Jorge Espinosa, managing partner with Espinosa Martinez in Miami.

They say that beauty is in the eye of the beholder. However, the world of art is not just about beauty. It is about originality, creativity and source. When you buy art that catches your eye you want to be sure it is genuine. With digital art, this has not always been possible because digital files can be easily copied. Here is where the modern technology of Blockchain has merged with art to create a thriving new digital art marketplace.

Blockchain is the hot topic in business and system design these days. At its simplest terms, Blockchain technology is a highly encrypted, redundant set of digital ledgers to which you can add presumably incorruptible blocks of information. These digital ledgers are kept in multiple locations and the changes are checked so that only legitimate changes are made to the chain. So, for example, if someone purchased a car using a Blockchain transaction and then each service call or transfer of ownership were added as information blocks to the Blockchain as they happened, you could safely purchase the car knowing its entire history since purchase. In fact, when you bought the car your purchase information would become another block in the chain and would be part of the unchangeable record duplicated in these ledgers for future buyers. Blockchains and smart contracts are far more complex than this but for our purposes, this explanation should suffice.

Since authenticity or, as it is generally referred to in, provenance is so important to art and so hard to establish in digital works, Blockchain is a godsend for digital art. An artist can create a piece of art, link it by a unique digital key to a Blockchain and not only the origin, but all conditions of its creation and subsequent transfers of ownership or value will be permanently documented in the Blockchain. This is exactly what has been happening.

One of the first and most popular forms of Blockchain art was CryptoPunks. These were 10,000 unique 24×24 pixel drawings of punky looking guys and girls with a few rarer ones of apes, zombies and aliens. These unique tiny works of art were developed and sold on the popular Ethereum Blockchain platform. When you buy a CryptoPunk, you know that you own a verifiably unique piece of art from a limited set of 10,000. You can then buy and sell these digital drawings at auction to other Ethereum users using the Ethereum crypto currency called Ether. CrytoPunks often sold for less than $100, but some are selling at auction for upwards of $5,500.

A slightly different approach to Blockchain art was taken by the Rare Pepe folks. A Rare Pepe is a digital trading card showing sometimes wildly whimsical versions of Pepe the frog, a meme that has been around the internet since 2005. You buy Rare Pepe cards by opening a Rare Pepe Wallet to buy and sell the cards using bitcoin. The cards are assets on the Bitcoin Blockchain and each one is unique. One invocation that the Rare Pepe community adds is that you, the user, can draw your own digital Rare Pepe drawing, place it in a digital card frame and submit it to the community. Your art can then become another unique Rare Pepe artwork that can be bought and sold at auction. Last year, a Homer Simpson Rare Pepe digital card sold for the bitcoin equivalent of $39,000.

Yet another Blockchain art market that pushes the vision of digital art is Cryptokitties. Cryptokitties are digital renderings of kittens with unique colors and patterns. As with Cryptopunks, a limited initial set was produced. In the case of Cryptokitties, only 50,000 were created and added to the Ethereum Blockchain. What makes Cryptokitties different is that you can pay to breed (yes I said breed) two Cryptokitties and the smart contract (software program) that governs the art will create a unique new Cryptokitty that you can buy and sell at auction. In other words, you can increase the number of Cryptokitties by creating new generations created from combinations of the previous generations. In December of last year, a Cryptokitty sold for $120,000 and total Cryptokitty investment allegedly exceeds $11 million.

While traditional auction houses are still not selling Blockchain art directly, they have not been inattentive of this growing trend. London-based Christies, one of the oldest auction houses in the world, is starting a pilot program with Artory to record art transactions on the Blockchain creating a verifiable ownership record. In September, Maecenas, an art investment platform built on Blockchain, sold tokenized interest (where different bidders get a piece of interest in the work) in Andy Warhol's “14 Small Electric Chairs (1980).” The auction sold 31.5 percent of ownership rights for the two-meter high painting, raising around $1.7 million.

Paying tens of thousands of dollars for a Rare Pepe or a Cryptokitty may seem crazy to you but, as this craze grows and develops, it might be worth your time to know what art is growing on the Blockchains. Who knows? You might discover and own the next digital Picasso.

Jorge Espinosa is managing partner with the Miami intellectual property boutique law firm of Espinosa Martinez. He focuses his practice on the domestic and international protection of trademarks, patents and copyrights. He may be reached at [email protected].