Bridging Art and Blockchain through Digital Certification

Dave:
Welcome to this episode of Do the Woo. We’re talking Emerging Tech, and today we’re talking with Robert Norton from Verisart. Hi Robert, how are you doing?

Robert:
Good. Great to be here. Thanks for having me on the show.

Dave:
No worries. And I should probably say I’m your host, Dave Lockie as well. So I guess a bit about you, Robert. You’re the CEO and founder of Verisart. What came before that and what’s your journey been like as an entrepreneur?

Robert:
For the last 15 years, I found myself at the intersection of art and tech. Prior to Verisart, which is a platform that started doing blockchain certification for the art and collectibles market, I was running a company called Sedition Art, which was, in a way, one of the first platforms that sold digital limited editions by well-known artists. Now, of course, we come to know digital limited editions as non-fungible tokens and NFTs, which I know we’re going to get into later. But it was my time at Sedition between 2010 to 2013 that really got me thinking about how artists can find new audiences in other mediums. The principal medium of most of the artists we worked with at Sedition was physical, not digital. Prior to that, I was the founder and CEO of Saatchi Art, previously known as Saatchi Online. We turned it into an e-commerce enabled platform where artists who didn’t have any gallery representation could have a platform to show their work and sell directly to consumers. So, we did a lot of that heavy lifting for them. In some ways, it’s analogous perhaps to Etsy, but with more focus on independent working artists.

I guess why did I end up in this sort of strange intersection? Probably because, in the back of my mind, I wanted to do something in the art world. Both my parents did art degrees, my grandfather was a restorer, so I grew up in a household where the idea of unauthorized or authorized reproductions was quite prevalent. You’d often see, in the case of 19th-century works, studios like Joshua Reynolds would have many works of the same coming from the studio, some of which just worked on by his studio, some of which he worked on in parts, and some of which he worked on entirely. This area of multiples was really interesting to me. The aha moment with Verisart was looking at the case of the Knoedler Gallery, which came to the press around 2015. One of the oldest galleries in New York was found guilty of selling fake Rothkos, a well-known post-war artist in the states, selling these works by the dozen in modern times, in 2015. It wasn’t just unwitting people that should know better, but people like the chairman of Sotheby’s themselves. I was thinking this is a real problem when you have such trust in authorities that are clearly not able to be trusted. I thought about how to improve trust with the advent of distributed ledger technology. We’ve been tackling that problem now for almost 10 years.

To give you a little insight before that, I started my career back in ’95 at America Online, initially in business development, then running e-commerce, and then did a bunch of startups from health to games. I was the person that launched King.com in North America. So, I was the first managing director for King.com in North America. My whole career has been in consumer-facing e-commerce, as I would describe it. While we’re not a marketplace at Verisart, we do help people with their drops and their releases. We’ve now started offering a token gate app print service, which takes us closer to revenue-generating opportunities for artists as well.

Dave:
Amazing. What strikes me about your founding story is that this was not just a love of art, but a very personal relationship with art. It was all around you, with artists and with people who were trying to make a living with art, the artists themselves, the people around that industry, the restorers, the galleries, the marketplaces. This is obviously a very deeply connected and personal mission for you.

Robert:
I think Steve Jobs said, you can connect the dots looking backwards, but you don’t necessarily connect them moving forwards. I didn’t necessarily feel it as personally, but now I think it makes sense. My wife also has a gallery that we work with, and I met my wife through my interest in art. So, I guess we’re very much an art family at this point. But really, it was the advent of blockchain technology that inspired me to do this business. One of the artists we worked with at my former company, Sedition Art, is Casey Reas. Casey is also the co-inventor, along with Ben Fry, of a language called Processing, which enabled artists to generate their digital art with a rules-based programming language. It was Casey who wrote to me in 2014 and said, “Hey Robert, looking at what you’re doing at Saatchi Online and Sedition Art, I think this technology has real potential for certification of verification purposes, both for physical and digital art.” That got me thinking about how blockchains work, mechanisms to trust a timeline, and commitments to that timeline. It felt like a good application for some of the problems we were facing with our provenance certification. In a nutshell, we were taking the certificate, typically issued by some sort of authority, maybe an estate, studio, or gallery, and the provenance, which is another fancy word for the story—the agreed story around the history of that object. That may include exhibition literature as well. We were taking the registry—who’s ultimately responsible—and binding the certificate, provenance, and registry together by shared distributed ledger technology standards. I think it makes for a stronger provenance. That’s what we’ve been doing at Verisart.

Dave:
Yeah, really interesting. Maybe you could talk to us about what that journey’s looked like. Has it been one with a lot of pivoting, large or small, or has it been more a case of feeling like you’ve got the right solution, but the job is to educate, make aware, and onboard? How would you describe that 10 years?

Robert:
Ten years ago, a small percentage of households owned crypto, and now we’re well into double digits, depending on certain age groups. I think it’s up to 40% in some age groups. As a whole, it’s about 20% or so of households in the US that now own crypto in one form or another. We’ve come a long way, and sometimes people talk about the number of households that own crypto paralleling the growth in the number of households that went online in the early days of internet service providers and online services. Whether those correlate correctly, the point is that we’ve grown from a very small base to something that feels closer to mainstream, although it’s not yet at mainstream levels of adoption. We’re not past a 50% threshold in most markets, except for a few perhaps like El Salvador, where Bitcoin’s become an alternative national currency.

If I could characterize what it was like in 2014, I was at this Scaling Bitcoin conference at Stanford University. There were literally probably about 200 people in the community that then went on to build aspects of the blockchain infrastructure we’re familiar with today. That was probably the size of the industry for well-known players at that point. It was very small, and even at conferences, you would struggle to get more than a thousand people to show up. Now we’ve got huge conferences from DeFi to NFTs to staking, to wallet providers, new L1s, which is layer one blockchains, new roll-ups, and L2s. The industry has really evolved. Back in 2014, 2015, I spent most of my time explaining what a blockchain was and why the words art and blockchain were in the same sentence. Now, because of the NFT boom and bust we witnessed in 2021, no one really questions why the words art and blockchain go together.

We’ve come a long way in terms of people’s understanding of what this technology can do, but we’re still set back by the early years in terms of the bad actors in the space. We’ve seen arrests of the principals of FTX and Binance, and bad actors erode consumer trust. That’s very unhelpful when you’re trying to bring new technologies to market. In some ways, it was like two steps forward, one step back, but we’ve really come a long way over the last 10 years. As a result, we can start focusing more on the applications and less on explaining what’s beneath the hood.

Dave:
And I think because there’s such a visual representation—maybe the only visual representation of crypto technology that most people can find—it has that artistic element to it. There have been a lot of bad actors, and the worlds where art and finance meet are often murky and gray anyway. When you accelerate that with the petrol of the internet, there have been a lot of problematic NFT projects. I can imagine that’s been particularly challenging for you. You’re certainly right, there are lots of data points, but the trend line is increasing adoption, increasing awareness. Now you mentioned this idea about mainstream, and one of the conversations I hear in crypto is that crypto will be mainstream when people are using it without knowing that it’s crypto. I noticed that at Verisart you take a very deliberately technology-inclusive approach to describing what you do. How often do you find yourself in a situation where you’re trying to explain Verisart to somebody who is utterly naive and ignorant to crypto and blockchain? Do you ever find success in converting those merchants or artists, or is this always a more progressive and educational sell where they have to get some foundations before they can see the value in what you do?

Robert:
We’ve got a good history of working with artists, and we were one of the first external curators on SuperRare, which is a well-known premium platform for unique digital artwork. So one-of-ones is what they’re often referred to

. Back in 2021, because of my time at Sedition, where we worked with many well-known artists from Damien Hirst to Bill Viola to Tracey Emin and Shepard Fairey, Christian Boltanski, Yoko Ono, we probably worked with a hundred of the world’s top contemporary artists during my time at Sedition. It’s still continuing to this day. That experience of speaking to an artist and understanding what they want to release as a digital edition, can we help them, have they got the facilities to do it in-house themselves—this discussion was more complex during the NFT boom and bust because there were things like needing a wallet, a smart contract, and deciding under which smart contract to mint. But we were able to have those discussions because we understood the issues ourselves. We’ve done a huge number of inaugural artists’ NFTs. Whether it’s Roe Ethridge, William Wegman, Shepard Fairey, Petra Cortright, or Neil Beloufa, a lot of well-known artists’ inaugural NFTs. They came to us because they were somewhat confused by this landscape and they wanted somebody they could trust to guide them through the process. We did two drops with SuperRare, 10 by 10 and 8 by 8, focused on inaugural artists’ NFTs. We also did Artsy’s first NFT drop in early 2022, which included 22 artists. So, we’re absolutely in the business of handholding.

When it comes to looking for our audience and the actual users of our service—the SaaS users or the people that are subscribed to our software—we’ve found it’s very hard work dragging someone along to the drinking trough. It’s better if they’re already there by the waterside and you can perhaps help them more effectively. We’re not so much in the business of telling people they need to use blockchain technology, but more in the business of explaining how we can provide a good service for people who are already looking in that area.

Dave:
Cool. Yeah, that makes sense. As a small business, you have to focus on what’s achievable within your resources and timescales. I’m sure a lot of the awareness work you’re doing is going to have a knock-on effect further down into the future, but you certainly have to be judicious with the way you’re putting that target of energy. One thing I think about quite a lot, and this is with NFTs generally, not just art-based NFTs—of course, there’s some philosophical conversation about what is and isn’t art—whenever you use a new medium or format for art, it brings new constraints and opportunities creatively. With digital, it allowed for, for example, algorithmic generative art. However, then when you take digital art and put it on-chain, that also changes the format and the medium. What I’m thinking about here is the public nature of interaction with that art—who minted it, who collected it, has it been sold on secondary, what’s the price trend, all of that. My question is, to what extent is that interesting and exciting and offering new opportunities to artists where they may have had glimpses of that historically, seeing their art for sale or auction or whatever, but now they have this opportunity to be directly in communication with people that hold their art because if you both have wallets, there are plenty of ways to contact each other.

Robert:
There’s a lot to unpack there. The first is, obviously, art is now as easily tradable an asset as an NFT, as the fungible token—Ethereum, Bitcoin, Solana, or Tezos. These chains are in the business of minting coins and having people speculate on the value of those coins and the value those networks will accumulate. Remember, they all sit within the same type of wallets. That was never the case with art before. You had a painting, it may have been an asset, but it didn’t sit within your bank account, and you could trade it like you could trade pounds, dollars, or euros. You’re absolutely right to bring that up first. What the blockchain did, and particularly NFTs, is it basically meant that all the digital art released as NFTs were now effectively like financial instruments. That’s why you suddenly saw crazy amounts of speculation and wash trading, and activities that created these elevated floor prices for works that were sold or given away. The use of CryptoPunks or Bored Apes in these 10K drops became the symbol of the height of the market, where algorithms were spinning out 10,000 different variations of a theme. They were sorted by traits—certain rare backgrounds, shapes on their heads, laser eyes, etc. Artists started to use traits around art, and it became very confusing for a lot of people to determine what is art and what is just PFP—a personal profile picture. Some of these also became very valuable assets like the Punks and Apes.

I think that’s all now beginning to shake out. The challenges for artists probably outweigh the opportunities because artists get exhausted by having to maintain a constant dialogue with their community. The community can turn on them if the financial returns go down. It puts a lot of pressure and stress on the artists. Traditionally, artists have had dealers to remove some of their need to be there talking to their collectors. Healthy, protective art communities exist. The Art Blocks community, which we work with closely, and the generative art community are small and protective of one another. That’s a good example of a healthier discourse, but it’s not completely removed from those who just want to speculate on digital art as an asset and feel disappointed when prices don’t go their way.

The first thing is that art is now more of a tradable instrument than it was. It attracts speculators, and speculators outweigh collectors. We’ve seen that with the rise of marketplaces that don’t enforce artist royalties. That’s symptomatic of more speculators than collectors still in the market. We’re currently doing a show at Gazelli Art House called “Awaken and Metamagical Hands,” which includes pioneers like John Maeda, Golan Levin, Joshua Davis, and Leah, as well as younger artists like Robbie Barrat and Lauren Lee McCarthy. All these artists could have solo shows themselves, but they’re still trying to understand the role of algorithms in their relationship to others or even to themselves. Lauren Lee McCarthy, a professor at UCLA and the Design Media and Arts lab along with Casey Reas, has created an installation called “Saliva Exchange,” where people can come in and spit in a vial, write a few things about their saliva, and share it with someone else. It’s a conceptual piece addressing questions around the way algorithms are based in life and how that changes our interactions and notions of modern-day intimacy.

Different artists are exploring different digital trends—some using midjourney or OpenAI algorithms for generative video and art, others building their own software, and others focusing on conceptual fields. It’s an interesting time. However, the principal responsibility of an artist is to create art, not to pump their communities. Those artists who shot to fame by pumping their communities may not be the ones that last from a museum or historical standpoint.

Dave:
Yeah, interesting. Digital and blockchain art has been extremely disruptive, and that disruption continues. There are some emerging trends—very art-focused communities that are positive and nurturing, and people pushing the boundaries of generative and on-chain art. There’s still a lot more emergence to happen. Let’s switch gears a bit. We’ve mainly talked about art and blockchain so far. I’d like to bring this back down to earth for a Woo audience. We may have merchants listening who are selling art or interested in how they can use NFTs to enhance what they’re doing with e-commerce. We almost certainly have agency folks who would love to get their teams working with some of these technologies. They’re thinking about which of their clients might want to use this technology, what success looks like, etc. We talked about art being wrapped in these digital tokens. Digital assets are tokenized and put into common digital wallets. This extends to real-world assets as well—cases of wine, physical artwork, fractions of an old Mercedes, etc. If you’re just issuing NFTs and transacting on-chain, you don’t need a traditional e-commerce setup because you can do this through marketplaces. The whole idea is that you don’t need fulfillment because it’s all digital. You don’t need a traditional payment processor and checkout because it’s all based on wallet signatures and digital asset transfers. Yet, there is a lot of e-commerce happening where you do need e-commerce—you need to take delivery, accept orders, worry about tax and payments, and everything else. Where do those two worlds intersect? What does a merchant or a success story look like where you get those two things? Verisart operates in both purely digital and intersectional worlds through integrations with WooCommerce and Shopify.

Robert:
It’s super helpful when the certification is happening at the time of sale because otherwise, if you’re creating certificates on Verisart.com and doing your sale through some other mechanism, there’s always going to be a lag between the sale, the invoice happening on some platform—whether it’s your own, a third-party marketplace, or offline. We’ve always felt it’s helpful to close that gap in time for the certification at the time of transaction. With NFTs, you can mint and list the NFT later, but mostly people mint and sell the NFT at the same time. In the early years of Verisart, when we didn’t have any e-commerce integrations, people used us, but we didn’t see enough transfers of the certificates. We wanted to make that easier for people. About five years ago, we did our first app with Shopify. We’re super happy to have launched our WooCommerce app this year. We’ve learned a lot from our time on the other marketplace platform in terms of building a good app from day one with the WooCommerce audience. Our app allows people to certify products, whether physical or digital. We support minting NFTs or tokens. One thing we don’t support is fractions of an object because once you start offering fractions, you’re into the world of securities regulation, which we stay well clear of. Also, fractionalizing an artwork isn’t necessarily where there’s real demand for fractionalized opportunities. Fractionalizing businesses that provide you a yield or return that can be valued is more of an obvious first spot than fractionalizing an artwork because there often isn’t consensus around the price for unique artworks.

For WooCommerce merchants, we’ve seen a big trend in collectibles and a broader definition of luxury. If you thought about luxury historically, you might think of handbags, cars, and rings, but not hoodies and sneakers. But clearly, that is part of modern-day luxury. On Verisart, if you’ve got a collectible with an authority like a living creator or a trusted business, that’s a good opportunity to improve your current certificate of authenticity with digital certification branded by your store that can be verified by new owners in real time. That’s the core of our business. We have lots of different types of businesses using our certification—from custom champagne bottles to special golf clubs to digital prints and photography.

A good example is Johnny Depp. He built a community of NFT holders and sold those NFTs through a native Web3 drop. He then wanted to give something back to those NFT holders—allowing them to have a print of their NFT. These NFTs are part of his artwork, his friends, and they look like pop-up images. There’s a need for orders, and there’s a lag between placing the order and receiving the purchase. You get out-of-the-box order management and porting. In his case, he spun up a Shopify store and used Verisart to certify his prints. When you think about merchant needs, whether they’re Web2 or Web3, Verisart helps with certifying products, physical or digital, and minting NFTs. We’ve come a long way in giving people the tooling to build their own Web3 marketplaces if they want to. Merchants that already have a significant presence through their own website might also be on Amazon. You might have a merchant with its own domain using WooCommerce but also selling on Amazon. It’s helpful to have your own URL for those digital assets to live alongside physical ones because increasingly, they have a relationship. You buy a physical asset, maybe it grants you a token, which is a form of membership. Now you are closer to that artist’s world. You might give away that token for free. We support buying a token that allows you access to purchase a print or exclusive product at a reduced cost or ahead of others. There are a lot of ways digital and physical can complement each other. Artists are experimenting with these two mediums and offering experiences together. For example, the show we’re co-curating at Gazelli Art House in London has artists using Verisart to certify their prints, and the prints are certified as NFTs. We’re constantly looking for better ways to provide merchants and creators with tools for certifying their objects, whether physical, digital, or mapping the relationship between the two.

Dave:
I guess there’s a double-edged sword of this potentially being a tool artists can use to build and engage with their community, but not all artists. There’s nuance and unpacking to do around that for individual artists as they try to get that balance right. One thing you hinted at is that you might buy the digital token first, which gives you the right to buy a physical print or redeem it for some sort of experience later on. That fundamentally changes how art can be paid for. Instead of the artist creating art and hoping they can sell it, they can pre-sell it or fund the collection through pre-selling. Is that what the CryptoVenetians did?

Robert:
Yeah, we work with Bright Moments. We did the finale with them in Venice earlier this year. That’s exactly what we did. We had a poster only available to the holders of tokens from that last city, which was a thousand tokens minted during Venice, Italy, just after the Biennale this year.

Dave:
That was such a good documentary. I can’t find it online yet, but I watched it at a screening. It was really good fun, very heartwarming. I’ve got two more questions for you, one a bit of a double-barrel. What’s the difference between a receipt and a certificate of authenticity? They both have similar attributes, right? A receipt can improve the secondary resale value of something. It has some element of proof of authenticity. I think it’s stupid we haven’t created digital infrastructure for receipts. We can spend, but we don’t get digital receipts back automatically. For example, the best way to know how healthy you’re eating is to analyze all the receipts you get from takeaways and supermarket shops. What’s the difference between a receipt and a certificate of authenticity, both in terms of the nature and what that offers in onward value?

Robert:
In the case of token-gated prints, we incorporate the order number as part of the certificate of authenticity and the token ID used along with that order number. We have patents at Verisart for handling certification. On one end, you’ve got an unverified record, where I’ve said something about an object, but no one knows who I am or if what I’ve said is true or false. It’s the lowest amount of waiting. Then we have an issuer certificate, similar to a receipt. The retailer of the object says that this thing is true. When you’ve got an artwork where the retailer is not the creator, the certificate of authenticity is where the creator has authorized that statement. Finally, we have a certificate of authenticity plus, where there’s a physical identifier on the work like a QR tag or an NFC tag.

The core part of Verisart is that the certification can change state depending on the consensus, most importantly the creator. The problem in the past has been that the receipt is often the last thing the creator hears about. The collector gets it, but the creator might be told, “Oh, that receipt didn’t quite happen until maybe a year later, so we don’t owe you any money.” Verisart puts the creator more in control because they know when their certificates are transferred, there is a transaction out there. That’s helpful from a creator perspective. While there are similarities between receipts and certificates of authenticity, they are fundamentally different. Receipts require the issuer to be present in the future, and the issuer must remain trustworthy. One of the inspirations for Verisart was that issuers of these receipts were actually sending out fake works. The receipt was fine, but what it pointed to was fake. There are still challenges in the Web3 world with how NFTs have been construed. Transactions are correct, but what they point to may be incorrect. Verisart is actively trying to address this by building more trust at the time of transaction and ensuring the creator is present in terms of their authentication of the work.

NFTs as COAs is interesting because even if Verisart goes away, you’ve got an on-chain record that Verisart verified and can go along with the transaction. It future-proofs your investment when those intermediaries are no longer around. A lot of merchants don’t make it past 10, 20 years, so who will determine whether that receipt is valid if the merchant can’t authorize it?

Dave:
Yeah, interesting. Last question, around NFT market sentiment. We went through a big boom cycle. NFTs alongside DeFi were one of the two big trends driving a lot of narrative, volumes, and arguably innovation in crypto last cycle. This cycle, while we’ve seen some things emerge and become clearer, we’ve also seen the floor prices drop significantly across many blue-chip NFTs, and there’s a lot of uncertainty in the market. How do you think about that? You’re using NFTs very specifically and deliberately, rather than the popular conception of a monkey picture, but nevertheless, the broader context for NFTs must be impactful. Do you think in a year’s time we’ll be like “NFTs are so back,” or will it continue to be murky for a while longer? How do you see this sentiment resolving?

Robert:
Early internet, we had titles like Director of E-Commerce and Chief Multi-Webmaster. These terms fell by the wayside and became incorporated into tech or marketing. No one thought of online as an option; it became a must. We’ll get there with tokens and digital assets. The term NFT has been tarnished, and even Web3 has become caught up in that. When people used Facebook, they didn’t think they were on a Web2 platform; they just had a better online experience. I think we’ll get there with Web3 as well. Having a token will allow you to move more seamlessly between platforms, making the experience of being in a community or having a loyalty scheme smoother. We’re at the early stages of building that infrastructure. From an authentication standpoint, it makes sense. Token gating was complicated, but now a token allows you to do things more fluidly. Digital assets are here to stay. The language is still up in the air, whether we’ll use the term NFT in five years or just digital art or digital assets.

We’re still big believers. It’s been a rough ride, and floor prices have dropped, but there’s a more mature understanding of the market now. Some NFTs are surpassing their auction highs from the height of the market, particularly those artists who have crossed over into the fine art community. Generative art is here to stay, and tokens among merchants are becoming more common. We’d love your merchants to try our app on the WooCommerce store and get in touch with us directly. We do custom development for merchants but also put as much in our core product as possible. Right now, on WooCommerce, we support minting and certification. We’ll be adding additional functionality as the app evolves.

Dave:
Perfect. Thank you for letting people know where they can get ahold of you. Last question: as someone with insight into the brave new world of luxury consumerism, what’s the most unexpected luxury thing you’ve had a certificate of authentication for through Verisart?

Robert:
We have two things that were surprising. One is a very high-end watchmaker based in the Middle East. These watches are real works of art, costing more than most works of art, starting at $50,000. That was unusual for me to see such a high

-end product being certified on Verisart. The other is amazing calligraphy designs, carved in wood and highly intricate, also from that part of the world. We also have a Maori arts collective doing art from New Zealand. That’s the great thing about my job—we’re always seeing new ways creators and merchants find to certify their creations.

Dave:
It must be wonderful to live at that intersection between technology and art. It’s been wonderful talking to you, Robert. I’m very grateful for your time and insights.

Robert:
Likewise. Thank you for having me on your show.

Dave:
Take care.