Art Law Expert: ‘The Blockchain Can Unlock the True Potential of Digital Art’

With the help of Bitcoin, a new kind of license transforms the usage rights to copyright-protected digital artworks into limited and tradable virtual properties.

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Art Law Expert: ‘The Blockchain Can Unlock the True Potential of Digital Art’

"For the first time, digital art becomes collectable and tradable without printing or materializing it."

- Stephan Vogler

With the help of Bitcoin, a new kind of license transforms the usage rights to copyright-protected digital artworks into limited and tradable virtual properties. CoinTelegraph spoke with entrepreneur and artist Stephan Vogler, who publishes his artwork under this new license that provides more usage rights and easily-proven ownership.

Vogler and the art law experts of dtb rechtsanwälte in Berlin teamed up to create a license based on Bitcoin technology to transform digital artworks into technically and legally limited and tradable virtual properties.

“These licenses can be securely transferred worldwide with minimal transaction costs and — if paid with bitcoins — securely sold without the need for an escrow service,” explains Vogler. All usage rights owners are recorded in the Bitcoin blockchain.

Faces Series by Stephan Vogler

-- Faces Series by Stephan Vogler

CoinTelegraph: First, could you tell us a little bit about yourself and how you got into Bitcoin?

Stephen Vogler: I’m co-founder and managing director of an online games company in Germany. We're developing and running some very successful MMORPGs (massively multiplayer online role-playing games) for more than 10 years. So I've got a thorough understanding of virtual items and their market value. I also have a long-standing interest in information technology, modern art and law. Discovering that digital art hasn't touched some very interesting conceptual topics, I started to create digital artworks myself.

“[T]he blockchain is the first decentralized trustable database […]. You can use it to transform any kind of legal claim into an independent virtual property.”

I learned about Bitcoin in 2013 and soon realized that the blockchain is the first decentralized trustable database, which can track the ownership of virtual properties in a reliable way. You can use it to transform any kind of legal claim into an independent virtual property.

CT: You are one of the first people in the world to apply a license for every published work, using the Bitcoin blockchain to transform its usage rights into an immaterial good.How is this license created and how does it work?

SV: Think of the license as a piece of paper that says: "Whoever owns this piece of paper is the only person allowed to use the work." Just like Bitcoin can replace banknotes, Bitcoin can replace this piece of paper.

This is how it works: The author publishes the license text file together with his digital signature file. The license text includes a Bitcoin address, which belongs to the author. The author is now able to put a file (e.g., a digital artwork) under the license by creating a transaction from this address with a hash value of the file in one of the transaction's outputs (using OP_RETURN). The recipient of this transaction is the licensee who owns the usage rights. The license is exclusive and is granted only to this recipient. A new transaction can then transfer the usage rights to a new owner.

CT: Are you using any third-party services to do this (Factom, Counterparty, etc.)? Do you think these types of solutions would improve upon your method?

SV: No, I'm not using any third-party services. To put new files under my license, I'm using a simple script, and to transfer the immaterial goods, you can use the standard Bitcoin client. There are a couple of projects out there that try to implement similar concepts or parts of it as a service. They are in a very early stage of realization and differ in various aspects. In the future, they will certainly help to bring the concept to a larger audience.

For me, it's important that my digital artworks don't depend on a single service. They will exist and are transferable as long as the blockchain exists.

CT: How can artists showcase their work to potential buyers without it being copied?

SV: The concept does not prevent anyone from copying the work itself. However, the license enables the owner of the exclusive usage rights to prove his ownership. An example: A digital photo is put under the license and sold as an immaterial good to an art collector. If someone else sells prints of the photo, the art collector is able to prove his exclusive ownership of the usage rights and sue this person.

“[T]he blockchain can unlock the true potential of digital art.”

CT: How beneficial could the blockchain be in the art world? What specific problems can it solve? 

SV: Until now, in the art world everything is built on trust. There is no way to prove the authenticity or scarcity of material art. Art collectors need to trust auction houses, art dealers, authentication boards and of course the artists themselves. Unfortunately there is a long, sad history of abuses of this trust in the art world. The blockchain and its scripting mechanisms can help to reduce the necessary amount of trust to a minimum. In this way the blockchain can unlock the true potential of digital art.

This includes the following advantages:

  • The authenticity of the signature and the signature date of the work can be proven beyond a reasonable doubt;
  • The entitlement to the connected usage rights can be proven beyond a reasonable doubt;
  • The good can be securely and instantaneously sold or transferred worldwide with minimal transaction costs;
  • If the good is paid with bitcoins it can be securely sold worldwide without the need for an escrow service.

CT: The granting of the right to transfer the immaterial goodis exclusive and legally limited to only one licensee. What happens after the piece of digital art is sold and the rights are transferred? Can the buyer make multiple copies of this work after buying it?

SV: The buyer will be the only person who is allowed to distribute digital or physical copies of the work. He is also the only person who can transfer the usage rights to a new owner. However, if he does, he will lose the usage rights.

CT: You mention that if the good is paid for with bitcoins, no escrow service is needed. However, what guarantee does the buyer have that they will receive the artwork and the exclusive license?

SV: Thanks to the way Bitcoin transactions work, it is possible to transfer the usage rights and pay for this transfer in a single transaction. Either both things will happen — the transfer AND the payment — or both will fail. It's not possible that only one part of the transaction fails.

“[P]eople will try to use the blockchain to turn almost every legal claim into an immaterial good (e.g., copyrights, patents, stocks, trademarks).”

CT: To what other immaterial goodscan Bitcoins technology be applied, in your opinion? Do these good have to be immaterial? For example, can the blockchain be used to determine the ownership, authenticity or provenance of physical goods, as well?

SV: I think people will try to use the blockchain to turn almost every legal claim into an immaterial good (e.g., copyrights, patents, stocks, trademarks). If this really works out or not depends on the laws in the various countries. Of course, legal claims can also refer to physical objects (e.g., the right to use a car or the right to live in an apartment). However, the blockchain will only keep track of the ownership of these rights. I don't see any way to prove the authenticity of physical goods with the help of the blockchain.

CT: Loopholes in the patent system have led to the emergence of a burgeoning patent troll industry that comprises over $29 billion dollars annually. Do you think the protected digital property could undercut this practice (by eliminating the need for litigation since the blockchain can be easily used to prove ownership)? 

SV: Probably not. Even though the blockchain can help to easily prove ownership, it will not prevent anyone from violating the rights connected to the ownership. The process of enforcement of the rights will stay the same. 

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