Article By Abhimanyu Krishnan
The Swarm platform has announced that it will add The Art Token (TAT) to its platform, yet another development in its quest to make high-yield, alternative investments more accessible to a wide range of investors. So far, TAT funding has reached over $5.5 million.
Swarm is a decentralized investment platform that makes security tokens accessible to investors who are typically restrained by minimum investment amounts, geography, or other barriers.
The innate ability of blockchain to tokenize assets allows them to safely invest in a portion of an expensive asset.
The Art Token (TAT)
The Art Token (TAT) tokenizes artwork, allowing multiple investors to hold a specific share of value in the object.
The token will be launched on Swarm’s security token marketplace, and will be created using Swarm’s own protocol, SRC20. Developed specifically for security tokens, SRC-20 tokens are fully compliant with all applicable regulations governing the issuance and trade of securities.
One of the major purposes of the token is to persuade investors to view art as a viable long-term investment vehicle that can gain value year over year, without being subject to the fluctuations in the crypto market.
Art is a highly stable asset class that has consistently grown in value. The art industry, it may surprise, is up on the Dow Jones in terms of gains made in the past 20 years.
An index for post-war and contemporary art shows gains at 10.71% as opposed to the 7.54% increase for the Dow Jones. Contemporary art has gained upwards of 10.85% on average per annum for the past 50 years.
Post-war and contemporary photography is the niche art form that TAT specifically focuses on, and it is the biggest gainer in value in recent decades.
There are several advantages to the photography niche over others — photographic work is easily transferable, undergoes comparatively less degradation and requires lower maintenance.
All tokens are backed by fine art on a 1:1 ratio and matures 10 years from the date of issuing, though it can be extended by the issuer. Issue sizes are limited to a maximum of 50 million Euros and the Net Asset Value is calculated monthly.
Tokens will first be offered through Swarm, with a 30% discount on the first 5 million Euros worth of TATs, followed by a 10% discount on the first 5 million Euros in the second and third weeks.
The Company Behind The Art Token
The Art Token is issued by the Fine Art Invest Group (FAIG).
Founded in 1999, FAIG is a European group making progress in convincing the public to view photography as a viable investment vehicle. A study conducted by FAIG reveals that the art industry has made significant gains since World War II, indicating that it is a alternate option for diversifying one’s investment portfolio.
FAIG is one of the top 3 art retailers in the world. The group already has over $100 million in its portfolio and has seen returns of 15% per annum for 15 years running.
By tokenizing on Swarm, FAIG’s Art Token will be tradeable via a growing list of marketplaces including OpenFinance. Rumor has it a European exchange closer to FAIG’s home country of Switzerland is poised to join this list as well.
With such expensive items at hand, FAIG is emphasizing the safety and security of investor’s funds.
Each piece of artwork is stored in a Swiss bonded warehouse that is secured by the Swiss government. FAIG’s renown in the industry will be helpful, and the group has also made the effort to rope in multiple partners to lay the foundation for this novel investment opportunity, including Helvetia, Christie’s, Galerie, and several other crypto and art experts.
The entire process will be made transparent, so investors can be assured of the quality and provenance of the artwork, insurance policies and external market prices. These services will be handled by the Swarm team, who will build the technical architecture necessary for end-to-end transparency and quality assurance.
Swarm is Growing the Security Token Space
Swarm has added several new security tokens to their platform in 2018. Assets already available include farmlands, startups and foreclosure properties.
Recently, Swarm offered tokenized ownership of exchange platform Robinhood in the form of a Robinhood Equity Token (RHET). They have also formed an agreement with the OpenFinance Network to list all SRC20 tokens on the latter’s trading platform.
The underlying technology supporting the tokenization of securities is Swarm’s Market Access Protocol.
Users interested in investing in security tokens on the Swarm platform will have to follow KYC/AML compliance and setup 2 factor authentication, after which they can deposit funds in Bitcoin (BTC), Ethereum (ETH), Dash (DASH), Dai (DAI) and Swarm. Starting from today, Swarm users can also make direct purchases with fiat currency.
Learn more about the Swarm platform in our guide to participating in token opportunities on Swarm. To find out more about The Art Token, click here.