Everledger plans to use blockchain database to combat art fraud

Baozou Comment : Blockchain startup Everledger has always been committed to protecting the source and authenticity of goods. Previously, the company's blockchain-based diamond information ledger adopted Ascribe's BigchainDB blockchain database as its huge data technology support. Exhibition database service company Vastari provides information tracking during the circulation of goods. This time, the two companies announced a partnership to put the complete ecological chain information of artworks on the blockchain, providing stable and reliable platform support for art museums and private collectors.

Translation: Annie_Xu

Everledger, the London-based company best known for uploading 980,000 diamond specifications to the Bitcoin blockchain, has announced a partnership with art and exhibition database service Vastari.

Leanne Kemp, founder and CEO of Everledger, said:

“Everledger and Vastari are a perfect match as we both work to protect the provenance of goods; we create a permanent record to protect the authenticity of goods, while Vastari provides provenance assurance during the movement of goods.”

Vastari, which has an equity investment from Everledger, acts as a middleman between art museums seeking new works and private collectors who hope to increase the value of artworks through exhibitions. In this collaboration, Vastari will store all its artwork information in an unchangeable manner on the blockchain.

Leanne Kemp

Kemp explained that the data will be written to the public blockchain as well as Everledger’s own permissioned ledger.

“Permissioned ledgers allow us to better serve the industry by creating a system where access is strictly controlled and the ability to read and modify the blockchain state is strictly limited to a few users, while maintaining various authenticity guarantees and the decentralization of the blockchain.”

She explained that each art institution in a permissioned ledger can be thought of as a node.

“You can imagine a coalition of 15 art institutions, each running a node, and every ten nodes signing a block for verification.”

Blurred Assets

Everledger has been successful in maintaining information on diamonds due to their clear cutting characteristics; however, artworks are a completely different field. Bernadine Brocker, director of Vastari, said that there are four main areas of concern in the maintenance of information in the artwork field.

"The tracking of each artwork mainly depends on four key factors, namely: provenance, that is, who once owned it; exhibition history, that is, the channel for obtaining the artwork; written records that provide reference information of the artwork; key information of the artwork, such as size, shape, ownership, medium, etc."

Bernadine Brocker

It is the ambiguity of artworks that increases the difficulty of tracking and preventing fraud.

“Art and antiques are complex things that cannot be simplified into 40 data points; the company’s focus is on traceability and the flow of art transactions involved in financing and insurance.”

What is of real interest to the art world is the decentralization of blockchain technology; if there is any industry that is secretive, it is definitely the art industry, and few people have absolute control over artworks. Brocker explained that some people are worried that the data in this industry will be monopolized by someone. However, with blockchain, the situation is different; because all parties involved can see the relevant data.

“The art industry is in great need of people who can provide artwork authentication and display, rather than artwork sellers.”

Fighting art fraud

The Everledger platform has developed a very simple and direct solution for the diamond industry, which is to store all diamond information on the blockchain. Once the data is stored, it cannot be modified, which prevents the emergence of counterfeit and shoddy diamonds. And the £100 million jewelry theft and robbery insurance each year obviously requires a shared tracking mechanism.

This may have a larger market in the field of art.

Brocker said:

“It is estimated that 70-75% of the $1 billion in art transactions each year are counterfeit,” but a few companies avoid talking about it, making it difficult to track.

"Artworks have gradually become an asset that people trade, giving rise to many interesting financial products."

It is expected that art transactions will only increase in the future, so the transparency of relevant data is very important.

As global use cases are trending toward blockchain solutions, widespread adoption of blockchain technology is necessary to effectively prevent art fraud.

Brocker said:

“Effective management is only possible with broad participation, so we are bringing in major participants to form an industry standard so that effective management can truly become a daily process.”

Future plans

Kemp said Everledger plans to add two asset classes to its ledger sometime in 2016.

“We speak to leading luxury brands and art manufacturers where the indelible digital identity of an item can guarantee provenance and supply chain security.”

She explained that knowing the provenance of goods requires knowing the company’s location and supply chain; Everledger has developed business models around these related industries.

The company hopes to sell data to increase revenue, charge fees for data search and recovery, and potentially open its platform to third-party developers.