Blockchain could transform Art investing
Art investors, collectors and owners will be able to trade shares in fine art for the first time on a unique online marketplace powered by blockchain technology. Maecenas is a new marketplace for fine art investment that uses blockchain technology to revamp what its founders claim to be a market that has largely remained unchanged for more than 300 years.
It will also allow any investor to have a fractional share of a masterpiece. Maecenas focuses on masterpieces and proven successful artists. The platform only lists art pieces worth US$1 million and above.
But investing in art comes with considerable risks, from sophisticated forgeries to illiquid markets, and can incur high costs, whether that is fund charges, or associated transaction, insurance and storage costs. Furthermore, art markets are unregulated, opaque, and at the mercy of erratic public taste and short-lived trends.
Each piece of art goes through a validation process that involves external independent and trusted third parties. The validation process includes provenance analysis, document validation and physical inspection.
Prior to Maecenas, co-founder and CEO Marcelo Garcia Casil founded DXMarkets, a startup specializing in blockchain-based products for the financial services industry. In 2015, DMXMarkets was selected to join Fintech Fusion, a 12-month acceleration program in Switzerland.
He said: “We want to create a fair and open marketplace where investors and art owners can meet without intermediaries. We are using technology to revolutionise the art finance market, reducing costs, introducing transparency and creating liquidity. We are creating a new way to invest in fine art. Our ambition is to make the art industry a better place for everyone.”
“It is time for art to be become a first-class citizen within capital markets, and to have rich market data feeds, order books, indices and even derivative markets. A blockchain-enabled marketplace can make it happen.” Investors will be charged a fee of just 2% per transaction while owners pay 6% of the listed amount for their piece of art – this compares with auction house fees of up to 30%. Meanwhile, art owners, collectors and galleries will have much cheaper access to capital, allowing them to raise finance without losing ownership of their asset as they can only list up to 49% of its value.
The platform, which is currently crowdfunding, is targeting sophisticated investors who want to have art in their portfolio – a category that includes 88% of family offices, 75% of high net worth and ultra-high net worth individuals and 64% of banks, according to recent research. Investors must put in a minimum investment of $5,000 to part-own a piece of art listed on the platform and pay an initial deposit of $50,000 to open an investor account.