Artworks in the blockchain (III). Auctions.

During the days 10 to 17 of December, Tarasca DAO auctioned five of the original physical paintings of the card game. The auction was made entirely in the blockchain of Ardor, without any intermediaries. It was not necessary to pay 25% of the sale price to an auction house (Sotheby’s, Christie’s, etc.), nor to use payment companies (Paypal, VISA, etc.) that also charge fees. The auctions were made p2p, with the direct participation of buyers and artist, in a safe, simple and anonymous way.
Some 20 people from many different countries participated. At the end, the works traveled by courier from Galiza to China, Switzerland and Lithuania, home of the bidders who were the winners.
We will detail the steps to take so that any artist is able to auction a work directly in the blockchain.

1. Register the work.

The complete process is detailed in this previous post.

1. Tokenize the work.

The complete process is detailed in this previous post.

1. Advertise the auction.

The announcement of the auction is the responsibility of the artist, who must use the means at his disposal to warn potential buyers that the work exists and is for sale. In our case, as we are a small and recently created company, we have few means yet, but we have used our website and our Twitter accounts (in English and Galician), Medium, Steemit, and Instagram. We also got some repercussion in Galician generalist media (here and here). In addition to announcing the completion of the auction, we were concerned with providing a small tutorial to facilitate the participation of people not familiar with cryptocurrencies.
The auction announcement should include a good image of the auctioned work, a description of the techniques and materials used, and any additional information that may be appropriate. In addition to this, it is very important to clearly indicate the references to the record of the work and the token that represents it. In our case, we have done so on our website:

Auctions section of our web site.

1. The marketplace.

The platform we use, Ardor, is designed in such a way that each token has, by default, its own market already created. In fact, two markets: in Ignis, the native currency of Ardor, and in AEUR, the stable value currency backed by ArdoGate. In such a way that at the moment in which we have created the token that represents the work, a user of Ardor can already visualize his market and even place bids.
By simply adding our token ID to the Asset Exchange’s search engine, our potential buyers could already see the markets of our works on the Ardor client, which would look like this:

Markets, before the beginning of the auctions

In fact, nothing prevents a bidder from making his offers before the auction officially begins. In our case it did not happen, and the bids began to be published after December 10.

1. Bidders, make your bids!

From then until the announced date of completion of the auctions (December 17 at 12:00 UTC), bidders placed their offers for each painting. Unlike in the usual auctions, in this case there are no specific rules for bids. For example, we could observe bidders that raised the previous offer in only 1 ignis (0.014 €), and even races where three bidders competed, ignis by ignis, for having the highest bid.

However, that dynamic broke soon, as each buyer looked for the best strategy to get the paint:

1. Closing the auction.

On December 17 at 12:00 UTC we closed the auctions. That means, in this context, that at that time the highest published bid was accepted. When doing so, the token is automatically transferred to the buyer, at the same time that the money is entered into the artist’s account.

Representation of the act of closing the auction!

As you can see, it is impossible for a scam on the part of the artist, who having created only one unit of the token, can not accept more than a single offer, the higher one. Bidders who submitted lower bids can cancel them quietly, without the money having been moved out of pocket at any time.

1. Shipment of the work.

As explained, the participants in the auction are anonymous. However, to send the real work the artist needs to know the postal address to send it to. For this the buyer has to make it known by a means that proves that he is the buyer of the token, and not another person supplanting him. It is easy to do this in Ardor, since it has the Messaging function integrated. Thus, the new token holder must send a message to the artist from his own Ardor account:

The artist, of course, has yet to send his work physically to the buyer.

Ana’s works, about to go to its destination

1. Re-sale of the work.

In the future, if the new owner of the work wants to sell it, he has exactly the same technology at his disposal. He would have to announce the auction by his own means, and possibly credit his honesty in some way (he will send the physical work to the token buyer), or perhaps thanks to some decentralized reputation system.