NFTs, Property Rights, and Realty

Abstract

For over a decade now, the promise of distributed ledger technologies (often referred to merely as “blockchains”) has filled the minds of policy makers, politicians, investors, corporate giants, and even the general public. Headlines proclaim that “blockchain will transform business” and will “revolutionize the world economy.” Of late, the rise of non-fungible tokens (“NFTs”) has added fuel to the fire, further enhancing the rhetoric around what crypto can do to change the world. And perhaps nowhere have these promises had more resonance than in the case of property rights. Blockchain technologies have been touted as a mechanism to track and resolve disputes over property, ranging from intellectual property to personalty to even real estate. It is with this final asset class—real property—that this Chapter concerns itself. In these pages, drawn in part from our earlier work, we question the use of blockchain networks and NFTs in real property transactions by interrogating how the existing technologies work against the backdrop of the realities of real property transfers. Moving beyond the hype, we explain that a blockchain system would provide few if any benefits to our system of real estate transactions.

Yet, we think there is indeed a potential use case for blockchains and crypto technology when it comes to property rights. But, it’s not in the world of real property—which our existing system has largely shown itself to be sufficient—but rather for intangible property. American law developed to deal with tangible assets—whether personal or real. This makes sense because these asset types represented the primary forms of wealth for most of history. But tracking and transferring rights in intangible property—particularly purely intangible personal property—has always been underdeveloped. It is here, so we argue, that blockchain technology and NFTs might have the highest utility.

Keywords: crypto, realty, real estate, blockchain, intangible, tangible, personalty, NFT, non-fungible token