Introduction
In order to understand the business model followed by GalleryRenaissance, some rudimentary knowledge of blockchains and their applications is necessary. Further, it is necessary to comprehend the structures of transactions executed via blockchains. Otherwise, the risk of misunderstanding is quite considerable.
In the first place, blockchains are networks of independent computers (nodes) which come together for a common purpose. This is done when each node runs the software which sets the terms of participation in this common purpose.
In commercial applications, the aforesaid common purpose is to validate a batch of transactions (recognized by the blockchain), enter these into a page in a ledger and to seal this page. Such a page in the ledger is called a “block” and each block (except the first) is linked to its predecessor as well as to its successor. In other words, the blocks are linked in a chain, hence the name.
A copy of the entire ledger exists at every node and is publicly available (in a public blockchain). Since each node is operated by an independent individual, the assumption is that a majority of the participants will collaborate to keep the system honest. In other words, the majority will penalize any validator who inserts fraudulent transactions into a block.
Recognized Transactions
A transaction is recognized by the blockchain when an appropriate program located within the blockchain is used to execute that transaction. This program is analogous to an app on a smartphone. Such a program will typically have the secondary features that the user requires. For instance, if the user wants to sell a piece of music, the relevant program will provide the means for collecting royalties as well. The transactional and secondary capabilities of the program are collectively called a “smart contract”.
The smart contract suited to a user’s requirements may be supplied by a third-party in which case the user would pay a fee. Such a fee is often called “gas fee” and is nothing more than a commission to be paid to the author of the smart contract.
Alternatively, if a suitable third-party smart contract is not available, a custom-designed smart contract must be written and registered on the blockchain.
Tokens
A “token” is essentially a title deed to the object that the buyer acquires. This token is then recorded in a block as proof of the transaction. Thereafter, once the block containing it has been sealed, the token cannot be altered.
When a transaction is entered into a smart contract, all the terms and conditions of that transaction are defined and summarized in the token. Typically, the token will describe the object being purchased, its title and where the purchased object is located.
In a sense, the token is the chief object of interest in subsequent commercial deals concerning the underlying object that has been purchased. Thus the token can be treated as a share certificate, a bond or a promissory note. So the token can be traded without having to move the underlying object.
It has to be noted that all the laws governing the transaction such as contract law, copyright law, etc. remain absolutely enforceable but are not mentioned in the token. A separate, conventional contract will usually exist between buyer and seller. The use of the blockchain is a means to make the transaction much more streamlined and efficient. Further, by the very nature of the public ledger, there is a very high level of transparency which adds to business confidence.
In the case of fine artists, the record of transactions will form a part of the portfolios. For musicians, sales carried out via the blockchain will provide an estimate of their popularity independent of possible industry manipulation.
An example of a token is given below. This is the token for a work of digital art by an artist called “Beeple” and the work is a collage entitled “Everydays: The first 5000 days”.
Note that the work being sold is a jpeg file list at the end of the token. The sale price was about US$ 69 million but it is known that a conventional contract between buyer and seller specifies that the seller retains the copyright.
So the buyer simply owns a jpeg file which cannot be exploited in any way without the agreement of the seller. The buyer only has the right to sell the token and the associated jpeg file.
Example: NFT Token for “Everydays: The first 5000 days”
_________________________________________________________________________________________
{
“title”: “EVERYDAYS: THE FIRST 5000 DAYS”,
“name”: “EVERYDAYS: THE FIRST 5000 DAYS”, /* Name of the artwork */
“type”: “object”,
“imageUrl”: “https://ipfsgateway.makersplace.com/ipfs/QmZ15eQX8FPjfrtdX3QYbrhZxJpbLpvDpsgb2p3VEH8Bqq“, /* Preview of the artwork */
“description”: “I made a picture from start to finish every single day from May 1st, 2007 – January 7th, 2021. This is every motherfucking one of those pictures.”,
“attributes”: [
{
“trait_type”: “Creator”,
“value”: “beeple”
}
],
“properties”: {
“name”: {
“type”: “string”,
“description”: “EVERYDAYS: THE FIRST 5000 DAYS”
},
“description”: {
“type”: “string”,
“description”: “I made a picture from start to finish every single day from May 1st, 2007 – January 7th, 2021. This is every motherfucking one of those pictures.”
},
“preview_media_file”: {
“type”: “string”,
“description”: “https://ipfsgateway.makersplace.com/ipfs/QmZ15eQX8FPjfrtdX3QYbrhZxJpbLpvDpsgb2p3VEH8Bqq” /* Preview of the artwork */
},
“preview_media_file_type”: {
“type”: “string”,
“description”: “jpg”
},
“created_at”: {
“type”: “datetime”,
“description”: “2021-02-16T00:07:31.674688+00:00”
},
“total_supply”: {
“type”: “int”,
“description”: 1
},
“digital_media_signature_type”: {
“type”: “string”,
“description”: “SHA-256”
},
“digital_media_signature”: {
“type”: “string”,
“description”: “6314b55cc6ff34f67a18e1ccc977234b803f7a5497b94f1f994ac9d1b896a017”
},
“raw_media_file”: {
“type”: “string”,
“description”: “https://ipfsgateway.makersplace.com/ipfs/QmXkxpwAHCtDXbbZHUwqtFucG1RMS6T87vi1CdvadfL7qA” /* Location of the actual jpeg image */
}
}
}