Artory leverages Algorand as a blockchain infrastructure for its art registry and tokenization platform. Algorand is an innovative technology that overcomes barriers created by other blockchains. Learn more about Artory and Algorand in this article.
In September 2021, Artory closed a $4.5M fundraise to initiate its next phase in bringing trust and confidence to the art market by tokenizing physical artworks to prepare them for trade in the financial and crypto markets. Artory chose Algorand as a blockchain partner for this next phase because of Algorand’s unique ecosystem and capabilities. Algorand removes the technical barriers that for years undermined mainstream blockchain adoption: decentralization, scale, and security. The blockchain consumes substantially less energy than the majority of its peers and is one of the most environmentally-friendly blockchain solutions: a consideration that is no longer optional. Ultimately, Algorand accelerates the convergence between decentralized and traditional finance, making it an ideal solution for bringing tokenization to the art market.
Through trusted data from Artory’s network of partners, such as Winston Art Group, Artory is linking NFTs to vetted physical artworks to be offered as financial instruments through alternative investment platforms, crypto marketplaces, and private offerings. The data is secured by Artory on Algorand to generate tokens for each artwork and fund participant and provide ongoing data support.
Together, Artory and Algorand will create the next generation financial products by building instruments on top of the most trusted physical artworks. Artory is already stamping verified artwork information from partners on Algorand’s blockchain, with physical artwork NFTs coming to marketplaces later this year.
In creating a connection between investors and trusted art world institutions, Artory takes a vital step in democratizing the art market: giving individuals access to information, returns on investment, and a level of trust that is typically reserved for the upper echelon of the market. Artory’s NFTs ultimately help investors overcome the traditional barriers to entry of the art market such as access to art and price transparency.
Artory’s NFTs will also benefit artists by securing resale royalty agreements for secondary sales: a vital aspect for the continued success and fairness of the art market.
Borderless Capital, who co-led Artory’s capital raise, will help Artory implement Algorand’s technology. Borderless Capital is a blockchain-focused venture capital group investing in category-leading businesses like Artory to build innovative financial products through the Algorand borderless economy.
How is Algorand Different?
Algorand is an open-source blockchain network that consumes substantially less energy than the majority of its peers. The network is secure, fast, and multifunctional, being capable of hosting decentralized applications (DApps) and a wide array of different digital assets, such as Artory’s physical artwork NFTs.
Algorand delivers sustainable blockchain technology that can be used for years to come without affecting the environment in a negative way.
Algorand’s protocol is carbon negative because it doesn’t rely on massive electricity consumption needs, unlike other chains. Instead, Algorand’s protocol was developed to be environmentally friendly from the ground up. The Algorand Foundation partners with various environmental organizations to more than offset its calculated electricity usage. The foundation is committed to supporting green and social good initiatives and their grants program provides the perfect platform to support diverse projects including community led initiatives that support a cleaner and greener environment.
Sustainability is a key goal for the art market, as well, with market players such as Christie’s and the Gallery Climate Coalition making pledges to reach net-zero carbon emissions within the next decade.
The Algorand Pure Proof of Stake (PPoS) protocol optimizes decentralization and high transaction throughput. The blockchain is entirely decentralized, which means there is no powerful central authority or single point of control. Control is distributed among all individual network participants and a unique committee of users is randomly and secretly selected to approve every block. Nodes are run by entities representing diverse backgrounds across many different countries and there is no special group of users for a potential attacker to target.
Users do not need the approval of a trusted authority to use the Algorand blockchain. There is a single class of users and no gatekeepers. Every participant can read every block and can write a transaction in a future block.
Because of Algorand’s decentralization model, there is no risk of data being manipulated, lost or destroyed. Artory can always guarantee that the data verified by partners is accurately reflected, secure, and transparent.
Algorand’s consensus protocol does not require participants to solve cryptographic puzzles in order to propose or validate blocks. In the Algorand protocol, the computation cost a single user faces only involves generating and verifying signatures and simple counting operations. The cost depends only on the number of selected users for each block, which is constant and not affected by the size of the whole network.
Algorand’s decentralization allows the platform to require minimal processing power and modest IT resources to join, which will ultimately lower cost of participation on Artory.
Speed & Scale
The Algorand blockchain provides fast and seamless finality compared to other blockchains. The technology can handle around 46,000 transactions per second, which are finalized in just around 5 seconds, using logic signatures in smart contracts to validate transactions. The finality is secure and cheap, as well, and guarantees no double spending.
Algorand Standard Assets (ASA) provide a standardized, Layer-1 mechanism to represent any type of asset on the Algorand blockchain. These can include fungible, non fungible, restricted fungible and restricted non fungible assets. Moreover, the Algorand assets contain useful, optional tools to support traditional financial practices, such as clawback provisions and the ability to freeze and unfreeze assets.
The ASA also supports Atomic Transactions. In a traditional economy, there exists a trusted or legal framework. On the blockchain, Atomic Transfers offer a secure way to simultaneously transfer a number of assets among a number of parties. Specifically, many transactions are grouped together and either all transactions are executed or none of them are executed. With Algorand’s minuscule transaction fees, Atomic Transfers are incredibly low cost to execute and allow for exciting possibilities like instantaneous settlement of complex multi asset transactions and expedited debt settlement.
Algorand maintains security against attacks at both the consensus protocol level and the network level—all while protecting the safety of individual users’ accounts.
Algorand’s consensus protocol is designed to prevent powerful adversaries from corrupting enough users to control block generation. Unlike other protocols, neither a few delegated users nor a fixed committee is responsible for propagating blocks. Instead, the selection of users to participate in the certification of blocks is done randomly and secretly, without any communication among the users. An adversary does not know who will generate the next block (and thus should be targeted) until after a selected user participates in the consensus protocol. And by the time an adversary realizes that a user is selected, it is too late for them to benefit from an attack; the user has already sent their message and fulfilled their responsibility in the consensus protocol.
Algorand’s key system is another security benefit gained by using their system. The system of using keys in cryptography has existed since the beginning of blockchain. But it has become inefficient and not always secure. When a compromised Private Spending Key needs to be changed, an entirely new account with Public Address and Private Spending Key need to be opened – and assets moved from the old Public Address to the new. While this is effective, it is operationally onerous. A user who regularly changes their Public Address and Private Spending key also creates downstream implications, with each time a user wants to initiate a transaction from a new public address, they must provide the new public address to others for identification purposes. This leads to interruptions of automated recurring transactions with peers or institutions and additional back office work for those institutions, peers, and vendors to keep track of the changing public address.
Algorand Rekeying in Layer-1 solves these operational inefficiencies by allowing users to change their Private Spending key without the need to change their Public Address. Rekeying enables more flexibility, continuity, and less overhead with any changes of the Private Spending key.