Blockchain and distributed ledger technology (DLT) can revolutionize the art market in Italy through the use of cryptocurrency. The buyer gets not the physical good but a certificate of ownership, so there may be more involved. However, everything take place through platforms and the process has got its own problems and risks.
The first experience of cryptocurrencies and works of art dates back to June 2018. Andy Warhol's painting "14 Small Electric Chairs" was tokenized and sold on the blockchain platform Maecenas Fine Arts . Let us see what the tokenization process consists of and what the possible pros for artists, professionals and the market itself could be, retracing the recent tokenization experiences and the related technical-legal issues. of greater importance.
Tokenization is a sort of securitization of assets. This procedure involves the conversion of all or part of the property rights over the work into an asset token, digital information with security, transferability and non-duplicability characteristics.
So far, we know different types of tokens. Class 1 tokens act as simple coins, do not guarantee rights against a third party and can be exchanged freely. Their function is exclusively to record the existence of a specific subject or object on the blockchain. Class 2 tokens give owners a series of rights that can be exercised against third parties. Class 3 tokens have a composite function. They grant both property rights and other ancillary rights, such as voting rights or even economic rights.
Through the transactions regulated by the blockchain it is possible, that is, to sell a single item in small shares of property opening the opportunity to create a more "liquid" and wider market with the concrete prospect of forging another completely parallel to the "traditional" one in which, like the stock market, it will be possible to sell one's own securities. Moreover, the blockchain also allows further possibilities of use in the market which is no longer just "oil on canvas" and "portraits" but is also digital.
Many law firms in Italy are setting up special departments specialized in the tokenization of works of art since, according to the data of some recent sector studies, it would appear that 19% of online art platforms believe that the blockchain will be among the most competitive areas of the online market within a year.
With the Financial Market of Art (Fimart) platform based on blockchain technology, it will be possible to buy works of art as if they were shares listed on the stock exchange. Several tokenization protocols have been implemented through which it is possible to obtain different types of fractions of works of art, which will be divided into financial and non-financial products, with different sets of rules to access Fimart and to be able to exchange and purchase such types of fractions, so as to better coordinate with the guarantors of transparency of financial products such as Consob in Italy and the US Securities and Exchange Commission ( SEC).