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NFTs for museums
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NFTs for museums

Exploring the potential for museums, art places and all kinds of collections

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What are NFTs?
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answer
  • NFTs are unique representations of assets, both digital and physical, on the blockchain network. They use the same technology as cryptocurrencies; unlike them, they cannot be divided or interchangeable, but they can be bought and sold.
  • The concept first emerged in 2014 on the Ethereum blockchain.
  • Cryptoart, referring to the digital artwork represented by an NFT, introduces ownership and scarcity in the digital realm, verifiable in a decentralised manner.
  • NFTs are contracts that benefit from decentralised blockchain applications:
    • tamper-resistant digital ledger
    • possibilities of a smart contract (predefined royalties)
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Understanding Museums

Museums began to increase their online offering as COVID-19 aggravated the poor financial health of cultural heritage institutions and increased the need for a digital cultural offer.

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Similarities between NFTs and the art market
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discover
  • High-value goods
  • International market and networks
  • Common use of intermediaries or proxies for transactions
  • Common use of foreign/offshore structures and accounts
  • Culture of discretion: Buyers and Sellers often unkown to each other
  • Buying an artwork legitimises funds and converts it into an investment
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Crossroads

For museums the main applications of NFTs are related to the digital representation of their physical artworks and the many purposes for which the immutable digital ledger and the smart contract option can be used.

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Examples
  • St. Petersburg’s Hermitage Museum, creating a virtual entity of the museum that exhibited Cryptokitties next to the digitalised versions of the museum’s masterpieces.
  • In February of 2022, Vienna’s Belvedere Museum sold the digitalised version of The Kiss by Gustav Klimt, divided into 10,000 pieces, each fraction represented by an NFT.

How can museums apply NFTs?

image
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source

Copyrightfree / Uffizi Florenz Michelangelo "Doni Tondo", 1506/07

Digital representation of physical art works

image
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source

Schloss Skokloster, digital archive

Immutable record of authenticity and provenance

image
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source

Screenshot from The Kiss NFT Drop. Retrieved on 22.04.2022 from: https://thekiss.art/

Digital objects as dividable immaterial economic assets

Limitations of working with NFTS

Scalability

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open
  • Infrastructure investment
  • Environmental concerns
  • Missing theory on virtual property preservation
  • Managerial implications
  • Tension between audiences

Governance

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open
  • Copyright issues
  • Re-centralisation
  • Compliance with regulation
  • Asset classification
  • Speculative practices

Security

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open
  • Data availability and integrity (off-chain storages of the asset)
  • Token accessibility
  • Identity theft

Guides

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Practical guide to deal with digital museum objects as NFTs
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see
  1. Ensure authenticity and uniqueness through due diligence of the NFT.
  2. Ensure the copyright scope: what are the rights to reproduce and distribute the digital object.
  3. Select the right partner. Work only with a reputable technology company that will issue the token and store the underlying artwork in a transparent and secure matter.
  4. Work only with marketplaces that do not require the institution to make significant up-front payments or add higher gas fees to issue and sell NFTs.
  5. Ensure complete disclosure of the NFT’s purpose. What are the predefined royalties, risk factors or classification, whether they are or not investment contracts or other types of securities.
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Guide to offset energy consumption
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see
  1. Carry the NFTs auctions off-chain
  2. Use Layer 2 technologies like sidechain or rollups
  3. Purchase carbon offsets that fund renewable energy or plant trees
  4. Tolerating a longer confirmation time to lower gas fees

Future research avenues

Barriers to overcome

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Research on virtual property theory

How to preserve and curate digital museum objects; deal with dematerialisation, reproducibility and obsolescence

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Closing the blockchain air gap

How to relate the blockchain listing to the digital artwork in a standardized fashion

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When is proof-of-stake coming?

Transitions from Proof-of-work to Proof-of-stake is still the best long-term solution but when will it really happen?

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Managerial implications

How will the museum’s objective, reputation and funding be exposed to technology risks

Thinking beyond the monetary

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Education

Museums as institutions that issue tamper-resistant degree/course accredited certificates

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Culture

Curated experiences in the metaverse led by museum’s effort to contribute to the conversation of what is art in society

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Handout