What is Art Tokenization and How Does it Work?

The Rise of Asset Tokenization

Cultural institutions and brands are increasingly recognizing the potential of tokenization as a tool for building long-term value - both symbolically and economically. Today, real-world assets (RWAs) represent the second fastest-growing sector in the blockchain space, surpassed only by stablecoins. Tokenized asset volume has surged from $5B in 2022 to over $24B by June 2025 (+380%).

What once took months of coordination can now be done in minutes, fragile physical archives gain permanent digital backups, and trust is established not through paperwork, but through transparent, tamper-proof code.

But how is this transformation playing out in the art world?

How Does Tokenization of Art Work?

The tokenization of art - the process of representing artworks as digital tokens on a blockchain - is reshaping how we access, preserve, and distribute culture.

The process of Art Tokenization is strongly influenced by several factors:

Business model and purpose of tokenization - whether the tokens are to represent full ownership, fractional shares, or only collector rights; whether they are to be NFT (unique tokens) or share tokens.

Blockchain technology and platform - the choice of the appropriate network and token standard affects how tokens are issued, traded and secured.

Legal and compliance requirements - the need to comply with copyright law and financial regulations, including KYC/AML requirements, as well as issues of transfer of property rights or licensing.

Use Case: Fractionalized Tokenization

One of the most exciting innovations in art tokenization is the ability to fractionalize ownership of artwork. Traditionally, owning a famous painting or a blue-chip art piece was reserved for wealthy collectors, museums, or auction houses. High prices kept the art market exclusive - if a painting is worth $10 million, only a handful of buyers worldwide could ever hope to purchase it.

But what if that painting could be split into ten million digital shares, each worth $1? Suddenly, owning a slice of a Picasso or a Banksy becomes possible for regular people. This is not a theoretical idea; it’s already happening through fractional NFTs.

A fractionalized NFT is essentially a regular NFT that has been locked into a smart contract and divided into many fungible tokens, each representing a portion of the original asset. It’s akin to how a public company’s stock represents fractional ownership of the company. With art, fractional NFTs allow multiple individuals to collectively own a piece of a single artwork.

For example, imagine a digital painting valued at $1,000,000 being fractionalized into 100,000 tokens of $10 each. As an art enthusiast, you could spend $100 to claim a 0.01% share - meaning you are now a co-owner of that painting. You won’t hang the physical canvas in your living room (a custodian or foundation usually holds the artwork), but you gain economic exposure and bragging rights to an asset that was previously out of reach.

Use Case: ARCHIV3 - Preserving Polish Cultural Heritage Through Technology

Not all art tokenization is about ownership and investment. In fact, one case in point is the use of tokenization to protect art and make it globally accessible.

An example is the ARCHIV3 project by Bank Pekao S.A. in collaboration with Degen House.

This project emerged from a simple yet powerful idea:

what if we could save our national art treasures forever, using the best of modern technology?

Poland has a rich artistic heritage - the bank itself owns over 1200 works by major Polish artists, and some of these pieces are irreplaceable. Physical art is vulnerable - canvases can deteriorate, accidents or fires can destroy collections, and access is limited to those who can visit a museum or gallery. ARCHIV3 set out to create digital backups of important artworks and store them in a way that no single catastrophe or passage of time could erase.

The project employs a three-layered preservation strategy, combining:

• High-resolution digital scanning to capture every microscopic detail and color nuance with unmatched precision.
• Blockchain tokenization, creating secure, verifiable digital certificates of authenticity and ownership for each work.
• PIQL archival film technology, known for its extreme longevity and fidelity, used to store data offline in a future-proof format.

However, storing high-resolution art files on a blockchain alone isn’t practical (blockchains are not made for heavy data storage). This is where decentralized storage networks like IPFS (InterPlanetary File System) come in.

ARCHIV3 didn’t stop there, though.

Each scan was transported to the Arctic World Archive (AWA) - a remote, ultra-secure vault deep in the Arctic permafrost, designed to withstand both natural disasters and human conflict.

"Through projects like ARCHIV3, we want to test these solutions, educate, but above all, by entering the Web3 area, we want to show alternative forms of both action and thinking.” - Michał Walęczak, Director of the Private Banking Strategy and Development Department at Bank Pekao S.A.

And thanks to the blockchain element, anyone with an internet connection can verify and even view these digital art pieces, effectively enjoying a virtual gallery of Polish art from anywhere in the world. In fact, the bank has set up a digital gallery on their website where people can admire these works along with the blockchain details (block number, timestamp, etc.) as proof of authenticity.

Tokenization here has enabled a form of global access that complements the physical experience: if you can’t travel to see the original painting, the tokenized version can come to you.

In ARCHIV3, a painting was not turned into a speculative instrument to be day-traded. Instead, each artwork’s digital token is treated more like a soulbound record: a permanent digital certificate of that piece, securely stored and not meant for resale. By design, these tokens are about provenance and preservation, not profit.

Final Thoughts

The shift toward the tokenization of art does not mean that all challenges have disappeared. If we are to realize the full potential of Art Tokenization, several key issues must be addressed, such as legal frameworks for ownership, public perception and cultural buy-in, Interoperability and standards.

At Degen House, we see art tokenization as more than a creative experiment - it’s a strategic unlock  - one that merges storytelling, technology, and ownership into a new creative economy. We believe tokenization will redefine how value is created and exchanged - not just in art, but across brand ecosystems, media, and identity.

It’s not only transforming how art is bought and sold - it’s reshaping the very mechanics of cultural and economic value. And we’re here to help make that future feel not just possible, but inevitable.

If you're a brand, institution, or creator ready to lead this shift - let’s build it together.