CV VC Global Report - Blockchain in Art

Hey everyone, Hope you're all doing great. Welcome to the first of eight online events which are in depth panel discussion about the CVVC Global Report sections. I'm Nicola Reinbold, the ecosystem and incubation manager of CVVC and CVLabs. Now before we start with the panel, I would like to talk or to introduce CVVC and the report. So CVVC is an early stage venture capital investor with a focus on startup which build on blockchain technology based in the heart of crypto valley. The company invests in all stages of crypto and blockchain development from incubation to growth stage. In addition, the venture capital investment has its own incubation and ecosystem business. It's called CVLabs. Now this CV Labs consists of coworker spaces, advisory and events. In the past we did our CVVC top 50 report which is a periodical report on market valuation development from the crypto valley. The report highlights the diverse ecosystem in blockchain and cryptocurrency consisting of startups, corporates and government. Now we decided to do a global one called the CBBC Global Report. This is created by us in collaboration with PwC and distributed by Cointelegraph. It showcases top global blockchain organization across the various sectors. Blockchain in art brokers and crypto banks, crypto exchanges, custody providers, market makers, platforms and protocols, token issuance companies and venture capitalists in blockchain. The Global Report is rather a soft one, so it's kind of a landscape of all these sectors. However, we hold in depth panel discussion like this one today to go deeper into the topic. The report will come out next Monday and every two weeks we will hold now all these in depth panel discussion. This is all from my side. I wish you the best the pleasure of watching the panel discussion and handing over to Cristina who will be moderating the panel.

Hi everyone, I'm Cristina Lucrezia Konner, managing editor at Cointelegraph and it's a pleasure and an honor to be here with my wonderful co panelists and to talk about blockchain in art and art in blockchain. So ladies and gentlemen, I would like to ask you to present yourself your project and also to tell us a bit, where did you come from? From the art side or from the blockchain digital side? Christina, let's start with you. Ladies first.

Well, hi everyone. I'm excited to be on the panel. Of course. And let's start where I'm actually coming from. I come pretty much from the art side. I've been within my Career I've been doing all possible jobs in the art world and for the last 10 years I've been running art fairs. And so my takeaway was that more and more art is produced digitally and file based and artists are coming to galleries, artists are coming and want to show it. And it was so hard for galleries to do it, to manage it, to show it and to actually sell it. So about two years ago I met my co founder in San Francisco and he introduced me to the Blockchain Society. And this is when I got in touch with the functions of blockchain. I thought this is amazing, we can use that for the established art world. And so this is where my journey began and what I'm building together with my team is a integrated marketplace for digital art, for file based work that for my mvp, it's an offer to galleries in the first place, then to artists and for the full ecosystem, including auction houses and institutions, is an integrated marketplace so that you can have a marketplace on your website. So you have in your gallery roster artists that produce digital work, not solely digital, but photography, video, sound, animation. So they can also start selling that artwork on their own secure web pages and we provide basically the payment and management solution and the management interface for them. So can the collector buy it on their site or institutions buy it, look at it in a secure way and we do it on our own blockchain that we are developing. And yeah, so I'm coming from the art side and I believe in blockchain as a solution for also the established art world.

Thank you very much, Kristina, wonderful. Nanne, what about you?

Well, I'm actually joining Christina in coming actually from the art world very much so. I'm an art historian, started more as a curatorial level, love art, always been intrigued by art. And I became a specialist in French Impressionism which when I was studying in Amsterdam was the thing you were not supposed to like because it was called the easy art. So when I was studying in Amsterdam I was writing thesis that nobody understood about Baudrillard and philosophers. But I just followed my heart and I became a specialist in French Impressionism and I ended up in New York in 96 from Amsterdam. In Amsterdam I had more territorial jobs and here I became an art dealer and started to advise people, especially at the level of provenance, which is interesting because the company that I'm now that I founded, Provenance became a very, very interesting part or an important part of it. So provenance research was part of my job as an art historian and as an art Dealer. And then I joined the Wildenstein Gallery, which is big gallery with a huge inventory of French impressionists. And I was very lucky to be catering at the highest level of the art market, which was very fascinating and exciting. And after Wildenstein, I joined Sotheby's, became vice chairman there and worldwide head of private sales. And all I've learned in the art market always was that if you operate at the highest of the market, everything is based on trust. It's basically trusting, non attacking. Because most of the information about an artwork lives in my head and is based on things that I have seen. And to keep it short, what we're doing with Artory, with the company that I founded a few years ago, was to make sure that if there is validated, credible information about an artwork, it can actually live with that artwork, either in a public or permission based access fields. And we use blockchain technology for that. So the, the beauty about blockchain is, although I'm not a tech guy, I've learned this huge strength of blockchain is that it makes information unalterable because you can't change it and it gives it the timestamp. Well, apart from maybe containers that you want to follow from harbor to harbor, I cannot imagine a better use case for blockchain than art, where it's all about trying to capture information that is actually important for the artwork. And that's when you talk about a traditional art market, when you talk about a field of the art market that I really, really start to admire. It's digital art. Then blockchain gives you even more opportunities to make sure that you can create a special hash of the digital artwork that can be seen by many people, but you can actually prove that you own one of the original digital artworks. So maybe for the introduction we keep.

It to this wonderful nane. I'm sure that Monsieur Monet Emane would be really happy to hear that people who are passionate about that art.

I think Monet especially would have loved blockchain. Yeah, anyway.

Yeah, okay, that's another topic. Okay, let's move to Dina. Where are you, what is your project and where are you coming from? So we have already two art people on the panel.

Yes.

So I'm Dino lefkovic, director at 4Art Technologies. We're headquarters here in Zug in the heart of the crypto valley. I'm actually one of the few who does not hail originally from the art world. I used to be one of those exciting entrepreneur and business consultant people before I had the luck to start on My adventure on exploring the art world and art business and it truly is an adventure because it's a a very interesting, very special world which houses many interesting people, many interesting individuals certainly. And I'm here to represent four art technologies. I have been with the company since the very beginning, racing towards three years now and we are developing digital art market tools in the form of the 4Art app. We launched our product at the beginning of this year and we combine a number of different kinds of of tools to serve all stakeholders within the art world. Our claim to fame really what really got us going is a unique patented technology that allows any user to utilize their smartphone, currently iPhones and very very soon Android phones as well. To create a digital fingerprint of an art object making it uniquely identifiable and based on that foundation, making sure that you can always connect the physical art object to its digital twin to the digital. We are building a large set of digital tools be it digital automatic condition reporting, automatic track and trace services for R for all artwork movements be it integrated virtual galleries, working on behalf models and so forth to create really an integrated ecosystem to make daily life for everyone in the art world starting from the artists but a broker, gallerist, museums, logistics and so forth just easier, just faster. Because I don't have decades of experience in the art world but it doesn't take decades to realize that there's quite a room for improvement, quite a way for the art world to make. There's lots of space to digitize but there's lots of opportunity to be had and it's really exciting. I have to say I've enjoyed my time and I'm looking forward to a lot more of it.

Fascinating. Well, I'm really interested to know what is the finger of an art object to make a fingerprint? Let's move to Francesco Italian. Italy is a country with maybe one of the largest number of cultural objects. So that's definitely a very interesting topic to discuss.

Actually on my side I joined in not coming with an art background to the scene. My background is in finance, venture capital and asset management. And just a few years ago with the other co founder of rSquare, Fabrizio, that is a serial entrepreneur, we decided to bring our fintech experience to the art world. What we're doing with RSquare is effectively creating an exchange for the art by using the blockchain and the fractional ownership. We just want to create replicate what's already happening in the finance world with normal other asset classes like stocks or commodities on a square users can buy A portion of the total value of the artwork. Exactly like on the exchange where you can buy with €100 shares of Google, Amazon or Tesla. With RSquare, starting from €1, you can buy shares of fine art and collectibles. We started this project because we believe that technology is the way to start democratization in every industry and be more democratic that allowing everyone to participate to the art world, lowering the entry level barrier by lowering the price for acquiring an artwork.

Very interesting. Thank you very much for the introduction. So we have 50% of people from art, 50% from people from business. And my question to you is, the next question is when you first started converging technology, business and art technology, I mean blockchain, how would you evaluate the state of the market at that moment? And coming from now, from this moment, how would you comment how much has already the market has changed and grown during this month for Dino or I imagine more than one year for some of you. So Christina, could we start with you? When do you start experimenting with blockchain?

Well, I started digging into two years ago and I actually found it with my co founder who comes from the technology space last year. And I can just tell about my journey that when I started to actually pitch to galleries, sort of coming from fars, like what do you think about that? Would you use service like that? Would you see yourself in that and your clients? And this was about 1 1/2 years ago, it seemed to them like the far future. Yeah. And I can say with the pandemic and about in the course of the last year, things speeded up significantly. So for me we did so we are currently testing with galleries. And for me what is I see that there's a need. So I have the other way around that actually market participants are now coming to us and say, hey, when are you ready? Because it's one the pandemic, people are bracing themselves for another year, at least in that state. And it's clear that people got adapted to a digital participation in the art world because the screen is now our best friend. And we, at least in the US we do not have in person meetings. And it seems still quite a way to go until it actually will happen. So business and touch points with art happen purely through screens. So business is ready to catch up and actually use new models. And so they are looking into blockchain because also during the pandemic, reports have been coming back also to me that there's a lot of requests for digital art and there's a lot of interest for that So I see that there is an uptake, and other colleagues like SuperRare have also seen an increased sales volumes on their marketplaces, which is different than what I'm doing. So since it's a direct to end consumer, but it's basically a positive trajectory for everything. And all of the participants now in this panel come from sort of a different perspective on things. And I see a positive uptake. So at least I can report I have a lot of interest from the corporate side to actually use it and finally use it.

It's fascinating. Definitely that was not a very good beginning of the year, development of the year. But for us people who are working in the digital industry, it has opened so many new opportunities. And those who maybe were not ready for digitalization, well, had to start experimenting with it. Nane, do you think in general that the art market is more conservative or more progressive?

A good question. Because at Archery, we're actually dealing with two extreme sides of the art market. What we tried to do when we started some three years ago is to explain to people what blockchain technology was by reaching out to market players like Sotheby's and Christie's and big auction houses, and again, a little bit the kind of art market that I'm coming from. And the only reason why we did it was that we wanted to explain to people what the use case was. We knew that Christie's and Sotheby's would not fully endorse blockchain technology and everything that we've built because especially in the beginning, what we try to explain to people is when there's public knowledge about your artwork, although people don't know and cannot know who you are, it actually helps your artwork. But that's sort of counterintuitive for the big auction houses and the big art dealerships in the world because they try to keep the cards close to their chest. Having said that, we made a lot of publicity by collaborating with the largest auction houses. But interestingly enough, the request from people to register artworks and to have public exposure of the artworks on our registry usually came from the owners, like the Appsworth Sale, which was in a way an historical moment because it was the first time that a really important sale and that artworks like Edward Hoppers and you name it, were actually secured in blockchain technology and from that moment on in perpetuity, visible as one collection that started from the Appsworth Sale before it became dispersed. The wish came from the Ebsworth family. They wanted to use Archery because they thought it would give more credibility to artworks that they were selling. But if you make a step to what Christina just said. So we have this public registry. We have a huge database with public information. But what we noticed is when the pandemic started, and especially northern Italy, of course, but also New York, was extremely hit hard in the beginning of the pandemic. So intuitively we knew if you really want to be relevant, you have to change everything. But we were helped in a way, what Cristina said as well. What we noticed was logistic tracking became extremely important because artworks are still traveling more these days than the art lovers. There are still a huge. There's still a market. Let's not fool each other, right? I mean, let's not say everything is amazing. Sotheby's and Christie's in the first quarter had 80% less sales. So it doesn't mean that the art market was not affected by it. And that affects our business as well, of course. But what we noticed was there was a huge uptick from dealerships, galleries, and the auction houses to use our services for logistic tracking. Basically the way blockchain is used in the container industry. A container arrives in a harbor, who signs off, who cryptographically signs off on the information, and you can start to keep tracking the relevant and important and credible information about an artwork when it travels. So that helped us a lot. The other thing that helped us is I've always been a believer in fractionalized ownership of art, and I've always been a believer in tokenization. What we're going to discuss later, what helps us is when you are one of the owners of a fraction of an artwork through the registry that we've built on a permission basis, you can give every token holder of an artwork all the prime information that you need to know about that artwork when you invest in it. It's something that I would love to discuss maybe later with Francesco. That became really important. So although we have not created our own tokenization platform or sales platform, that level, we got an outreach from quite a few of those platforms that they felt it would give credibility of the artwork that's being tokenized or sold in a new way. So I see big developments. I see the traditional marketplace actually basically staying the way they are. Let's face it, it was wonderful to see the big auctions at Christie's and Sotheby's. There were no digital revolutions. It was basically a hybrid of digital sale and just a traditional sale. But I do believe there are opportunities. And as a company, we've suffered like everybody else. It's terrible that we cannot see each other anymore, that all the events where we can actually exchange our ideas are not there anymore. I personally suffer from that. I find it horrible. But I do believe that companies like ours have a future because the marketplace will change and there are plenty of opportunities there.

For sure. Dina, so you've joined the art space in the beginning of this year, and then the pandemics came that I imagine wasn't something expected. So how did it impact the strategy of your business model and did it give you, like, which challenges did it give and also which opportunities?

Well, I mean, the COVID pandemic has been, of course, quite severe in its impact. Certainly one of the core tasks that I have at Ford Technologies is the organization of our sales and marketing efforts. And you can imagine that those have been impacted and we've had to do essentially a 180 degree turnaround, having to adjust. I mean, one of the cores in the art world were art exhibitions, were art events. Round about 50% of the art business was done at these events. People got together, they met, they created connections. The art world is strongly based on trust still. So you build those personal connections, you increase your circles, you meet new experts and new connections, and all that, of course, fell away. So how do you promote a new product? How do you meet people? How do you create partnership? I mean, I've met Nana at Art Basel last year. So, you know, that's where these things happen. And none of that existed anymore from basically one day to the next. And yeah, no, we've had to adjust very quickly, of course, but it's been quite incredible actually, how the art world, after initial shock, as we've all had, I think in all industries, having to first realize what has happened, having to realize what has to be done to get everyone safe, to have everyone be healthy, and then to how to create new systems, new structures in this world, which, as we can see now, will be with us for a little longer at least. And of course we've seen in this short term chaos. Yes, lots of effort has to be done. I mean, I've slept very little in the month of March, April and May, certainly. But we see that in the long term, this push of digitization, which we've seen, you know, entire exhibitions being moved online, art sales being moved online, you read articles every single day of Christie's, of Sotheby's, big auction houses, big galleries and so forth, finding clients, you know, finding success online despite what they feared, despite of what was expected, or even far beyond expectations. So we see that in the future, services like ours, like Francesco offers, like Nana offers, like we offer, are not just side events, not just nice little tools, nice little toys that you can maybe choose to utilize, but those are going to be at the very center of the future of the art business on how to connect clients globally, on how to meet future demand. I mean, there is always, of course, a change, but there is a generational shift coming when it comes to the art world, when it comes to, you know, those selling art, those producing art, but also those collecting and buying art. And these new individuals, these new collectors especially, they have very, very different demands. They grew up and are adjusted to a very different world, which, you know, which we all know, with cell phones, with digital information, emails and so forth. And the art world wasn't there at all or in a very limited capacity. So we see this push of digitization very favorably. Of course, we are lucky to be at the very spearhead of leading the charge of digitization, of connecting and of utilizing all these tools to create new opportunities. It's been stressful, but, yeah, I think in the end it's going to move us in the right direction and provide lots of benefit to lots of people. It's going to help to democratize the art world, help to give more information, more detail and, you know, which is something at our heart to provide more security and more certainty to supplement the trust and to, you know, sort of go borderless, go 24 hours. Those limitations are being removed. And that's very exciting to see.

Thank you for your optimism, Dina. Francesco. So I would like to ask you, how did the. Your interactions changed during the last months with the institutions and individuals who own the art objects and also those, how you call them, traders who search for shares of art assets. How did it change how the dynamics of the financial market for art changed during the last months?

Well, on our side, I joined what Cristina was saying. It was all of a sudden, it was easier to explain the product. People were asking a lot of questions, were just in a blink of an eye, open to innovation, which was quite interesting in my opinion. The art market is not very progressive, is very difficult to make them embrace change, even though when change brings mostly benefit. If you look at tokenization, tokenization just bringing more money because you are giving, you're opening new liquidity to the art market, bringing in new clients, not only the new to the field, young buyers, the millennials, but also the crypto holders. You bring in the finance people, people that look at art as an asset class and they don't look at the emotional value, but only at the speculation that they can do so. With technology, you are bringing a big pro which is more money. Talking with institution was much faster. We had a big increase in terms of people interested in experimenting and tokenizing assets. In terms of offering, we work mostly with galleries and collectors. At the end of the day, what we're offering is a tool to monetize without any cost what they have, without any marketing cost, without having to do the normal cost of sale. So they liked it and it was just faster. The conversation on the trader side, the users, what we call the small investors, to be quite honest with people at home, simply we had to talk with more people because we went from around 8,000 visits on the website to 455,000 at one point. So it was like a boom. And I think it was the same though people that were more reluctant to accept and understand what they were just like giving it a try. And that's. The product because they want to buy the fractional shell of Andy Warren, but it's because they want to try something new. I think the world is all in this. After we had this time to reflect and we know that we gotta do something different. And people are very much more willing to experiment new things, which I love. I mean, coming from technology, it's amazing.

Wonderful. Thank you. Okay, let's talk a little bit about one of the aspects of of blockchain application in art that is tokenization. Nanny already mentioned that. So which opportunities, but also which challenges does tokenizing art give the market? And well, is there an opportunity that everything in art can be tokenized anytime soon? Well, maybe let's start with Dina who has this. Well, because he talked more about the tool. So I wanted to know from the person who is coming, not from the art, how do you see the tokenization of art objects?

Well, I remember one of the first conferences that I participated in when I joined for technologies was the Ireland Finance Conference held by Deloitte, which was two years ago now. And the tokenization was already, of course, one of the aspects that we talked about. There is something that the art side, but the financial side as well are very interested in. And the interest certainly has continued to grow. We've had a corporation under the name of artsells. We were one of three corporation partners. And the art salts collection and exhibition was for example created by the House of Fine Art in London. Includes blue chip artists such as Kaws, Banksy Koons and so forth. And that project was supremely successful. I have to say I mean, these shares, a third of that collection was tokenized and fractionalized and sold to investors and those fractionized ownership participants. I think everything sold out within 24 hours. The value has been increasing very well. The latest report came out after the first half year and the value increase was 24% above expectations. And we have many, many projects coming along. I've been lucky and happy to talk to Francesco as well about possible cooperation because tokenization is something that people are very, very interested in from the art side as well. Because art is a not quite easily movable, not very liquid asset, of course, but you have many people who are collecting art who would like to share it, and there's many or many individuals, a large amount of interest from art collectors to be able to participate. I mean, how often can you buy a bank Sierra cost but for a very small sum? For the upsells project, if I remember correct, it was $100 to be able to buy a part of it, you can participate in these kinds of models and in these kinds of solutions, which is wonderful for everyone. And I think that's just at the very, very beginning. There's a long road ahead and I think a lot of different and cool things coming up. The challenge, of course, something that we've been looking at, we've been involved at, is what do you do with that tokenized ownership? I mean, it used to be very simple. You buy a piece of art, you hang it on a wall, or you place it in some bunker in Liechtenstein and never see it again. But most people, they place it on the wall, they enjoy it, and that's really it. And what do you do if you have a tokenized piece of an art, asset of an art piece, or a collection that is sitting somewhere? What do you provide to these collectors, to these participants? That's one of these things, for example, that we're including, is that all token holders within our app, within the Ford app, they get exclusive access to the digital collection. Within virtual reality, they can enjoy it themselves, they can share it with others. They get automatic updates of the value that is relevant to the collection. So you can really start connecting with them. You can start trading your fractionalized, your part ownership. But that's, you know, at the beginning, we're just trying to think of ways just to test ideas. What are people interested in and what can you do beyond just simple artwork ownership? So that's been incredible. But I have to say again, tokenization of art assets, fractionalization is important when it comes to the democratization of Art collection of art ownership, how to use art, how to experience art and just make it more available and to see exactly what people want, what they like and what they enjoy.

Christina, do you think that there are types of art objects that are easier to tokenize and those who are more difficult to tokenize?

I would guess so. So my, my heart lies at the digital, right? So this is where, where I was coming from that I see digital art that is not easier, just it's there to be tokenized that can be, can be traced. It's essentially digital and can be moved around as it was said. And this is exactly that where I saw the development going. And this is what, what I offer and this is where I'm coming from to actually organize the rights management and then the shop integration as in the website or in the marketplace. And to come back to your initial question, do you see everything being tokenized? Well, actually, yes. So this is basically my forecast for at least the next five to seven years that I see. And there's the market is pretty much talking about let's say crypto artists many and there's been a lot of conversation within the crypto art community and let's say the more traditional arts that was also nane referring to and I think also many of the earth services actually target to and I see that the traditional art world will also understand and come to understand the advantages of the blockchain and tokenization. So that means also artists that are now printing their photography or thinking in white space installations in museums, as in several channel installations, will think well actually I can also sell it with my dealer or myself tokenize that and move it. And I think that's the beauty of it. So people that haven't been essentially on the web to selling their digital work because they've been always printing that, I see that going into that direction. Also estates, for example, estates that do handle rights for artists that have work that is digital, either film, sound, whatever, I see that also that they will be experiencing and finding out that it's actually a perfect use case also for them to distribute. Right. It's not only, it's. It's not only ownership and, and sell in that way, but it's also distribution that you from as we all are in our living rooms or in the shared office spaces that you can actually now deliver to your final client sitting sitting somewhere else and you don't have to ship anything. So I'll definitely see, see that trend. And I feel that my clients on my end feel the need to offer that.

Francesca, would you agree with the fact that we are going towards tokenization of everything?

And if.

Yes, what are the prerequisites for the speedy adoption of the technology in this regard?

Look, with me, if it was up to me, I'll tokenize anything, whatever. I'm a big fan of tokenization. In fact, ArtSquare is. We tokenize fine art and collectibles as well. So whatever goes to an auction house. So yes, definitely, the more tokenization the better because it links to the mood, to the vision of tokenization, which is coming from the technology, if you want to. Because blockchain is doing what is creating this democratization virtual assets. So it's definitely fascinating. What do we need in order to have more adoption? This is all about the tool to become more mainstream. So when you're going to have the 15th of September, Apple releasing iPhone 12, if they say we have a wallet already installed, it's going to just be a big bang for us, for all the operators, because we're gonna see everyone looking into this technology. So it's just a matter of time. It is something quite. When it comes to, you know, we're looking at, we talking about investment in art. So it's quite tricky because you must still respect the main regulations, meaning you can't propose an investment to Weber without making sure that everything is correct. So forgery is a problem as an example. And let's call them fake news or fake information. This is why all my peers that are working in the validation process in relying on the blockchain for the provenance. This is very important because if you buy a token on a fractional share on R2 now we had done our job internally as a due diligence. And what Dino and Anne were saying about the importance of making sure that all the information are correct and verified and immutable and transparent, verifiable on the blockchain. This is very important in order to have adoption that people feel comfortable that it's not a scam.

Yeah, that's. Sorry. Yeah, that's very interesting. What I find fascinating is I've been following, of course, the last couple of years, what's happening on the fractionalized ownership side. I am a traditional art dealer and I still believe if you can't sell an artwork the traditional way, don't even start to tokenize anything because you'll be cheating on your investors. If I see now on the traditional art market side, on the supply side, that quite a few art dealers are very much interested in now starting to carve out 20% of the ownership of an artwork. Well, first of all, you tokenize the entire artwork and they can sell 20% of the artwork. We have secured a group of artworks that have never been tokenized before, which I think is very uplifting and very inspirational for the kind of market that we're talking about. And then you have to add, indeed, all these elements that should have been in place already from the get go, is who signs off on the information. You know, with art, we on purpose, we have the whole Winston Art Group appraisal services integrated in our system in a completely encrypted way. We cannot read what's happening there, but people sign off on information. And whether it's Dino's company that you integrate in our systems, which is definitely something I would love to do, is then people can really be secure in what they're buying. And if you then give them access to all the prime information on a permission base, it's almost like working with the Bloomberg terminal. You can see all the information about your artwork. And then I think Dina sort of referred to it, you can start to add bells and whistles. I can always see my artwork on my phone if I want to, because there's always a camera on it. And you can do all kind of things to make it more appealing that you feel that you actually are a co owner of an artwork. So I think we're entering a new stage there. I think you enter a new stage if the traditional market is starting to look at it as an opportunity rather than a threat, which I feel with everything we're doing, we've always been seen as a threat, and we're not. We're trying to make that market more efficient. You know, I remember that Cadave had an art fair here downtown in New York, the first digital art fair at the same time. And in those days, I was still the chairman of Tevoff. The most traditional art fair took place at the Armory in the Upper east side, Park Avenue. Almost every visitor who I met at Cadaver I could bring to Teffal, and they loved it. And I'm sure some of these people, like the Winklevoss brothers, were there for the first time. They went to another kind of art fair. I'm sure these people are going to buy that kind of art as well. It will grow the market. Whereas nobody from Tevaf I could convince to come downtown with me to actually look at the digital art. It's fascinating, but things are shifting and, you know, we all hate the situation we're in, but I Think the COVID situation is making people more aware that everything will have to change. If you want to keep things the same, we have to change. Really?

For sure. I would also like to invite our wonderful viewers to send their questions to YouTube, Twitter and Facebook. We're looking forward to it. Nane, I would just like to reiterate my question to Kristina. Do you think that there are really differences in tokenization of different types of art, but also different epochs, ages of art? So is it more difficult to tokenize a Monet object of art than exactly the same?

It's exactly the same. It represents a certain value. It's actually more interesting to tokenize a Monet because that's a completely illiquid part of your assets class. Right? You have 20, 30, 40, someone already paid $120 million for a Monet sitting out there. And there's something you can do. You can still be the owner, or you can have all the rights of the owner. You can be the custodian, and a part of it is actually owned by investors. And why not? It's possible.

Interesting.

If I may, this is actually how it works on our square. You see, from the beginning, the art owner say a gallery will define with us what we call a modular smart contract. So if you want to get technical, is the rules of the smart contract that define the multiple ownership. All right, so we define that who is deciding if there is a cell in the physical world to accept it, yes or no? We could do a pool. What we have now live is the art seller is defining. So if the gallery receive a request to buy the whole artwork, they will buy back the tokens and the new shareholders will have just their profit. So in case you want to scale it, you don't have any limits in terms of rules of governance. You can put exactly like in finance. I hate to go back all the time to that. But you define the rights attached to the shares. So you have the right to come and see it. You can have the right to have it hang it on your wall on Christmas Eve. If you more than X amount of shares, you have the right for dividends in case the artwork is rented. Everything is possible because of technology, because now with a smart contract, you can get a notification on your phone saying here's $200 because the artwork has been rented to one exhibition. Hey, you must vote now we have an offer to sell the artwork. Do you want to accept it? Yes or no? Or hey, the offer has been accepted. Here's your profit.

Can I ask a question? Can I ask a question to you.

So Because, I mean, a difficult question is.

So I'm in the digital sphere and I believe 100% in fractional ownership. But my question is always. And this is the. Basically the logistics of it and the insurance. Have you seen. Because if you see an appraisal of value of an artwork, and this has been always like a headache also when I was dealing in the physical artwork, the shipping, the insurance of highly valued artworks, how do you deal with that? Or is that neglectable in the overall? Because this is. I think, yeah, it's a. It's a tough task to deal on a. On a scale, on a huge scale as to actually the physical dealing with that.

The way we approach this situation is the way we approach the whole platform by customization. So when you sell, you say in advance, the artwork is insured, the artwork is here, the artwork is going to move. And when you buy, you know, in advance what you're buying. What we have now are artworks that are owned by galleries, they gonna stay in the gallery and the galleries in charge of selling it, maintaining it, and managing it. If another artwork that is owned by a collector, you know in advance that it stays with the collector. So as a user, when you go online, you see what you're dealing with. Say you want something more expensive, you buy with insurance, you buy that is in a vault. You buy that, you never see it. Say you want something that you want to enjoy, you buy it, that is in a gallery, you just put a filter. I want to buy only from galleries, because you can go and see it, you know, so everything is customizable when it comes. So I agree with you. It all comes to the decision of the user and how they and the people and the clients. You know, if you are selling an artwork and you have owners and you must ship it, you want these people to pay, so they must know in advance that they will have some cost. You know, when. When you buy a boat, you know that you're gonna have cost in keeping it at the port. When it comes to digital art, it's actually better, as you were saying, because you can have the token, you want to rent it, you have it. You have your tv, you put the password in the token and you can have access for three hours. And what is very amazing for digital artists is that they can monetize this because they can receive the money quickly. It's basically the same revolution that we had with music, with the ipod, because you can give them rights. However, as the token wants to access the digital Artwork. This is the only way to know that it's the real one. They must insert a password, a key to access the token. And here we go. The artist is receiving the money in their wallet. So I only see pros, to be honest.

Interesting enough, you're coming from a heavily regulated industry, the finance industry. And what apart from the technology we just discussed? What I like about tokenization is it now becomes a financial asset. So it's a pain in the butt, so to say. But you have to add all the compliance that is already regular when you buy any financial product. So it's actually an artwork that you can trust more because there is so much more information available in these smart contracts, which is basically replicating all the kind of contracted agreements that you have when you invest in a company. And you have to know who transported the artwork and the whereabouts of the artwork, and the gallery has to sign off. This will not move my premises. It actually adds a whole layer of transparency that we've not seen before.

This is where technology comes in. Because thanks to technology, it's super easy to do that.

Absolutely. I mean, that's one of those things that we've been very strong in. One of those focuses of our technology is, is that transparent track and trace to, in a decentralized way, with these magic tools that we all carry around, you can automatically, with no lag instantly, with very little effort, track every single movement. And I mean, we've been partners with Munich Re, the largest reinsurer in the world, for some time now, for one and a half years now. And I've recently partnered up with Hasenkamp, one of the most established fine arts logistics companies in the world. And they're very pro digitization. They're very interested in this kinds of technology because as you said, it creates a way to very easily, very transparently track exactly what's happening with the art piece, where is it, who's currently in possession, who's responsible if a damage has occurred, has been identified, who's responsible on that insurance case, for example. So those partners, those industries are very much pro these kinds of technologies, especially blockchain, because it can simplify and automate many of these processes. You know, that track and trace, being transparent, being valid, being decentralized, provides a number of key advantages. And they're very interested to participate and have been wonderful partners, very active in trying to create a system, create a digital infrastructure to make that possible. And I mean, the question of a digital custodian or a legal entity, I mean, blockchain as well, enables you know, very simple decentralized voting systems. So you have, you know, an art piece being shared by 100 people. They can vote on what to do on, to send it to an exhibition or not. And everything can be done automatically. Every partner is informed automatically. There is, there's complete track and trace of what's happening. And you know, that's, that's really, that sounds very future, but that's very, very close and coming to us within a very short amount of time.

And this brings us to the question that is the most popular among the audience. How blockchain can tackle the problem of forgery? In my personal opinion, you still have to depend on the human factor in the beginning of the evaluation of any object of art where expertise is key to make this process work from the beginning. Do you agree with me? And what other aspects of the tackling of the forgery problem are there?

Sorry, I have to take this. Dino has seen me at many, many panels talking about it. Blockchain does nothing. I mean, there's nothing magic about blockchain. It doesn't make an artwork authentic or it doesn't make it more expensive, whatever. All it does, it's a very simple system. It makes information unalterable and it gives it the timestamp. It's like, don't even overthink it. But do think about how cool is that? Because it doesn't exist. It didn't exist. It's like for the first time, when you're in your car and it's the first car, how cool is it? It drives right. These are big inventions. And that's why the big industry, the banking industry, pharmaceutical industry, container industry, they have been jumping hard. They jumped on it already. But how cool is that? But there's nothing magic. You still need an app, like for art to make sure that it is the actual artwork. You still need an official appraiser. And you can all capture that information. People can cryptographically sign off on it, but there's a whole distribution system that you can do. You can indeed make sure that every token holder is now part of that information in the blockchain and they can start to vote on things, as Dino just said. But there's. Yeah, the fear of blockchain is also because people start to attribute these kind of magical forces to the blockchain. No, there's nothing magical about it. It's all about what human beings enter. And that information is now visible, which is important. You can't hide it. And it is, although you can give it permission based, it's not that Hassenkamp most certainly doesn't want everybody to know that an artwork of $20 million being shipped, you can make sure, Dino and his company can make sure that only the right people can access that information.

Exactly. Nothing magic, if I may, Nana, I agree with you in parts. There's sort of a moment that we're seeing now. Yes. Old masters, old established artists. I mean, we have the story of the Mona Lisa being stolen, being brought back. Is it the original? Nobody really knows. Yes.

Begin with anyway.

Yeah, yeah, exactly. No, but, but for, for artworks in the past. Yes, absolutely. I'm totally with you. There's no. I mean, there's one technology, as always say a time machine that would solve that problem, but that's a bit more tricky. Blockchain isn't some kind of magical technology. But you know, we, as you know, we're trying to. Or we're, we're setting sort of a point at which the artists themselves, they can create the data record specific for that very specific object. I mean, we're talking serial prints. Doesn't really matter. And then that question of originality doesn't really go away because you can be sure that in 50 years time you have the clear identification, you have the connection to the valid immutable blockchain track record. And that will bring in a new time. So you're absolutely right. It won't solve those issues of the past. But now we can create a new future and we're really excited. Artists are really excited to do so. Super simple to do, as all modern technology should be. So that's. Yeah, that's certainly possible. And blockchain helps, to put it that way.

It's the artist himself or herself who creates their own statement in perpetuity and rather leave it to other people in the future to say that the artwork is actually done by you. I agree.

Well, in my case, it's actually. My company requires the artist to sign off that this is his or her work. So because I'm dealing with living artists in contrast to any deceased artist. So I think in that case it's in the interest of the artist to actually keep track of the work and keep track of the value of the work. So if you say it's an edition of 2, 3 or 5, that if it's public, that you're not going to go ahead and issue additional editions on the site, why should you? Because it's public and there's a certain price to it. And this is, of course, it's a community that agrees to One industry standard and one standard of information exchange. So I think I'm with you that yeah, we will see how corruptible it will be in the future. But basically if everyone agrees to a standard and then you can easily track down who signed something off and you understand that this is incorrect you can also yeah, you can get rid of, get rid of that person in that chain.

Francesca, how do investors tackle this problem of forgery and which well justifications do they need to invest into digital art?

They look for the artery or for art up logo in the provenance. If they see they know it's very good artwork and if the artwork is listed and tokenized on R square it means it's a good artwork and you must get some shares.

People watching this are thinking we've prepared this all in advance and we all just basically meet for the first time.

If you think about it, it's a joke but it's also true. You know there's going to be new standards. Not today. You think an artwork is of value for what reason? Because it's been at an auction and after you've been actually when you are the artist has been acquired by an artwork from an artist has been acquired by a museum then it's like in the Olympus of the immortals and this is gonna. We're gonna see new standards coming along and it's not possible to give an answer now on the new standard of art buyers. You're asking what behavior did they have? This is a world of people that are looking at it. They are willing to create their digital art shares portfolio and they will then define what is inside those portfolio. What is value, what is forgery, what is real, what is of taste. So it's again whatever technology brings power to the people and we are seeing the same happening with blockchain to the art world. Stay tuned.

We also have a very interesting question that I would like to ask. Maybe not to all four of you but if someone is interested to answer. So what impact will have on the art industry? The fact that since January 2020 the art market must comply to the Know youw Customer and Anti Money Laundering regulation.

Well it's, it's not a problem for us because we demand of all users within our system who would like to write information to be KYC authorized. We utilize the same service providers like, like banks. That has been certainly an issue for some but we feel it's a necessary barrier because you need to rely on that information. You need to be able to. While we are art centric you need to be Able to ensure that the person's writing and creating these really important track records, this provenance, I mean, we all know it's absolute key to the value, not just culturally, but financially as well to artworks. So we demand it, we feel it's absolutely necessary. It's not difficult to do. It's very easy these days to identify yourself and it just creates security for a of couple complete ecosystem. So I think it's going to be necessary if you are going to be working online, if you're going to be trading, selling art online, just to be able to build that trust. Because again, today the art world is based on personal connections, on personal trust. But if you want to create a globally network market where you can rely on people who are thousands of miles away, you need to have that kind of, kind of security, you need to have that kind of authentication.

The beauty is the other way around. If you're interacting as a buyer on a digital platform or buying tokens, you can also make sure that you are becoming a trusted buyer. Right? I mean, it's not a one way affair. You've done something online, you've actually the whole KYC processes, AML processes have been done. You can also identify yourself as a trusted buyer. I mean, if I were an art dealer, I would have imposed that already on the market. Right. It's incredible that most of the dealers have looked the other way. It will not happen. It will not happen. And all of a sudden this new regulation is there and you have to comply, you have to follow those rules. And again, here technology can help you actually.

Thank you very much. So yes, blockchain maybe is not magic, but definitely this magic starts when art and blockchain converge together. Thank you very much for your time. Cristina Nanne, Francesco Dino, that was a pleasure to talk to you. Thank you very much. Our dear audience. And we are looking forward to the release of the report by CBBC, PricewaterhouseCoopers, distributed by Cointelegraph. Thank you very much. Tune on.

Thanks everyone.

Bye. Thank you.

Bye bye.