Can Blockchain Help Grow Small Data into Big Data?

By Jason Bailey, Founder, Artnome, Boston, USA
In Conversation with Dr Shermin Voshmgir, Founder BlockchainHub at the Art + FinTech summit Bahrain 2019 © Fadi Farhat Photography
The Blockchain Art Market Revolution panel at the Art + FinTech summit Bahrain 2019 © Fadi Farhat Photography
The Outlook of the China Art Market panel at the Art + FinTech summit Bahrain 2019 © Fadi Farhat Photography
Art & Analytics panel at the Art + FinTech summit Bahrain 2019 © Fadi Farhat Photography

Art Analysts in Bahrain ask if Blockchain can help grow small data into big data

The art market is a $64B-a-year market which severely lacks a high volume of good, quality data. While larger volumes of auction data are becoming easier to get a hold of, consistency and quality control are still major issues - and only a fraction of the work by important artists ever makes its way through to auction. Museums are increasingly making data on their collections available, as well, but there is still no single repository unifying data across multiple sources. With no singular database for important information on our most valued art, we put ourselves at risk for forgery and misattribution. The nature of forgery makes it difficult to measure its full impact, but many believe statistics stating upwards of 15-20% of artworks in circulation are forged or misattributed.

In the short term, the art world’s current “small data” situation could means big opportunity for scrappy companies willing to put in the effort to build proprietary databases. However, the long-term benefit of using tools like machine learning for analysis requires that we stop duplicating efforts across dozens of small companies to gather and clean the same data and instead increase the total volume of good, clean data available to all. Simply put, the more data you use to train machine learning, the more accurate and powerful it becomes. We need orders of magnitude more data before we can reach these stages in the art world. Only then can we shift the focus from gathering data to actually providing valuable insights, which is the ultimate goal of analytics in any field. Part of the solution might be to form a consortium or clearing house of art data made openly available to all; another part may be using the blockchain to build a decentralized repository.

Several experts in art data and analytics convened in Manama, Bahrain, recently to discuss these and other issues and to shares ideas and best practices at the world’s first Art + FinTech summit, 2nd Annual UNFOLD Art XChange that was part of the talks program for the 4th edition of ArtBAB, held at the Bahrain International Convention and Exhibition Center, under the patronage of Her Royal Highness Princess Sabeeka bint Ibrahim Al Khalifa,Wife of His Majesty The King of Bahrain in collaboration with Tamkeen, that took place from the 7-9 March 2019.

The first panel titled “Art & Analytics: How Can Big Data and Analytics Help Art Collectors Better Manage Liquidity, Risk, and Volatility" was moderated by Adriano Picinati, founder of the Deloitte Art & Finance Initiative. The panel explored big data and analytics, and what collectors and their advisors can do with new data and tools. It also looked at art as a relatively new asset class and how financial advisors can help monitor and better manage the liquidity, risk, and volatility for their clients.

Christine Bourron, founder and CEO of Pi-eX, a company that provides analytical and financial tools especially designed for the fine-art market, spoke on the importance of focusing on the quality of data over quantity. Rather than boil the ocean, Pi-eX’s has built its own proprietary database of trade data from scratch and focuses on the gap in signals between market supply and demand.

Crowdsourcing is one way to increase the total amount of data available for analysis. Anders Petterson, founder and managing director of ArtTactic, a progressive art market analysis firm, gave insight on how it crowdsources ‘opinion-based’ data for the art market. The company uses techniques similar to those used in the financial markets to analyze the art market and build up art market trends.

Christopher E. Vroom is founder and CEO of CollectorIQ, which provides integrated collection management and market research for the fine art market. He spoke on the role that data and algorithms could play in pricing estimation. Vroom shared a demo specifically for the ArtBAB fair showing a selection of six Bahraini artists. The demo used visual algorithms to compare color, hue, size, etc., to its database of works to predict pricing.

Dirk Boll, president of Christie's EMERI, described how blockchain and AI combined with big data can contribute to a more transparent art market. He gave the recent example of Christie’s first blockchain experience through their partnership with Artory. The partnership kicked off late last year with the sale of the Barney A. Ebsworth Collection. The collection, which is considered the most significant privately-owned collection of American Modernist art ever to come to market, was recorded in its entirety on Artory’s blockchain.

From here we dove into several panels on blockchain. The blockchain, generally described as a distributed ledger, has many components that appear promising when it comes to storing provenance.

Adriano Picinati interviewed Dr. Shermin Voshmgir, founder of BlockchainHub and an expert on blockchain. BlockchainHub is a group that brings together blockchain education, blockchain research, and technology incubation. Dr. Voshmgir demystified the technology behind the blockchain and outlined how it could provide increased transparency in the art market through a decentralized provenance database. Dr. Voshmgir also shared her views on the future direction of the blockchain and ways its use could further impact the art market moving forward.

The second panel titled “Blockchain Art Market Revolution: Improving Provenance and Transparency for the Art Market” was moderated by Khalid Saad, CEO of Bahrain FinTech Bay. It focused on blockchain use cases surrounding how art is bought and sold, thwarting fraud and tax evasion, and reducing friction during the auction process. The panel also explored how blockchain can bring about better transparency to artists, collectors, investors, and auction houses.  

Nanne Dekking is the chairman at TEFAF and founder of Artory. He gave an in-depth overview of how the Artory Registry works when an artwork gets sold at an auction, is insured by a bank, or is exhibited in a museum. He explains that once the data about the event and the artwork gets submitted to the Artory Registry, the data record is digitally signed by the publicly known party involved in the event. This makes both the author and the time of submission verifiable. The Registry cannot prove that everything stated by the author is correct, but it’s mathematically proven that he/she said it and when. A certificate is issued to the owner of the artwork who is vetted by the issuing entity involved in the artwork event. The certificate consists of a cryptographic key pair. One of the keys, the public key, gets published with the artwork record on the Registry. The second key, the private key, gets stored in the collector’s vault. This private key enables the owner of the artwork to decrypt and thereby read messages that have been sent to the public key on the Registry.

Niko Kipouros, founder and CEO of 4ARTechnologies, spoke on how he plans to drive digital transformation and offer greater transparency, security, and process efficiency for the art market. Using patented augmented authentication technology, 4ARTechnologies requires nothing more than a standard smartphone. The authenticity of a physical work of art can be verified with complete provenance by storing the fingerprint of a work of art together with a digital curriculum vitae on the blockchain. By using a high resolution scan of the surface of the art, the record is made forgery-proof, and cannot be manipulated.

Paul Lindahl is president and CEO of Arius Technology. He highlighted Arius’ 3D fine art image capture platform initially created for the forensic analysis of the Mona Lisa by the National Research Council of Canada in collaboration with The Louvre. It has also been used in the authentication of a DaVinci sculpture and the digital restoration of paintings by  Monet and Turner. Lindahl also explained how Arius technology works with artists to create near-perfect textured reproductions of artworks via Elegraph™ printmaking.

Ray Cai, CEO of Artwook, spoke on a blockchain-based platform for fractionalized ownership investment. Designed for the Chinese art market, the ownership of each piece will be fractionalized into tens of thousands of units for crowd investment. Cai also described the creation of a secondary market or exchange where investors can trade their partial ownership in instant transactions on their platform.

Robert Norton, CEO and co-founder of Verisart, shared how they have created a certification platform that applies blockchain timestamps to make verifiable claims about arts and collectibles. Norton spoke of Verisart’s recent partnership with Paddle8 to launch the P8Pass, bringing blockchain certification and authentication to the online auction market. He also spoke of Verisart becoming the world’s first blockchain company to partner with eBay in June of 2018.

Elena Zavelev, founder of New Art Academy and CADAF interviewed Qinwen Wang, chief art and technology officer of ArtWook and co-founder HashBang. Wang discussed the rise of China in becoming Asia’s centre of gravity for crypto and blockchain investment and innovation. Wang addressed the booming art consumption and art development market in China and the enormous untapped potential to offer hundreds of millions of middle-class Chinese an alternative way to invest their fast-growing wealth in art by reducing the entry point through fractionalization. Wang also spoke on bridging art and tech and raising greater awareness in the China art market through HashBang’s current systematic course offering which includes <Stable-coin economics>, <Gaming Theory:Incentive Mechanism Design>, <Cryptocurrency Quant Trading> and <Art Investment and Transaction in the Blockchain World>.