Written by Roger Ryan

“Artchain global endeavours to build an autonomous blockchain underlying architecture and a trading platform for the art industry and the economy as a whole.”

No small feat then for Kay Sprague and her well-esteemed team. The aim of this dynamic project is to highly liquidise a notoriously illiquid market and, although art has come forward with the rise of the internet, your standard personal investor will scorn at the thought of the higher risk lower return investment. Art under-performed in comparison to the Americas’ stock market from 1972-2010 with growth of just 6.5% per annum (reference 1) in comparison to the S&P 500 average annual return of 11.76% (reference 2) for the same period. Alongside this the opinion bias that influences Arts value can be tougher to grasp than your standard trading Profit and Loss Account.

Running on the permissioned public HyperLedger Fabric the technology is well and truly proven with some of the biggest players in the space utilising this platform (IBM, Intel, Cisco & JP Morgan). Reading the whitepaper you get the sense that this team has put together a well-equipped concept that allows for future development and adaptability to move with blockchain advancements over the coming years. It is not a true open source blockchain project but I think that is irrelevant for the majority of artists, art investors and galleries. They want a safe secure and open marketplace that verifies the legitimacy, sales history and further liquidises a market that is said to be worth $1 trillion USD. Artchain delivers that.

It motivates community development by incentivizing artists to list their work by distributing ACG to them tokens based upon their current status. It also requests a high level of community developer involvement and has accounted for this in the crowdfunding distribution tokens (10% of tokens to outstanding contributors of the community). The only limitation I would infer from the whitepaper is the lack of scope that has been allowed for the physical processing and delivery of these goods. The major limitation on art’s illiquid nature is not solely the platform it is traded upon but also the actual physical deliverance of these goods. It is indicated that this system will have the capability to link with IND 4.0, IOT smart tech in the future. I think it is vital to the development of the project to clearly define how they plan to transport, deliver these works to ensure the safety and quality of such valuable assets.

Crowdfunding round is currently going through stage 1 with a bonus of 7% being offered on a purchase with a value of $0.03 per token. A minimum of 3 Ethereum are to be invested taking today’s price of $691 per Ethereum that’s $2073 minimum investment into an ICO this will be off-putting to the smaller investors that would be willing to take a risk but it will not dissuade the genuine art collectors & investors.

Artchain, I believe, is a good project with a strong team and a solid operating platform. The art market is a weird, wonderful and often a dangerous place for your typical investor. Artchain does address a lot of issues within the market and the aim of expanding this as a global trading platform it could transform today’s art industry. I believe the barriers to entry of the crowdfunding will be counterproductive to their ultimate goal but long term it’s a viable solution to consolidate a market that is dispersed globally in such an inefficient manner.

Reference 1: https://www.gsb.stanford.edu/insights/research-art-good-investment

Reference2:  http://www.moneychimp.com/features/market_cagr.htmhttp://www.moneychimp.com/features/market_cagr.htm

 

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