On December 7th, 2015, the AGENTIC GROUP held a lively and deeply penetrating panel discussion on the potential for Blockchain technology to unlock new value in the massive and largely unregulated business of Fine Art comprised of top executives in the space, as well as noted authorities in law and technology, including: Judy Pearson, Co-Founder and President of ARIS Title Insurance Corporation; Jeffrey Smith, legal and entrepreneurial mastermind and Founder of Tradable Rarities Exchange; Li Jun Xian, Partner at Emigrant Bank Fine Art Financing; and Jesse Grushack, Blockchain Strategist at ConsenSys, a global Ethereum development consortium.
I had the distinct pleasure of moderating the panel; and while I have done so many other times for many other events, this particular experience was one that is forever burned into my cerebral cortex, for a number of reasons, but in particular for the brutal (and necessary) honesty with which the panel handled the subject matter. For this, all in attendance should forever be grateful.
While official estimates as to the value of the global fine arts market is a paltry $115 Billion, insiders put it at somewhere between one and two trillion dollars. Numbers like that beg discussion, and in front of over 75 members and guests -- including high-level representatives in finance, technology, entrepreneurship, the arts and international diplomacy -- our panel proceeded with quote after quote of untethered insight.
So much was covered that, while we reserve the full range of information gleaned from the panel for our members, (which is one good reason why you should become a member!), We just have to share some of the highlights with those who couldn't make it. Just a small amount of insight from our panelists provides a wealth of critical knowledge about the financial behemoth that is the global Fine Arts market.
After the usual welcomes and thank yous, we got down to the heart of the matter, with Judy Pearson's opening statement providing the first brain-splintering quote of the evening:
"The art market is the largest, lawful, unregulated business worldwide -- with the third most amount of crime, just behind drugs and guns... hundreds of millions of dollars of assets are transferring with little to no documentation, in a market that has a complete lack of transparency... there are some people in the art world who would say that 40% of all works are faked or forged." - Judy Pearson
So there's that. After a bit of (somewhat nervous) laughter form the audience, the realization bombs began raining down on the unsuspecting gathering as if it were an information apocalypse. If you ever wanted to know where value in art is -- or where it's going -- this was a deep dive on par with a James Cameron undersea expedition.
A few heartbeats later, Judy was followed-up by Li Jun Xian:
"The question we're faced with is (one of) motivation. This is a market that operates on a lot of asymmetric information... to give up that advantage... well, I don't even give that information out." - Li Jun Xian
In other words, she runs this party -- act accordingly. Another quote that we absolutely loved came from Jeff Smith:
"The current system for provenance and authentication is antiquated... the same evidence that can put somebody to death like DNA or fingerprint evidence, applicable to a painting... has been rejected (for evidence of authenticity) by the Sotheby's and the Christie's (of the world)." - Jeff Smith
Jeff is also a lawyer, so we should probably take his word for it.
So to sum up three (of many) simple, brutal and crazy takeaways from the panel:
1) The Fine Art market is a lot like the Wild West. Or maybe a drug cartel. Or maybe both.
2) The Fine Art sector generates value through the rigid and systematic control of information, disinformation and secrecy on a level that would make Machiavelli blush.
3) It's a lot easier to be convicted of murder than to authenticate certain works of art.
Of course, we discussed many other crucial, thought-provoking issues, and some very pointed solutions that can be applied through market forces and the blockchain, (where Blockchain strategist Jesse Grushack and finance-savant audience member Reggie Middleton really illuminated the crowd), but that is insight reserved for our members, or perhaps for a different article.
All this said, I leave you with one very different take also provided by Jeff Smith, as a counterbalance to all of the gamma radiation we absorbed from the art pros Monday evening:
"Imagine an unprecedented amount of capital flowing into rarities... what's possible is a second renaissance -- an elevation of mankind. I know its lofty, but why not?" - Jeff Smith
In other words, emerging Blockchain (and other) technologies give us the power and the means, right now, to recreate the world -- even in very entrenched and opaque sectors -- on terms that benefit vast majorities of people. It is up to us to be agentic in our understanding and applications of this gift of power, and to press the elevation of all humans.
So why not, indeed.
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