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How ownership of art works on the Maecenas blockchain platform

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Written by
Marcelo García Casil

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16 August 2018

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From July 25 we were delighted to launch our beta auction on the Maecenas blockchain platform. The auction of Andy Warhol’s 14 Small Electric Chairs on Maecenas generated international attention and represents a watershed moment for art on the blockchain.

The beta is still ongoing, so if you want to start using the platform yourself and participate in future auctions, it’s not too late to sign up - just follow the instructions here and be sure to fund your wallet with ART tokens, Ethereum or Bitcoin.

You can also find out more about the technology that underpins the Maecenas platform, as well as our underlying philosophy, in our briefing documents.

Download our Briefing Documents >

 

What happens, though, once you’ve signed up, placed a bid and successfully become the owner of a fractional digital share in one of the world’s most famous artworks? What do you, as an investor, get for your money, and how are your ownership rights protected?

Here’s how we solve the issue of ownership for artworks sold on the Maecenas blockchain platform.

 

Who owns a piece of art when the blockchain becomes involved?

Firstly, the original owner of an artwork sold in a Maecenas auction will remain in control of the piece. This is because - for now - sellers can only list up to 49% of of the economic interests of their artworks.

Next, ownership of the artwork is transferred to a Special Purpose Vehicle (SPV) prior to the auction itself. The shares of this SPV are then sold so investors can participate in the economic interests of the artwork.

It’s important to stress that Maecenas is simply a decentralised auction platform that can be used by art traders, collectors, gallery owners and others for a number of use cases. By using blockchain technology to underpin transactions, we ensure this activity is as transparent as possible - and by using an SPV, we ensure investors’ economic interests and ownership rights aren’t contingent on Maecenas existing (so there’s no threat of Maecenas disappearing overnight).

As for what happens to the physical artwork: this may be stored by the original owner in some circumstances, but more commonly will be kept by a third-party in a purpose-built secure facility (such as a freeport). Our hope is that investors will then be able to arrange private viewings of the artworks in which they own shares, as well as collect dividends when the artworks are leased to galleries and museums for profit.

 

Art on the blockchain offers greater security

That Maecenas is built with blockchain technology means that transactions are secured by the incredible power of the blockchain ‘ledger’, making the Dutch auction process private yet more transparent than you would find in a traditional auction.

The nature of the blockchain also makes transactions and other key information tamper-proof, which will also have a positive impact on other matters such as the overall valuation of artworks and helping with some issues surrounding provenance.

Do you have any more questions about ownership, art on the blockchain, how the bidding process works, and the benefits Maecenas is looking to bring to the wider art community? Find out more in our briefing documents.

Download our Briefing Documents >

 

Topics: Platform

Marcelo García Casil

Written by Marcelo García Casil

Founder and CEO of Maecenas. Having previously worked at a number of large global banks, Marcelo has wide-ranging experience in designing and building large-scale enterprise-grade systems with a focus on investment banking and financial solutions. An an entrepreneur, Marcelo has specialised in blockchain and financial technology, primarily in areas covering tokenisation of assets and new capital markets. His strong technical architecture and leadership skills have earned him the recognition and endorsement from amongst his clients, teammates and peers. Marcelo frequently speaks and presents at industry events, conducts specialised workshops and training sessions, and provides expert advice to companies.

Please read the following disclaimer >

This blog post is illustrative and for informative and general education and discussion purposes only. It is not, and should not be regarded as “investment advice” or as a “recommendation” regarding a course of action, including without limitation as those terms are used in any applicable law or regulation. This information is provided with the understanding that with respect to the material provided herein (i) MAECENAS is not acting in a fiduciary or advisory capacity under any contract with you, or any applicable law or regulation, (ii) that you will make your own independent decision with respect to any course of action in connection herewith, as to whether such course of action is appropriate or proper based on your own judgment and your specific circumstances and objectives, (iii) that you are capable of understanding and assessing the merits of a course of action and evaluating investment risks independently.. MAECENAS does not purport to and does not, in any fashion, provide tax, accounting, actuarial, recordkeeping, legal, broker/dealer or any related services. You should consult your advisors with respect to these areas and any material with regards to investment decisions. You may not rely on the material contained herein. MAECENAS shall not have any liability for any damages of any kind whatsoever relating to this material. No part of this document may be reproduced in any manner, in whole or in part, without the written permission of MAECENAS except for your internal and/or personal use. This material is being provided to you at no cost and any fees paid by you to MAECENAS are solely general educational purposes. All of the foregoing statements apply regardless of (i) whether you now currently or may in the future become a user of MAECENAS’s platform or products and (ii) the terms contained in any applicable contract between you and MAECENAS.

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