The Property Law of Tokens
Non-fungible tokens – or NFTs, as they are better known – have taken the world by storm. The popular idea behind an NFT is that by owning a certain thing (specifically, a digital token that exists as an entry on a blockchain ledger), one can hold property rights in something else (either a real or intangible asset). Setting the popular idea aside, however, what does it really mean to tokenize something under the law? What does the owner of, for example, a token of an original oil painting, or a digital work of art, actually get? The answers to these questions have tremendous implications for just how revolutionary tokenization can really be.
Because the market for NFTs appears to be growing at an impressive rate (sales of NFTs have risen from a mere $13.7 million in the first part of 2020 to 2.5 billion), the rights a token holder actually acquires in the underlying thing will inevitably drive tokenization and property rights cases when they come before courts.