Jess Houlgrave - Codex Protocol - Ethereum London Keynote - #ethldn

[Music] this is a bit more high level than Sasha's I'm going to talk a little bit more about how the traditional art world is using blockchain right now and some of the ways that we are using it as as was mentioned I founded coda I was a co-founder of codex protocol in 2017 I currently work with creative United and the Arts Council England looking at the impacts of Technology on the UK contemporary art market that's a report that's coming out at the end of this year in light of the political instability that we're all going through and how the the UK's art market is really going to be affected and I founded the foundation for art and blockchain in 2018 it's a u.s. 501 C 3 which aims to support artists who are working at the intersection of art and technology we did a big launch last year where we saw the crypto kitty for $140,000 in an auction and that was very exciting but since then we funded art projects including one that's going to the Vancouver Biennale next year which is going to be a four day installation at the Biennale and so really working within the traditional world to help use art as a medium to explain blockchain and I'm going to show you some fun pieces of Arts to keep you awake as we go through I'm in 2016 I started writing an academic paper on the applications of blockchain for the art world that was at Sotheby's Institute of Art my background before that was in finance but I was working at Sotheby's and was already interested in crypto through some friends and noticed the intersection of this technology and the traditional art world with some familiar names like Deloitte who were looking at how blockchains could be used to track provenance and many unfamiliar names as well who are either galleries like contemporary who are specializing in blockchain related artworks moving picture gallery and a few others and so that was in 2007 probably this picture is about 2017 and this is what it looks like today it's enormous and you see that there's a huge range of the various use cases for this technology within the traditional kind of art world sphere title and provenance is what I would call the kind of infrastructure layer a lot of people a lot of projects working on that right now to give us the grounding to do much more exciting things like securitisation or fractionalization you can earn our 1% of a war hole allowing artists to secure their intellectual property and of course artists using cryptocurrency either as payment mechanism if you want to buy vases art with some Bitcoin or indeed issuing their own coin in various ways shapes or forms either as artwork or indeed as a as a payment mechanism - and so lots and lots of things that have been evolving over the last several years this was a survey done of art world auction houses and galleries in 2017 so quite a long time ago now and there was a new one coming out this year which everybody is eager to see whether the expectations have dropped or increased but even then a lot of auction houses were thinking about how this was going to impact their business and really thinking about how you know how they were going to evolve and one of the reasons for that is that when the internet came about many many art world institutions got caught out they thought it was not going to impact them some arts and online art platforms came and the last 10 years a lot of big institutions within the art world have been scrambling these very very good digital teams not only to catch up on some of the things that they perhaps missed out on but also to make sure that they are taking advantage of future technologies and so I'm even some of the most traditional art world players Christie's of this world have been running crypto blockchain conferences and writing sort of very in-depth research reports about the impact of this technology on the market I'm going to do two things I'm going to talk a little bit about the art which is kind of a fun bit and then a little bit more about how this is being used actively today within the art world so these are some of the fun things you might have seen some of them before this one is one of my favorites you probably can't see from the back but this is a picture of Nakamoto by an artist called crypto graffiti and if you look very closely these are cut up JP Morgan credit cards and risk which was a kind of board game visual display done by an artist called Simon Denny at the Petzl gallery in New York in 2016 very different again a real focus and commentary on the culture of cryptocurrency in blockchain which is a bit like this one the Bitcoin which was developed by Sarah mio Haas in 2015 she actually issued her own coin distributed them to collectors and potential collectors and if you collect enough bitcoins you can redeem them for one of her physical works of art although these are actually fairly in demand as well to actually have one of the original bitcoins again a slight commentary on the composition of the crypto and blockchain culture particularly in 2015 if not still today some more kind of fun pieces this is sort of been I think particularly exciting for people over the last so the crypto winter and a great reminder and undies which watercolors done by a Scottish artist called Terry cook who was commissioned by one of the earlier theorem guys to paint a very similar one to this and has been producing kind of interesting works ever since this book I highly recommend it for anybody who is in the blockchain space not just artists and not just people who are interested in art it's a a work of art in and of itself and each chapter you can you have an app and you can allocate theoretical crypto currencies to each chapter those theoretical crypto currencies are invested using natural language processing according to the content of the chapter and you can watch your portfolio change over time and it is a real it's really insightful in terms of bringing artistic thinking and very very left-field thinking into the ecosystem about the potential impact that this technology is having and could have on wider society it contains a piece of art called this the Nakamoto oath which is a sort of proposed oath for developers about how they should be creating this technology with everybody in mind and a fantastic book this is the final piece of art that I'll show you which is I am a queen by an artist called Kevin a Bosch he sort of comes from the traditional world and in 2017 this was done and he had his wife who is a doctor draw his blood and using his blood he stamped the smart contract address of a contract which released 10,000 ERC 20 tokens he called them I am a coin the idea was that he had sort of given life to them and he uses them in a whole series of works including one of my favorite which is called stealing the wallet the contents of this wallet is a crime and he releases actually the both the public and the private address and the following works from that are called this is a crime scene as he monitors the wallets that these coins end up in and it's really fascinating to see people take one give it back send it to somebody else as a gift and as a sort of sort of conceptual piece of art is is really interesting particularly I think in terms of thinking about how we place value on art and artists and he collaborated with AI weiwei last year to release another project called priceless which again is a real commentary on value and the value that we place the society on people I have talked very briefly about this because I'm going this is where we begin to touch on digital art this is very obvious which one the Mona Lisa is not just because she's behind some bulletproof glass in the Louvre but we recognize which the original is versus replicated images whereas within the digital art sphere we traditionally haven't been able to do that and this is what Sasha was talking about earlier and we don't know which the original JPEG is but imagine if we could allow collectors to recognize the unique the digital and scarcity is something that's very very important in terms of value construction of art and so if we can prove which is the unique the individual that allows us to enable free image replication of digital works while still having the concept of being able to collect the Edition or the single edition or any number of editions and the implication of that as we've seen is crypto kitties selling for hundreds of thousands of dollars but also of a number of platforms focused on enabling digital artists to not only protect their intellectual property but also to monetize it one of the most interesting ones and again such a talked about this idea of resale royalty z-- which is something that is much closer to our hearts here in in Europe than it is in the US but a platform called Dada which has restricted trading of tokens so that secondary trades have to go through the platform but that allows the fraction of the resale royalty is to be given back to the artist and the reason that this is so important that a lot of people miss out on is that value construction within the art world is about the longevity and the life cycle of an artist's career if I produce the work today and I sell it to you for $100 and then I go become an accountant the likelihood of that work is ever becoming worth millions of dollars is very very small and so value increases for art a highly dependent on the continued activity of that artist and a continued work which is why I think that many people would agree that artists should be able to participate in the upside of those works and I've lost a slide that does it but there was a really great academic in the u.s. who is working on not this concept of royalties but a fractional ownerships such that an artist can retain an equity stake in a work of art that they own and choose to trade that at any point in time or monetize that at some point so that they can realize the future value of their career they do this in a very economic and statistical sort of setting and model what it would be like if if top 20 artists retained a percentage of their work rather than investing the profits from their work into the SP and and then look at how that can be modeled across all artists and it's really really interesting in terms of how we are projecting value through the ecosystem to the some of the people who create it but who today often don't get to participate in that value so what about the more kind of traditional art world the first transaction from an institution in the art world to buy a piece of art for cryptocurrency was in 2015 it was the Applied Museum of Contemporary Art in in Austria and they've they bought on Vanguard or pearls event listeners which is a digital piece of art for Bitcoin and since then the use of cryptocurrency as a payment mechanism within the art world is growing there are galleries like coin temporary which only accepts cryptocurrency and even more traditional work so we do a lot of work for the company called live auctioneers who provide white-label software and they now have the petite ooh accept ethereum as as payments and the reason that that is attractive is often because the art world is very global big cross-border transactions exchange rates fees all sorts of things and so the the idea of being able to buy things with cryptocurrency is sort of slowly making its way throughout the art world fractional ownership of course is a big hot topic last year the company called my Senath auctioned 49 percent of an Andy Warhol electric chair for which kind of gave a total market cap I suppose of that artwork about 5.

6 million dollars and you can now trade that on on the my seen us exchange personally I'm a little skeptical on this one because it's been tried before in centralized circumstances and where you have a physical piece of art you also need some sort of centralization who's going to hold that physical piece of art and the demand historically hasn't been super high so I think it'll be really interesting to see whether blockchain and this idea of fractionalization can reinvigorate that demand for fractional shares of work and finally I can talk about provenance which is I think as I said earlier some of the kind of infrastructure level stuff that is being built for the art world today for those of you who don't Providence is probably the primary value driver of works and works in the art world this is a very extreme example but should tell you the story and this this painting here is believed to be by Jackson Pollock it was sold in 2006 at Sotheby's for 140 million dollars and the reason it was sold for that is because there's very low risk associated with it we know the five collectors who've owned it we've got pictures of that first collector standing in Jackson Pollock's studio with Jackson Pollock and the painting so the chances that that is fake it are low the chances that somebody else has claim to the title are very low on the other hand we have this one which the paint samples test the same anybody who's seen the documentary who the is Jackson Pollock will know this story but this was found in a garage nobody knows where it came from and most Warhol experts think it probably is by him but nobody is going to pay any amount of money for it because the risk is so high that it is not real that somebody doesn't have good title to it that there is some sort of outstanding claim bad restoration all sorts of different things and so this is what we talk about when we talk about provenance it's the history of the item and particularly the documentation that goes with that you may or may not know these artists this is a piece by Roscoe this is another Jackson Pollock this is my name but none of them are and the only reason that we know none of them are is because we spotted the fakes in the documentation the artworks weren't totally under the radar by experts and museums and the forger who did them bell tracky is an Austrian guy and we know that there are a lot of his works still in the museums around us today this picture looks like it was taken a very long time ago but it wasn't this is his wife dressed as a Victorian lady posing as an Austrian heiress when the pictures on the wall the idea being that they went to these auction houses and they said hey we've got proof that this these belonged to my wife and you can see these that we've got they faked all of this stuff and they even managed to sneak some of this documentation into the Tate archives and who knows what else around the world and this is the main issue here it is not that people are regularly creating long long-lost Mona Lisa's or replicas of the Mona Lisa it is that they are creating forged documentation and even for real artworks the prevalence of forged documentation is very very high because people know that good provenance supports a higher price and this is where the work that we've been doing at codex comes in is the idea of being able to store provenance information that documentation on an NFT over time one of the things that I think is really important is that we it's very difficult when you're talking about an offline asset to validate information that is added to the blockchain the way that that's done in the art world today is that we have a reputation system we trust particular players that's why I go to X auction house and I'm happy to spend a million pounds I'm not but if I did I would go to X auction house they probably wouldn't go to Uncle Bob's auction house around the corner and spend a million pounds because I'm not quite convinced that Uncle Bob has the same reputation and so what we have done at codex is replicate that through a system of verified accounts I'm a bit like the blue checkmark on Twitter if you have been through a verification process we know who you are as a consortium then you can have a checkmark if you haven't and you're just a collector then you have your your wallet address and what that means is that collectors can store documentation over time and but when they come to sell a work they know which pieces of information have come from which sources and at which point in time and that's the really critical thing here when we talk about the documentation issue is that we know that that photograph wasn't taken 100 years ago it was actually only uploaded to the blockchain yesterday and it wasn't uploaded to the blockchain by a reputable source with a blue checkmark it came from somebody that we don't know and so we are better able to evaluate the validity of that information and so sort of talking about a little bit what we've done about codex here we go this is that thinking at the back this is vases gallery on the Codex platform artists are able to document and register their work mesa has a blue tick mark and can register these and what he can then do oh this sort I'm gonna skip it this is an auction house page but what he can then do is actually send that record via email so we've built basically a smart contract that custody Zen FTS that you can access via OAuth login and various other login functionalities which there are kind of purists you think that that's not very decentralized why use a gmail login to access this but the reality is that in terms of driving adoption within what is a very traditional art world if you can email a certificate of authenticity or a Codex record to your collector I guarantee you they are much more likely to be able to use it and to interact with it and to even just start learning about this stuff than they are if you tell them you know my mom when she buys a piece of art of the gallery that now she has to go home and download meta mask and so so so this is something that we've been really focused on working with the traditional art world to develop user experiences that short bridge that gap somewhere between centralization and decentralization but really start to engage people with how this stuff can impact them and you can log in with from here to mask if you want this this is a little bit about the limitations I think one of the things that is really important is to distinguish what blockchain can and can't do and this is a little bit more relevant when I talk to an art world audience who often either have been promised that blockchain is the solution to everything or who are very very skeptical about it but the key thing I think is really here around the documentation we can prove where information comes from and and at what time that information is added to the blockchain and that is a huge improvement on the status quo and I'm gonna finish with this quote from an artist friend of mine Benton C Bainbridge who says that if you made a symbiotic Union between digital money and digital art would the two forms mutually reinforce one another and his belief was yes it would and my belief is that too because I think there a number of artists phaser included who are doing tremendous work to help push the blockchain and crypto and all of this stuff out to the wider world and help people understand it and at the same time I really hope this stuff can benefit artists as well your questions everyone's ready for a pint Oh No there was one other back yeah yeah so there are number there are a number of ways of doing it at codex we have a partnership with a company based here in the UK called tag smart who produce synthetic DNA tags different kinds of tags whether it's paper or canvas or a sculpture but those effectively can be read and the identity of that synthetic DNA can be added to a codex record we also work with a company called dust which is based out of the u.s. they use kind of tiny tiny little pieces of diamonds who all have their own identity that's unique and readable and that can be added onto the back of a canvas or something like that's very hard to remove there are also extremely innovative things happening there's a company called proven authentication in the US who is producing canvas with synthetic DNA already embedded within it so there there are kind of a huge number of these sort of technological solutions which are bridging that gap one of the issues of course is the integrity of the artwork and there are many artists who either don't want some sort of tag on their work or who feel that that compromises the integrity of the work and that's where solutions like scanning and become really interesting and and also for works that are to either fragile or in a state where you can't attach something physically and there are a number of companies around who will do very very detailed Carbon analysis and 3d scanning and x-rays and produce basically that a sort of set of data and there is one who I don't think the the integration is complete from a technical perspective but who will eventually they're based in Vancouver there are some of the sort of top ones in the world and they will be able to write directly to the codex blockchain to say you know this is this we can prove that this is the first card so that if ever there was dispute they would be able to redo that and effectively match that and other other challenges exist there obviously because work and degrade over time things change but within kind of statistical reasonability we think that that probably holds for a certain period of time so there's lots of ways of kind of making that link and they're really very according to cost how how valuable it is to do that I would also say that whilst a lot of people think about how do we make this link between physical and digital right now we don't link our paper receipts and our exhibition records in a physical way to the artwork they are kept together because they mutually reinforce one another's value and so are sort of the expectation although still to be tested it's very early days is that people will want to keep provenance records with the original piece of artwork because it's very little incentive to separate them in the first place but but there are solutions to do that yeah you know and I think this is where one of the points about what kind of limitations were is this idea of legal ownership there are you know great companies like material doing awesome work on kind of legal recognition of this stuff there was a court case in China about 17 months 18 months ago where a blockchain record was admissible as a piece of kind of legal ownership proof I think that that's something that fits in the kind of broader realm of blockchain of how legal systems recognized and blockchain records and of course in a sort of case law you know legal system that's very very different to a legislative body and so I think we will see over time how different legal systems are adopting this stuff I think it's what we've always kind of thought about it codex is that this should be a tool to help preserve provenance information it should be a tool to help artists document and archive their work it's not necessarily meant to replace you know anything else but indeed in the art world you typically don't have any sort of legal piece of paper that says you own it either possession is normally what it takes that so I think that will that'll continue yeah so at the moment it's built on a cerium and that's how we bought it from the start the way we had to our two earliest investors were two companies called live auction is an auction mobility who builds white-label software for auction houses and so they are our primary customers and I think I sort of skipped over it but they have auction house pages and through an API can automatically create codex records through their existing software and so colex was sort of born out of this idea of providing this technology specifically to auction houses in the first place there is a lot of discussion particularly amongst those auction houses and some other kind of key players within the ecosystem about this idea of a permission chain and part of the issue with that is that there has to be some sort of data standard kind of across different people the getty museum who i do some work with around their open data platform how we the nomenclature and the taxonomy we use to describe these things and how they fit in the context of technology is still evolving and evolving slowly and so i think that there is there are certainly belief that sort of an art world permissioned chain is a kind of aspiration but i think that for the time being it's still pretty early days I mean codex is just one of several platforms that are around and trying to do the staff or different things and so I think it's you know for the art world they're really trying to get to grips with what this means but the likelihood is that there will I think probably end up being a sort of industry chain at some point you say again yeah I mean I think you know again this is still still sort of pretty experimental stuff codex now has several thousand records on it and so there would be a kind of migration pain but there are there's a similar platform called varus art which is built actually on top of the Bitcoin network there is artery which is built on a permissioned aetherium chain and and so I suspect at some point there will be a kind of reconciliation or maybe we'll get to the stage where they can all talk to each other anyway yeah we've always been built on Syria that is a good question so so yes so I was involved with obviously codex and its outset and then I founded a company called shiaas which is an EOS block producer we use our profits to find girls coding programs in developing countries and most recently I've become involved and become a co-founder although I'm late to the party of a sort of eSports platform called edge and so yeah I sort of have these three things I mean I think for me I really enjoy solving problems and finding real problems where this technology isn't kind of being you know when you've got a hammer you're always looking for nail and whilst I love blockchain I'm more interested in solving problems in the right way and solving problems that I think are really exciting and so one of the reasons that I love working in the art world is because they have a lot of friends who are artists and it's something that I feel very very passionately about for the same reason that working with edge on eSports I find it exciting it's slightly different I'm don't have lots of friends who are eSports players but I do recognize that it's a super exciting industry and so my only recommendation would be to find something that you you know really love doing and that you feel excited about because founding a company is probably you don't do it for fun and you don't do it for money normally because you know it's it's a lot of sleepless nights and an awful lot of heartache and and work but if you're doing it for something that you really love then it makes getting a bit easy so we don't do it codexes look at individual documentation and verify it that would be hugely intensive and typically to that is only done today at the point-of-sale that's why you go to an auction house as an expert who can tell you whether something is real or not and can evaluate that information I mean that's why we replicate that same system with this kind of verified blue check marks there are of course technologies that are around that do that and some of the big auction houses are acquiring these companies which use various artificial intelligence or sort of sample testing all sorts of things to see if if things are real or not the you know the thing is that there are they're about two trillion dollars worth of artworks around the world I'm only about 64 billion of those changes hands every year this it's quite low turnover and it's fairly sporadic actually though that turnover tends to be often in the same sort of pool there's stuff that has been sitting in vaults and often in Switzerland for 400 for many many years I mean we never see and we probably never will and so you know I think a lot of this stuff a lot of the documentation that we will see a lot of things that may or may not get recorded on a blockchain typically will take place at the point of transaction rather than you know adding something that's never left Switzerland no left a vault in Switzerland - a blockchain so so I think it's typically transactional and then you normally have an expert that's involved [Applause]