Posted: February 21, 2018 -
The Codex Title Registry is an innovative platform striving to create cutting edge applications that directly impact the Art & Collectibles industry. Following from our ongoing interest in the ever-growing developments in the worlds of blockchain technology and recent release of our specialised report, we sat down with Codex Protocol to chat about their work and the increasing impact that this technology has on the world of art and technology.
Can you tell us a bit about Codex and your application Biddable? What are the aims behind the company?
Codex Protocol is a decentralized title registry for the Art & Collectibles industry. Our aim is to provide much needed infrastructure for the Art & Collectibles industry by providing an efficient means of storing provenance information whilst at the same time giving collectors the privacy they need. It is designed such that third parties can build on top of it, and we will work with stakeholders to design and build suitable applications. A title registry can make the storage and verification of provenance information simple which is useful for a wide variety of stakeholders such as insurers, asset-backed lenders, marketplaces, artists and more. The first application we are building is Biddable. Biddable will allow bidders to bid anonymously at auction and to buy at auction using cryptocurrency instead of fiat.
What are your thoughts on the current art market?
The art and collectibles market has, over hundreds of years, provided an uncorrelated store of value to collectors. Returns over recent years have shown that art and collectibles can outperform other asset classes. For example, classic cars have produced a return of 457% over the past ten years. Some current trends in the art market, such as a decline in auction sales in favour of private sales, show that collectors continue to prioritise their privacy. That’s why we’ve designed Codex and Biddable in consultation with the industry.
You were recently recognised at the World Crypto Economic Forum in San Francisco, winning the Token Pitch Competition. Can you tell us about this fantastic achievement?
Winning the Token Pitch competition and a special nomination at the World Crypto Economic Forum was a fantastic start for Codex Protocol. We were really excited to receive such great reception from a panel of global expert judges, particularly given how many other great projects there were among the forty participants. Most of all, the win really validates our thesis that this is a great application of blockchain technology with potential to have a significant impact.
What do you think is it about art that makes it such a unique asset class?
Art & Collectibles is a unique asset class because they are typically unique goods for which provenance is the primary value driver. This means that record keeping is more important in this asset class than any other. And yet, despite this, there is no title registry. This is understandable given the privacy requirements of the industry but for the first time, blockchain enables us to create a decentralized title registry where we can both preserve information whilst also retaining privacy. We anticipate that this can really help the asset class to expand.
How does blockchain technology help with issues faced by collectors and buyers of art? How do you see cryptocurrency impacting the way that collectors and buyers interact?
By placing provenance as the center of the protocol, blockchain technology can help with a large number of issues faced by collectors whether this be proving title, authenticity, provenance information, insuring works, using works as collateral for loans and more. We are starting by providing solutions to enable collectors to store provenance information and ownership. We believe this is necessary to allow other use cases to flourish and for arts & collectibles to develop as an asset class. For cryptocurrencies more specifically, we believe that enabling cryptocurrency to access art and collectibles will help give access to buyers who have previously been excluded from participating in the market. It may also help reduce the high transaction costs that are currently problematic for the market.
What does the future look like for Codex?
We are really excited for the future of Codex. Since our public announcement we have had excellent reception, not only from the crypto and blockchain community but also from the Art & Collectibles community. From day one buyers of Art & Collectibles around the world will be able to buy over 10 million items per year at auction whilst bidding anonymously. We have already engaged in discussions with some other exciting projects which we hope will be built on top of the Codex Protocol, helping to make it become the industry standard.
You have said that “From day one buyers of Art & Collectibles around the world will be able to buy over 10 million items per year at auction whilst bidding anonymously.” That’s exciting. Could you elaborate on this a bit?
We’ll be integrated into the software of existing online marketplaces including Liveauctioneers and Auction Mobility at the time the product launches. This means that using Biddable, bidders at auction houses will be able to register to bid by leaving a cryptocurrency deposit in a title-escrow rather than going through the extensive registration processes currently required by auction houses. This means faster registration times and anonymous bidding.
Could you please discuss your revenue model?
We are building open source technology that is designed for anyone to build on. The protocol is intended to benefit the entire ecosystem and any fees payable to the Codex go to the Community Pool to support application development on the protocol. Like anyone else, we are able to build applications that can generate revenue.
It would be interesting to understand your market penetration strategy (within the boundary of what you can reveal). Will you partner with dealers, auction houses, galleries and/or marketplaces?
The Codex is designed so that third parties can build on top of it. To drive volume of adoption from the beginning, we will work with our consortium members, Liveauctioneers and Auction Mobility, to build the first product on the protocol called Biddable. Biddable is a bidding software tailored for the auction market. Collectively, our Liveauctioneers and Auction Mobility serve over 5,000 auction houses that sell 10 million items worth over $6 billion annually. We are thrilled by the number of inbound enquiries from industry participants wanting to operate on The Codex, and we welcome and support any other industry stakeholders to join the consortium to design and build applications on the network.
What are some of the application benefits for collectors?
The Codex itself is technology infrastructure on which arts and collectibles provenance can be recorded. Individual applications built on The Codex will have their own users. For collectors, applications on The Codex will have access to the provenance registry, which can help diligence items, preserve provenance information, and accurately value pieces for future sellers and buyers.
Last but not least, who are the people behind Codex Protocol? Can you tell us when and how this venture came about?
After building and selling a venture-backed fine arts online marketplace, it was very obvious to Mark Lurie, our CEO, the problems that blockchain could solve for the industry. Having previously worked as a venture capital investor at FJLabs and Bessemer Venture Partners, Mark also understood what investors are looking for and how to assemble an all-star team. I also came from a finance background, previously working for a large Canadian pension fund and investment banking at Credit Suisse. I obtained an M.A. in Art Business from Sotheby’s Institute of art, where I wrote a thesis on the applications of blockchain technology in the art ecosystem. I later worked at Sotheby’s bidding department, where I saw the frictions of the auction market up close.
Mark and I connected through my research and our mutual appreciation for how transformational blockchain can be for the asset class. From there, I joined Mark and co-founded Codex, taking the role of COO along with John Forrest, our CTO. We are joined by an esteemed group of advisors, partners, and investors who help us steer and grow this project to benefit all industry participants.
Note: Since this interview, ArtMarketGuru are delighted to announce that Codex has received a generous $5 million investment from Pantera Capital.
Read the press release below to find out more about this exciting news…
Codex Protocol Receives $5 Million Investment From Blockchain Fund Pantera Capital
Preeminent Experts Joey Krug, Abe Othman, Nader Al-Naji, David Wachsman Join Advisory Board
San Francisco, CA, February 28, 2018 — Codex, a cryptocurrency and decentralized title registry for the $2 trillion arts and collectibles (A&C) asset class, today announced that it received a $5 million USD investment from Pantera Capital, a leading investment firm focused on blockchain technologies. As Codex continues to grow its platform, Pantera’s investment, along with previous investor commitments will help with protocol development and supporting participants in building applications on Codex. Pantera Capital’s Co-Chief Investment Officer, Joey Krug, has also joined Codex as an advisor, serving as a blockchain technology and strategic advisor.
Codex CEO Mark Lurie said, “Codex is incredibly excited to receive strategic support and financial backing from Joey and the team at Pantera Capital, one of the most prominent funds in the blockchain space. Their extensive knowledge of the blockchain space will be invaluable as we work alongside the Codex Consortium to place provenance on the blockchain and finally provide a title registry for the arts and collectibles asset class. The ability to prove ownership, without compromising the privacy demanded by fine art collectors, will result in a better, fairer, and bigger market for all participants.”
As the first U.S. cryptocurrency investment firm, Pantera Capital exclusively focuses on investing in blockchain technologies and is one of the largest institutional owners of cryptocurrencies. The Pantera team draws upon its experience in both traditional finance and emergent blockchain technology, and strong relationships with some of the most promising projects and entrepreneurs in the space, to develop highly effective investment strategies. Additionally, Krug’s position as a Codex advisor will bring industry-specific value-add resources to the project as it develops its go-to-market strategy.
“We are thrilled with the addition of Codex to our portfolio companies,” said Krug. “As blockchain technology and digital currencies establish their role in the global economy over the next several years, our mission is to act as the catalyst for widespread blockchain adoption and innovation. We believe in Codex’s vision and its ability to radically transform how business is done in the fine arts and collectibles industry. We have also seen first hand the amount of new cryptowealthy investors looking to diversify and store value. Through Codex, cryptoinvestors will have the ability to leverage the art and collectibles asset class for this purpose.”
In a separate announcement, blockchain experts Augur advisor Abe Othman, Basecoin founder and former Google software engineer Nader Al-Naji, and blockchain and crypto communications expert David Wachsman have joined Codex’s Board of Advisors alongside Krug. Othman will serve as a blockchain technology and incentive systems advisor to Codex, Al-Naji will advise the team on crypto macroeconomics, while Wachsman will guide the company’s long-term communications strategy.
Abe Othman is an advisor for Augur, an open source, decentralized, peer-to-peer prediction market platform built on Ethereum, as well as other startups such as Homebase and STOX. Othman is a visiting scholar in the Operations, Information and Decisions Department of The Wharton School at the University of Pennsylvania where he builds computational engines. Othman received his PhD in Computer Science at Carnegie Mellon University and his AB in Applied Mathematics from Harvard University. In 2015, Othman was inducted into the Forbes 30 Under 30 in the energy industry for co-founding Building Robotics, a software-based system to help make buildings more energy efficient.
Nader Al-Naji is the founder of Basecoin, a stable cryptocurrency that runs on a rules-based monetary policy to achieve a price stability mandate. Al-Naji has a background in finance and software engineering. He has previously worked at D. E. Shaw & Co. in equities high-frequency trading and was a former software engineer at Google, working in Google Search and Google Ads. Al-Naji graduated summa cum laude in Computer Science from Princeton University with a certificate in Applied Mathematics.
David Wachsman is the Founder and CEO of Wachsman, the largest public relations firm specializing in digital currency and blockchain-based companies. Wachsman provides media relations, strategic communications, brand development, and corporate advisory services to many of the most indispensible companies in the financial technology, digital currency, and crypto-asset sectors. Wachsman represents prominent clients in the blockchain space, such as the Crypto Valley Association; Dash; Lisk; IOHK, the developers of Cardano; and tZERO.
Major stakeholders have embraced the Codex Protocol and its first application, Biddable, which will enable holders of cryptocurrency to bid in auctions and increase privacy and access for all bidders through a title-escrow system. The Codex Consortium’s spectrum of industry partners—including collectors, auctioneers, dealers, museums, and other vetted organizations—recognizes the clear solutions to common challenges in the auction markets. The Consortium will adopt the protocol and accept cryptocurrencies exclusively through Codex from day one. Furthermore, the Codex Protocol is open source, allowing third party players in the A&C ecosystem, such as art insurers, collateralized lenders, and art logistics providers, to build applications and utilize the title system.
Codex is the leading decentralized title registry created for the arts & collectibles ecosystem, which includes art, fine wine, collectible cars, antiques, decorative arts, coins, watches, jewelry, and more.
Powered by the DEX native token, the Codex Protocol is open source, allowing third party players in the A&C ecosystem to build applications and utilize the title system. Codex’s landmark application, Biddable, is a smart deposit-escrow system deeply integrated into the Codex protocol, solving the biggest issues faced in A&C auctions: non-performing bidders, lack of privacy, and barriers to market access. To learn more about the Codex Protocol and Biddable, please visit www.codexprotocol.com.