pricing system. Unlike typical markets, art value is influenced by many factors, like the artist’s reputation, the piece’s condition, and its history. This makes it hard to determine its worth.

Limited Data

Finding reliable data on art sales is tough. Many transactions happen privately, which complicates efforts to track prices properly. This lack of clear data can hinder accurate valuations.

Role of Intermediaries

In many art sales, middlemen represent buyers and sellers. Their motivations can sometimes create issues. Miscommunication can lead to title defects, complicating ownership rights.

Title Concerns

Ownership records can be incomplete or inaccurate, leading to disputes. Historical injustices, like art looted during wars, illustrate the importance of accurate provenance. Experts continue efforts to return artworks to rightful owners.

Authenticity Concerns

Forged artworks can cause major headaches in the market. Any doubts about a piece’s authenticity can derail a sale. Authentication involves verifying the artist and its history, often leading to legal disputes if mistakes occur.

Specialized organizations help with artwork authentication. Institutions like the Wildenstein Plattner Institute maintain lists of authenticated works, increasing their value.

Nanne Dekking discussed the complexities surrounding Edvard Munch’s “Summer Night by the Beach,” showcasing the importance of provenance in ownership disputes.

Blockchain can help secure an artwork’s value. Tokenization offers a digital way to prove ownership and track an art piece throughout its life. This boosts its usability as an asset.

Key Features of Asset Tokens

Continuous Data Capture: Asset tokens can regularly update valuations based on market data, providing owners with comprehensive insights.

Certification and Actionability: Smart contracts determine the level of information needed for services like insurance or loans.

Transferability: When ownership changes, tokens can be easily transferred, allowing relevant service providers to access the necessary data.

Auditability: Asset tokens offer a clear record of who added what information, ensuring reliability and transparency.

Securitization: Tokens can also link to security tokens, allowing for fractional ownership and other digital assets.

Conclusion

Blockchain can greatly enhance the art market’s transparency and efficiency. By addressing issues of authenticity and ownership, it creates new opportunities for collectors and artists. At Howard Insurance, we guide clients through the complex world of art ownership and valuation.