Art, fine wine, collectible cars, music instruments, jewelry, and much more comprise A&C. Over the past few years, A&C has become so big, that Deloitte is considering it as an asset class . It’s: “a group of securities that exhibits similar characteristics, behaves similarly in the marketplace and is subject to the same laws and regulations”.
Additionally, it’s an asset class in which high-net-worth individuals (HNWI) currently allocate an average of 6% of their portfolios. Deloitte’s 2017 Art & Finance Report estimated this asset class to be worth $2 trillion. It is also projecting growth of $0.7 trillion by 2026 with an estimated$620 billion of annual transactions.
Firstly, despite the size and growth of the market, there is one massive issue. The issue is the lack of a title registry. So, this comes down to lacking two things:
Provenance and metadata, are 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.
So, these issues inhibit buying and selling with ease of mind. Additionally, securing and insuring collectibles becomes more complicated. So, it makes forgeries and fraudulent behavior easier.
Secondly, enter the Codex Protocol. The asset registry tailored for A&C objects is the Codes Protocol. It preserves all information about a piece. Additionally, the information includes evidence of ownership and other metadata.
The Codex team is building a protocol that will revolutionize A&C by creating a decentralized title registry for them. In addition, they are also creating a decentralized consortium of experts to validate authenticity. The Codex Protocol will track an object’s “history of ownership through a neutral and decentralized verification”. The protocol will also have the ability to securely store metadata about objects whilst also making them easily accessible (if required). All in all, Codex is bringing provenance onto the blockchain — a match made in heaven.
A consortium of 5,000 auction houses backs the Codex Protocol. They also 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. Lastly, Codex itself has already launched Biddable.
Thirdly, the centerpiece to the Codex Protocol is the Codex Record. A Codex Record contains provenance details and other metadata for a particular object and is created when an object is loaded onto Codex.
Before loading an object onto Codex, all associated information needs to be verified by validators (these include appraisers, auction houses specialists, dealers, gallerists, etc.). Validators need to confirm that the information provided by them is correct if an object is loaded by end-users. 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.
The validators will be selected on a discretionary basis. The Codex teams expect 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 Codex Protocol works, I will walk through a simple example below:
So, the Codex has placed itself in a prime position to solve the issues discussed above. In addition, they improved upon them by becoming a decentralized asset registry tailored for A&C objects. It will do so by providing Proper Provenance & Secure & Accessible Metadata. 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.
Having proper provenance in place with the addition of secure and accessible metadata will bring a host of benefits, including:
Lastly, 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 CodexCoin (CODX) is used to access the Codex Protocol. It has a multitude of uses, including:
But, the Codex Protocol has not launched its token yet. You can only purchase CodexCoins (CODX) during their Initial Coin Offering (ICO). It’s dated for the end of July. You can find more information about their token sale and sign-up for their ICO, here.
By our friend Ermos Kyriakides. You can follow his Blog at https://medium.com/@ermos.k and on Twitter at https://twitter.com/ermos_k.
Link to original blog here.
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