Freeport Looks to Provide ‘Ownership For All’ Through Tokenized Art
Tokenization has been the most radical development in the art world of late. Traditionally, acquiring fine art has been a privilege enjoyed by the affluent. However, tokenized art has changed the notion, as it has helped the space grow more equitable, democratic, inclusive, and accessible by making fractional ownership possible.
The latest available numbers suggest – besides the mainstream global market of fine art, worth US$65 billion – the online tokenized market has been growing in parallel. It has crossed the market of US$2.5 billion in designated platforms. And one such platform that is helping leverage this surging market is Freeport.
Freeport: Helping Own Equity in Legendary Fine Art
Freeport helps you hop the bandwagon of globally revered fine art by letting you buy, collect, and sell exclusive fine art pieces at a fraction of the total cost. You get tokenized equity backed by tangible assets as your mark of ownership for some of the rarest art pieces you have always craved but never imagined to have owned.
Access to the Freeport app implies you can set up your 3D gallery. It offers you virtual space to load up your wall with fine arts and NFTs. You can explore existing galleries virtually and share your customized, unique collection with the help of a click.
The Evolution of Freeport: Benefits of Digital Securities and Democratizing Investing through their Use
The concept of Freeport in the real world dates back to the ninth century BC. Many freeports came up in Italy in the 1700s in cities like Genoa, Trieste, Venice, etc. Freeports helped host large amounts of high-value goods without paying customs duties on imports and bypassing tariffs on sales. Over time, freeports came to be seen as zones where the rich would concentrate their wealth. They would leverage these high-security facilities to keep their wealth hidden in assets like fine art.
The Freeport app has turned the notion of freeport into something good. Something considered an area for accumulating wealth, away from the reach of the prevailing tax regimes, has been turned into a provision to democratize the ownership of high-value things. The purpose of the Freeport app is to take accessibility to great value beyond the uber-rich. Web3 and blockchain technology make it possible to digitize and expand the stored value of an asset.
Democratization, equitability, and inclusivity – properties that Freeport introduces also make it possible to enjoy visual art without any restriction, prohibition, or fear. Since they are in digital form, there is hardly any need to hide high-value art. Also, one can openly deal with it since there is enhanced transparency. The in and outflows are so transparent that one can not use these deals to evade tax or launder money.
Digital Securities: The Core of it All
If you are still unsure about the Freeport app's benefits, here is a brief overview of how digital securities work to consumers' advantage. Industry leaders like ATKearney, Ashurst, and Securitize came together to publish a report on the estimated future opportunity worth US$1,600 trillion securities digitization represents.
At their core, digital securities, similar to cryptocurrencies, run on blockchain technology. Moreover, they signify a digital representation of ownership of an underlying asset, which could be fine art.
The benefits of digital securities that lead it to command over such a large market are multiple. They offer increased liquidity, with trades and settlements happening instantaneously. It is convenient to track the progress by maintaining and keeping accessible capitalization tables on a real-time basis.
Digital securities are cost-efficient as their upkeep is possible at a fraction of the cost and effort required in a paper-based system. Programmable digital securities seamlessly comply with regulations. Programmability makes it possible to make them do so according to the specifications laid out in a particular jurisdiction. Overall, it helps in cross-border trade. Furthermore, digital securities are more accessible because of the lowered transaction costs, resulting in lower investment requirements.
All these benefits of digital security introduced to the field of global fine art are what the Freeport app brings to consumers. And it is in line with the prevailing practice of tokenizing luxury goods.
Tokenization of Luxury Goods: A Tested Reality
The tokenization of luxury goods has seen immense success as a way to make high-value investments a possibility for everyone. Everyone could benefit from the appreciation in prices of these goods.
A few years back, a company released more than one million tokens, backed by a 1.1 million dollar Ferrari. Shareholders could own the Ferrari fractionally for a dollar. Now the car is worth US$4 million, with the value only to increase further in the coming years.
Since it is not in someone's possession and is safely stored in Stuttgart, owners would not have to worry about or pay for the maintenance and safekeeping of the car. The project's success inspired the company to launch 500 collector cars in tokenization platforms.
In January 2022, Scuderia Ferrari, the racing car division of Ferrari, announced its agreement with Swiss blockchain developer Velas Network AG to make it possible for many to actualize their dream of owning a Ferrari through digital collectibles.
The Art World witnessed similar success. For instance, 14 Little Electric Chairs, a work by Andy Warhol, saw its value going up to US$5.6 million with its launch into a tokenization platform. Tokenization made it possible for thousands of investors to own a share of the work.
Investment through tokens has also eased investments in assets that need efficient safekeeping. For instance, one needs special refrigerators to store collectible wines. The price of these refrigerators can be in thousands of dollars.
But fractional ownership of these luxury items through tokens makes it possible to leverage the benefits of the asset without worrying about its preservation. Also, it helps keep the assets liquid as one can sell their share as and when they choose, without worrying about customized transportation systems for perishable luxury items.
Philip Capital, an Asian Financial House, decided to tokenize fine wine as digital securities. It introduced ‘En Primeur tokens (EP)' in collaboration with Singaporean private securities exchange Alta for fine wine to be bottled this year, where each batch will comprise 16 wine labels totaling 36 bottles. The wines will be sourced from some of the most well-known vineyards of Lafite Rothschild, Haut Brion, and Mouton Rothschild.
Following a similar style, Singapore-based full-service capital market platform ADDX tokenized French wines sourced from Burgundy wineries. The primary subscription of the wine tokens was available at 0.83 Singaporean dollars, with the minimum subscription size set at 1,000 tokens or US$830.
In this well-tested tradition of tokenizing luxury items, the Freeport app brings new colors and introduces new dimensions, especially with its Warhol Collection, due to arrive in Spring 2023.
The History of Andy Warhol Tokenization
As mentioned, it was in September 2018 when Andy Warhol's 14 Small Electric Chairs, created in 1980, was sold to eligible participants on Maecenas, a blockchain-powered art investment platform. The London-based Dadiani Syndicate, a well-known fine art gallery, facilitated the sale. Not only the tokenized sale of a famous artwork attracted more than 800 sign-ups within one week, but the auction also raised US$1.7 million for 31.5% of the artwork at a valuation of US$5.6 million.
Similar efforts were made in the recent past when in November 2022, Sygnum, a Swiss-regulated digital asset bank, partnered with art investment company Artemundi to tokenize Four Marilyn, an iconic Andy Warhol artwork. Sygnum arranged the sale with provisions of fractional ownership of 5,000 digital security tokens.
Apart from owning a fraction of the artwork, it is also possible to purchase Andy Warhol wallpapers in diverse styles and designs. And it will be in Spring 2023 that Freeport will feature a Warhol collection through tokenized securities.
Freeport: What the Future Holds
In the future, Freeport plans to include NFTs, which are increasingly being viewed as securities. Industry experts believe that categorizing NFTs as securities will only make them more powerful and promising. There are many advantages.
For instance, the art market has always been a securities market, where purchasing artwork equals investing in an artist's catalog raisonné, which is only going to appreciate, especially if you are buying works of the likes of Andy Warhol.
Secondly, if we consider purchasing artwork from an accountant's perspective, its corresponding ledger entry is accompanied by an object, a well-packaged canvas in this case. The NFT market follows the same principle. It trades ledger entries directly in place of dealing with a physical object.
Since the object requires efficient maintenance to stay well in the long run and appreciate, keeping a physical is cost-bearing. An NFT, removing the object from the scene, gives you a cheaper way to trade art and benefit from it.
Freeport venturing to accommodate NFTs would imply an efficient way to own a fractional interest in the commercial goodwill, which revered famous artworks always carried with them but stayed mostly out of reach for the commoners. At the same time, it will open up avenues for new artists to fetch a more justified price for their artwork.
The job of investing in fresh artwork from emerging artists is often tempered with unnecessarily high caution. Moreover, with fractional ownership's ability to distribute the risk across a set of holders, digital securities and NFTs can facilitate art to thrive across different quarters. So, ownership for all will become a lived reality from a mere slogan!