Intro to Collecting Art on the Blockchain

A guide for institutions on collecting digital art with blockchain—ensuring secure, lasting, and accessible stewardship for the future.

This guide is mainly intended for museums, but the basic principles are applicable to anyone looking to collect art on the blockchain. Have a question that’s not covered below? Email us at support@feralfile.com.

Overall, why is digital art intersecting with the blockchain?

Right now, we’re at a historic turning point. Artists working with software finally have access to a suite of tools enabling them to fully participate in the commercial art market.

Feral File is focused on curating and exhibiting digital art on the blockchain. We define “digital art” as art that is created and/or published using software, and we define “art on the blockchain” as any kind of artwork that is specifically stored, authenticated, and/or transacted using blockchain technology.

Prior to the blockchain, artists working with software did not have a native way to package and sell their art. In the ‘90s, net art explored what it meant to publish and distribute artwork on the internet — but there was no native way to bring those works into the existing systems of the art world. As artists have continued to embrace emerging forms of software in their work, this friction has been felt in each iteration of contemporary art’s still-evolving history.

However, with the recent proliferation of blockchain technologies, artists creating with software finally have a native way to integrate their work within the art world. They can now sell their work in the digital formats of their choice, and have their works collected by institutions and individuals without worrying about how to transfer the work, how to store it, how to display it, or how to authenticate it and keep it secure. What’s more, the blockchain provides a distribution system with built-in payment and collection, making the technology extremely useful to artists and collectors alike.

Ultimately, the blockchain brings payment, authentication, and conservation together in a seamless way that was never possible before. At a time when more and more art is produced with software and viewed in digital spaces, a wide array of artists are choosing to publish and distribute their work using blockchain technologies. As such, now is a great time for institutions to begin developing a sense of literacy in blockchain technologies, and to begin integrating software art within their collections.

What’s the current state of institutions collecting art on the blockchain?

While blockchain technologies have made it possible for emerging and established artists to have their art recognized by the art market, the same technology has also made it simpler for their work to be collected by institutions. As one example, LACMA collected John Gerrard’s Western Flag (2021) as the first blockchain-based work to enter their permanent collection. Then, in 2023, the museum bolstered their collection of art on the blockchain by adding 22 works from a group of 13 international artists. As they wrote in a press release, “the acquisition of blockchain artworks is the latest example of the museum’s longstanding support of artists as they harness technologies to express their ideas in new ways.”

In 2021, Feral File collaborated with the Museum of Modern Art (MoMA) and Refik Anadol Studio to produce and exhibit Unsupervised, a blockchain-based artwork which the museum subsequently acquired. In 2022, MoMA expanded their interest in decentralized technologies with a blockchain-focused salon, The Third Web, which focused on “the ineffable Web3” (you can watch documentation from the salon here). And in March of 2024, Feral File collaborated with MoMA to curate SOUND MACHINES, an exhibition featuring sound artworks on the blockchain from artists including Yoko Ono, American Artist, Holly Herndon, and Mat Dryhurst.

As one more example, CryptoPunks — an incredibly popular collection minted on the Ethereum blockchain — are now in the collections of major institutions such as ICA Miami and Centre Pompidou. In a press release, ICA Miami wrote, “the CryptoPunks have become icons of online identity for some of the most talented artists, technologists and thought leaders currently building the future internet.”

In 2023, beyond their own CryptoPunks acquisition, Centre Pompidou acquired 17 additional blockchain-based works — including artists Jonas Lund, Robness, Agnieszka Kurant and Sarah Meyohas. In the same year, Buffalo AKG made a historic acquisition of art on the blockchain after collaborating with Feral File on the exhibition Peer to Peer, the first survey organized by an American museum of the leading artists engaged with blockchain technologies.

This is just a small snapshot of the current state of museums’ collections of art on the blockchain and, as you can see, acquisitions are just beginning to take off. Moving forward, we expect to see many more art institutions welcoming blockchain-based works into their permanent collections, and we hope this guide can help.

(For more on this topic, this tweet includes a great rundown of traditional institutions collecting art on the blockchain.)

What makes the blockchain such a promising tool for artists and institutions?

As a technology, the blockchain is able to secure the provenance of any digital asset without trusted third parties, while including a built-in payment system. It’s also publicly accessible and can be employed by anyone, anywhere.

Think of the blockchain as a virtual computer in the cloud that can run programs called smart contracts and store data in the form of tokens. Smart contracts operate across a global network of participating computers, and this decentralized architecture is what ensures the longevity, transparency, and security of the programs and data that run on the blockchain.

A crucial feature of blockchain technology is its immutable ledger, which means that once a token (a piece of data) is recorded, it cannot be changed or erased. Tokens can represent interchangeable financial assets or unique, "non-fungible" assets — such as media, software, or other kinds of digital files.

The blockchain can be used to create tokens that represent ownership of an artwork, much like a deed represents ownership of a piece of land. They are a tool to prove ownership, track provenance, and convey payments. Art on the blockchain can comprise any type of file: some artworks require files stored on servers, some rely on code within smart contracts, and some are entirely conceptual, using the blockchain solely for transactions. Regardless of form, the core idea of tokenized art is that data is recorded onto the blockchain when an artist creates an artwork, and each time it changes hands. These permanent, interlinked records provide proof of authenticity, ownership verification, and traceable provenance.

Why use a blockchain instead of a database?

The blockchain decentralized proof of provenance and the ability to seamlessly experiment with royalties and resale rights. This has opened up new opportunities for artists and collectors to directly engage with one another in a form of permissionless innovation.

Historical context is very important for artworks. If you can track the provenance of an individual piece of art, you know its origin, you can prove that it’s not a fake, you can trace who has owned it over the years, and you can record all future changes of ownership. Tracking the provenance of physical artwork can be extremely challenging, but for digital art, it can now be fully automated using the blockchain. This is due to three core characteristics of blockchains:

1. Openness. Blockchains are built on open, collaborative protocols where everyone agrees to write data following the same rules.
2. Permanence. One of the main purposes of a blockchain is to create an immutable ledger, which is exactly what’s needed to maintain provenance for an artwork as it changes hands over years, decades, or even centuries.
3. Decentralization. A blockchain is spread out all over the world and can be run by anyone. That means that it’s not beholden to a single company whose bankruptcy could cause the loss of all records, or worse, the loss of all the artworks it hosts.

Besides providing strong proof of provenance, a blockchain also has a few other advantages thanks to the longevity of its records.

For one, it can address some long-standing inequities in the art world, such as guaranteeing artist resale rights. Per the 1971 Artist’s Reserved Rights Transfer and Sales Agreement, rights of this sort can be recorded on the blockchain and cryptocurrency payments can automatically be made to an artist whenever a new sale occurs. (Note that by default, token standards don’t ensure this type of right — it’s just something that’s possible due to attributes of blockchains, and something that’s being built into Feral File’s contracts.)

Overall, the blockchain is useful for digital art because it can easily handle things that are tricky (or even impossible) to do when you’re managing physical art. The undeniable proof of provenance and the ability to automatically provide royalties to artists on resale are great advantages that paint a promising picture for the evolving world of digital art.

What does it mean to “own” art on the blockchain?

In short, you have an electronic key that is required to “unlock” the current record of ownership for the artwork.

When you purchase art on the blockchain, a new entry is made that shows the transfer. That record is associated with a very big number called a “public key.” Then there’s another very big number associated with the transaction called a “private key,” which only you know. You can use that private key to prove ownership of the record (and thus the digital artwork). You can also use that private key to transfer ownership of the artwork to someone else.

As a collector, these technical details should be largely invisible to you. You can simply use a hardware or software wallet, which holds all your private and public keys and keeps them safe. Just like you don’t need to know all the information associated with every credit card purchase, your digital wallet should keep track of everything on your behalf by “holding” your keys and using them to manage your art collection for you.

For fine art on the blockchain, the question of your rights as the owner is similar to the question of the rights you receive once you purchase a physical artwork. Just as with traditional art, art on the blockchain should come with a signed agreement that tells you what rights have been transferred to you. The only difference is that the rights agreement for a work of art on the blockchain tends to be digitally signed, and parts of those rights could be controlled via “smart contracts” — such as the artist’s rights to a royalty payment upon the resale of the work.

Best practice for smart contract-based rights agreements is to “hash” the agreement and store it with the blockchain record, so that you can always prove that the agreement you have matches the rights that were transferred, as recorded immutably on the blockchain. (All digital-art sellers may not follow this best practice, but Feral File does.)

How do I acquire and securely store art on the blockchain?

Ultimately, you will need two things to acquire and store art on the blockchain: a source of funding, and a storage location. Your source of funding and storage location will each be addresses on a blockchain that are locked by a private key.

The Funding Address

The funding address needs to hold the funds that you will use to purchase fine art on the blockchain. This will usually require you to set up an account with a crypto exchange so that you can easily buy and sell cryptocurrency. As of this writing, Forbes Advisor recommends Kraken, Gemini, crypto.com, KuCoin, and Coinbase as the best exchanges.

Once you’ve created an account at an exchange, you’ll be able to connect a bank account, fund your exchange account from your bank, and then convert those funds into the cryptocurrency required to purchase an artwork — usually Ethereum (ETH) or Tezos (XTZ).

Once you’re ready to make a purchase, the platform where the artwork is listed for sale should make it easy for you to send cryptocurrency from your funding address, and, pending your purchase, for the artwork to be sent to your storage address.

The Storage Address

Your art on the blockchain will be held at your storage address, so you’ll want this account to be fully secure and not dependent on external sources. We call this “self-sovereign storage” because you remain in control. You can manage self-sovereign storage with a variety of hardware devices or software apps, which should contain methodologies to ensure the resilience of your storage address (so that you don’t lose it, and don’t get hacked). They do so with 24-word backups, or by using either Shamir’s Secret Sharing or multisig technology.

Here’s an overview of several of the easiest-to-use choices for creating storage addresses:

1. Ledger (Hardware Wallet; Ethereum or Tezos)

The Ledger is a hardware wallet, which means that it’s a physical device that exists solely to store keys for controlling digital assets. Not all hardware wallets support all blockchains, but Ledger supports both Ethereum and Tezos, so it’s a good choice for storing fine art on the blockchain.

See the Ledger Academy for basic information on how to use a Ledger device, and the Ethereum docs and Tezos docs for short notes on how to activate those currencies.

2. Gordian Seed Tool (iPhone App; Ethereum only)

This open-source software is available from the Apple App Store or from GitHub. With it, you can generate a cryptographic “seed” and then use that as the foundation for an Ethereum address. You can then send your art on the blockchain to that address.

See the Gordian Seed Tool Manual for information on how to use the app, including notes on “Integrating with Ethereum.”

3. Gnosis Safe (Smart Contract; Ethereum only)

A Gnosis Safe is a multisig contract that works on the Ethereum network. Its advantage is that it’s a true multisig, meaning the artworks stored in the contract can only be transferred if multiple people agree (and also that losing a single key should not cause the loss of access to your art).

A Gnosis Safe is created through their website. You’ll decide the rules for the multisig, including how many people will be needed to access your collection. This is typically done as a “2-of-3” multisig, meaning two out of the three listed addresses must agree to access your Gnosis Safe. “3-of-5” is another popular option, and can be helpful if you’re managing art on the blockchain for an institution with multiple stakeholders. .

See the tutorial from the Bankless podcast for a nice overview of this option, or visit Gnosis Safe docs directly.

Is the blockchain secure?

Overall, yes. Current blockchains use technologies that are expected to be secure into the “middle-future.”

Though it’s possible that future technologies could compromise blockchains, the most likely result is that at some time in the future you’d have to relock your ownership records using new keys.

The biggest threat to the ownership of your art on the blockchain lies in the private key that you need to prove your ownership. A key can represent a “single point of compromise,” in that if someone hacks it, they could steal the artwork. A key can also represent a “single point of failure” in that if you lose it, you will no longer be able to prove you own the work.

Fortunately, there are well-known solutions to these issues, involving “sharding keys” and backing them up using a mechanism called “Shamir’s Secret Sharing” (learn more about these techniques here).

Overall, the best way to secure your assets is to keep your private keys sharded, locked up (i.e. physically recorded and safely stored), or both. Private keys aren’t necessary for the display of your artworks, and proof of ownership is often a one-time function, so they’re not needed for everyday use. Keys or shards should simply be brought out on a scheduled basis to make sure they still exist, but otherwise they should be kept locked away, making the security of the digital art almost total.

One final note: On some blockchains a mechanism called a “multisig” can offer a classic dual-control system, creating another methodology for avoiding compromise or loss.

Is the blockchain bad for the environment?

Some news stories around 2020 talked about the high energy cost of Bitcoin, focusing on the method that its blockchain uses to verify everything written to it. That methodology is called “proof-of-work,” and for an extremely large blockchain such as Bitcoin, it does have high-energy costs (though the news stories could be considered sensationalistic, and didn’t measure comparative costs nor consider where the energy for the Bitcoin blockchain was being generated).

Whether or not Bitcoin is environmentally problematic is largely irrelevant here because most art on the blockchain uses Ethereum or Tezos, both of which rely on the “proof-of-stake” consensus mechanism to cryptographically process secure transactions. Proof-of-stake does not depend on large amounts of computing power (and thus, large amounts of energy). And, as our world becomes increasingly powered by renewables, so will blockchains.

When I collect art on the blockchain, where is the data for the digital art file actually stored? Do I need to back it up?

As we mentioned earlier, fine art on the blockchain uses decentralized technology as a kind of digital deed. Digital art is generally not stored on the blockchain itself; instead, your blockchain record of ownership will include a reference to the artwork’s location, a hash of the work, or both.

Today, digital art files tend to be stored in “IPFS,” which stands for Interplanetary File System, and is a decentralized peer-to-peer storage system. IPFS is more robust than storing your files on a private server, but nonetheless it’s best to also back up your art, which can be done with the IPFS Desktop App or command-line tools.

Ultimately, storing your digital art is your responsibility, just as it would be with any physical art. If you have it both stored via IPFS and backed up to your own file-storage system, then you should be able to trust that your digital art will remain available.

Are there legal issues related to the ownership of art on the blockchain?

The best way to avoid legal issues with your art on the blockchain is to know your rights as the collector. All the blockchain does is record a history of exchanges for your collected artwork, ultimately allowing you to demonstrate provenance and show that you’re the current owner. But you should ensure that you know what rights come along with those exchanges, preferably via a signed agreement of rights that has also been hashed and stored with your blockchain record.

Additionally, you will need to be familiar with the laws of your jurisdiction.

Are there tax issues related to owning art on the blockchain?

Again, you should be familiar with the laws of your jurisdiction. Different jurisdictions might consider art on the blockchain to be securities, commodities, or property. It isn’t settled in most major jurisdictions, either due to different agencies saying different things, or due to blockchains being deliberately left out of draft legislation.

Looking towards the future, it seems reasonable to expect that true artwork that isn’t being offered for investment purposes will ultimately settle into the same niche as physical artwork, but art on the blockchain can have a lot of different purposes, so you should ultimately consult with your financial and/or legal advisors to ensure you understand the current state of things.

Need a hand, or have questions? Reach out — we’re happy to help.

We know that beginning a collection of fine art on the blockchain can feel a bit daunting. We’re happy to offer tips, best practices, or even partner with you. We’ve worked with institutions such as The Museum of Modern Art and The Buffalo AKG Art Museum, and we’d love to help you, too. You can contact us directly at support@feralfile.com.