Real World Applications of Cryptocurrencies - Art & Collectibles

Given this series has amassed quite a following, I thought I’ll write one more, before I take a small 2-week break from writing. Following on from my previous post on Online Ticketing Systems & the GET Protocol, which you can find , I will be discussing how the rts ollectibles ( ) industry will be disrupted by the emergence of the blockchain and cryptocurrencies. here A & C A&C Unique Asset Registry — Codex Protocol Overview is comprised of objects such as art, fine wine, collectible cars, music instruments, jewellery and much more. Over the past few years A&C has become so big, that Deloitte is considering it as an asset class — “ A&C a group of securities that exhibits similar characteristics, behaves similarly in the marketplace and is subject to the same laws and regulations”. It’s an asset class in which high-net-worth individuals (HNWI) currently allocate an average of to. Additionally, according to , this asset class is estimated to be worth projecting a growth of by with an estimated of annual transactions. 6% of their portfolios Deloitte’s 2017 Art & Finance Report $2 trillion $0.7 trillion 2026 $620 billion The Problem Despite the size and growth of the market there is one massive issue; the . This comes down to lacking two things: lack of a title registry — This is the and of a particular object. It’s what drives the monetary value of an object as it indicates whether it’s authentic or not. Proving an object’s authenticity, is a long, often manual and hard process which requires analyzing a lot of paperwork and is often inconclusive. Without proper provenance, , and become very prevalent. It is estimated are lost annually due to this. There are numerous recently examples of fraud, including, . Provenance history of ownership associated documentation fraud fakes forgeries over $6 billion John Re scamming art buyers out of $2.5 million over nine years for fake Jackson Pollock (and more) artwork —Is information related to an object such as photographs, past appraisals, receipts, restoration records, etc. The space, is plagued with a are vital to ‘unlock the value’ of collectibles as the provision of services (more on this later) relies heavily on this. For example, a buyer may want to know what kind of damage a collectible car had in the past or whether there have been any modifications. Metadata A&C lack of comprehensive, secure, easily accessible metadata. Metadata and is very hard to achieve, transparently and securely, using current technology. Of course, there are some centralized registries that provide provenance, however, neither collectors nor intermediaries will ever fully trust a centralized registry_._ Provenance metadata, These issues inhibit buying and selling with an ease of mind. Additionally, securing and insuring collectibles becomes more complicated, whilst, making forgeries and fraudulent behavior easier. The Proposal Enter the . Codex Protocol The is designed as an asset registry tailored for A&C objects. A Codex Record is designed to preserve all information about a piece, including the evidence of ownership and other metadata. Codex Protocol The Codex team is building a that will revolutionize by creating a for them, coupled with a decentralized consortium of experts to validate authenticity. The will track an object’s . The protocol will also have the ability to about objects whilst also making them easily accessible (if required). In one simple sentence, Codex is bringing — a match made in heaven. protocol A&C decentralized title registry Codex Protocol “ history of ownership through a neutral and decentralized verification” securely store metadata provenance onto the blockchain To top it all off, the is backed by a consortium of 5,000 auction houses and trusted industry stakeholders thus putting it in pole position for adoption and becoming a standard. Since they are building a protocol, it will provide others to build decentralized applications on top of it. Codex itself is has already launched . Codex Protocol Biddable How It Works The centerpiece to the Codex Protocol is the . A Codex Record contains and other for a particular object and is created when an object is loaded onto Codex. Codex Record provenance details metadata Before loading an object onto Codex, all associated information needs to be verified by (these include appraisers, auction houses specialists, dealers, gallerists, etc.). If an object is loaded by end-users, validators need to confirm that the information provided by them is correct. If an object is loaded directly by validators, they need to research and load this information themselves. In order to ensure the integrity of the system, validators will be rewarded in a very similar fashion to how they are today. validators At first, the validators (and their rewards) will be selected on a discretionary basis but the Codex teams expects that in the future rewards will be “algorithmically distributed along with a reputation system that scores end-users who have expertise”. To illustrate how the works, I will walk through a simple example below: Codex Protocol loads her artwork, , onto Codex. Since is getting loaded onto Codex for the first time, any associated information needs to be verified by . Alice Lona Misa Lona Misa validators Validators confirm the authenticity of and successfully gets loaded onto Codex. Lona Misa then wishes to anonymously to . Since all information on Lona Misa is recorded in a Codex Record, Alice has the ability to to the to view the information attached to the Record. Alice sell Lona Misa Bob delegate view permissions Bob Despite the fact that chose to remain anonymous, can be certain that the is due to the proper provenance provided by the protocol. Alice Bob Lona Misa genuine Once the sale is complete, will now be registered as the . Bob new Lona Misa owner The Solution Codex has placed itself in prime position to solve the issues discussed above (and improve upon them) by becoming a tailored for A&C objects. It will do so by providing By leveraging the advantages of the blockchain and smart contracts, the identity of the object, its path of ownership, authenticity and related data will always be secure, immutable, guaranteed, verifiable, accessible and transparent. decentralized asset registry Proper Provenance & Secure & Accessible Metadata. History of Ownership Having proper provenance in place with the addition of secure and accessible metadata will bring a host of benefits, including: — Ownership of A&Cs can now be proven, without compromising privacy Anonymity — Applications and Services (asset-backed lending, bidding, escrow, insurance, etc.) will have greater confidence serving their customers. Better Services — This is particularly geared towards newly created wealthy holders of cryptocurrencies. They will now have the opportunity to diversify into an asset class that provides an uncorrelated, appreciating and private store of value. Greater Accessibility — By having a widely adopted registry which brings a host of benefits, will help grow the A&C space and . Greater Market Size “by hundreds of billions of dollars” “could increase the value of the asset class by over $1 Trillion” — The Codex Protocol will eliminate the costly middlemen and the risk and suspicion that sometimes comes when centralized single entities hold information. This will inherently reduce transaction costs as well. No Middlemen — This is pretty obvious but the number of frauds, forgeries and fakes will be dramatically reduced as provenance will now be secure, accessible and transparent. Reduced Fraud How Are CodexCoin ( ) Tokens Used? CODX The CodexCoin is a token used to access the protocol. Users, or applications on their behalf, will pay fees in the form of CodexCoin to create, update, and transfer Codex Records. These fees will be used to provide rewards. The ( ) is used to access the Codex Protocol. It has a multitude of uses, including: CodexCoin CODX Paying for creating, updating and transferring Codex Records. These fees will be discounted depending on how many CODX an application (built on top of the Codex Protocol) stakes and for how long. fees validators for their verification work and penalizing them if proper behavior is not followed. Rewarding Providing a for an on-chain voting scheme, meaning that token holders will be able to govern the decentralized system. mechanism The Codex Protocol has not launched their token yet. You can only purchase CodexCoins (CODX) during their nitial oin ffering ( ) which is dated for the end of July. You can find more information about their token sale and sign-up for their ICO, . I C O ICO here How many claps does this post deserve? How about a follow? If you enjoyed this post, please feel free to 👏 👏 many times (you know you want to!), give my blog a 👣 👣 and 🤲 🤲 with your friends. 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