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Arts & Communication Blockchain and royalties in China’s art market

reflecting the changing landscape of art creation and administered and executed through smart contracts, which
ownership. are stored on the blockchain and automatically executed
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As we conclude our exploration of the complex realm when certain conditions are met. The emergence of
of resale royalties, we see both their worth and limitations. blockchain has fundamentally altered the technological
These systems support artists, but they also have landscape, evolving and finding its unique place within the
drawbacks, including significant administrative labor and creative community. 65
inequitable international laws. This takes us to a significant As we delve into blockchain’s mechanics, we
turning point: Blockchain technology represents a understand its foundation: A secure, shared ledger that
promising avenue for the improvement of various aspects. brings unprecedented transparency and efficiency to
In Section 3, we will explore how this technology might art transactions. This technology’s ability to automate
simplify and enhance what we have covered so far. agreements through smart contracts introduces a new era

3. Harnessing blockchain for resale royalty of trust and accessibility in the art world. NFTs have become
a crucial aspect of this technological revolution. An NFT,
systems in the art market which can be an image, gif, or video, represents items on the
Section 3 presents an innovative approach to addressing blockchain, recording peer-to-peer transactions within a
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some of the challenges and inefficiencies identified in the networked computer system. NFTs, by design, are unique
current resale royalty systems. Here, we delve into the digital tokens that represent an asset, and ownership of
realm of blockchain technology, exploring its potential an NFT confers authenticated ownership and “bragging
to revolutionize the way artists’ rights are managed and rights” to the buyer. This uniqueness and the ownership
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enforced in the digital era. This section aims to bridge validation they provide have fueled their popularity among
the gap between traditional art market practices and digital art collectors and investors, even as concerns about
the burgeoning world of digital transactions, offering a counterfeiting and reproduction of digital representation
glimpse into how cutting-edge technology can enhance persist. 68
transparency, security, and fairness in the art market. This NFTs emerge as a pivotal innovation, merging art with
forward-looking perspective is essential for understanding blockchain’s security. These unique digital assets have not
the evolving landscape of art ownership and the emerging
solutions that blockchain technology brings to the table. only captivated collectors but also offered artists a new
venue for recognition and remuneration, reshaping the
3.1. Blockchain technology and its relevance to art market’s dynamics. Smart contracts, the backbone of
resale royalties NFTs, are self-executing contracts where the terms are
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This section begins by positioning blockchain as a game- directly written into lines of code. They automatically
changer in how artists’ rights are recognized and rewarded, execute transactions and agreements once predetermined
especially through NFTs and smart contracts. It illustrates conditions are met, thereby enhancing efficiency and
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the shift toward digital solutions that promise to redefine obviating the need for intermediaries. These digital
the economic landscape for artists. In the contemporary contracts are tailored to automatically execute transactions
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art world, blockchain technology has emerged as a using a straightforward “if/when-then” mechanism.
transformative force, particularly with the advent of However, it is crucial to acknowledge that the effectiveness
NFTs and smart contracts. This technological evolution, of smart contracts in executing and enforcing resale
especially prominent since 2021, has revolutionized the royalties is not without challenges.
way artists are compensated for their work, particularly in The intersection of NFTs, blockchain technology, and
terms of royalties on subsequent sales. The integration of smart contracts has profound implications for the art
blockchain into the art market is not just a fad; it marks a market. NFTs have introduced a standard feature of resale
pivotal shift in how artists’ rights, specifically resale royalty royalties for subsequent sales, fundamentally changing
rights, are managed and executed. how digital artwork is created, bought, and sold. Many
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Blockchain, as defined by IBM, is a shared, immutable blockchain platforms incorporate royalties into NFT smart
digital ledger that records transactions and tracks both contracts, providing up to 10% royalties on secondary sales
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tangible and intangible assets. This decentralized ledger to digital visual artists. This system has not only provided
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provides an efficient method for delivering information financial sustainability for artists but has also led to record-
between parties, offering immediate, unchangeable records breaking trading sales in the NFT art market, defying
that are transparent yet accessible only to members of the concerns that the addition of royalties could negatively
blockchain network. Information and tasks are seamlessly impact the market. 73
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Volume 3 Issue 1 (2025) 8 doi: 10.36922/ac.2875