For the cryptocurrency Bitcoin, one of the goals of its implementation was decentralization– i.e., that no central actor (such a government or central bank) would control its validation and use.  This was accomplished via “blockchain” technology, which implements a consensus algorithm across numerous, anonymous actors to validate transactions in the currency.  Another benefit offered by blockchain is the prevention of counterfeiting, as the consensus nature of the system bars attempts to “double-spend” the same coin.  The Bitcoin system is not theoretically bulletproof, but statistically and practically it works.

Could this protection against counterfeiting see other significant applications for blockchain beyond currency, such as securing ownership of hard assets like vehicles or real estate from title and deed fraud?  If that happens, first-year law students in Real Property class may no longer be tested on endless hypothetical scenarios like “Seller sells Blackacre to Purchaser Alpha; later the same day, Seller sells Blackacre to Purchaser Beta….”  

Well, as to digital assets, the notion of using blockchain to secure ownership has already arrived.  The Etherium cryptocurrency, through its use of “smart contracts” – programmed rules that self-implement without the need for an enforcement mechanism – recently spawned the concept of Non-Fungible Tokens, or “NFTs.”  NFTs provide one with the ability to “own” a digital asset that is one-of-a-kind.  While the digital asset (like a photo or video file) is not stored on the blockchain itself, a “token” representing its ownership is and, by virtue of the consensus algo, ownership should be protected from tampering.  

As with much in cutting-edge tech, NFTs are controversial, have their detractors and, of course, have inexplicably made some large fortunes.  Last year, Christie’s sold an artist’s NFT for $69 million.  

The NFT market has already slid into the world of litigation.  French luxury brand Hermés has sued a prominent artist for making NFTs inspired by its high-dollar “Birkin Bags.”  Miramax sued director Quentin Tarantino over his stated intent to sell NFTs of “exclusive scenes” from the original Pulp Fiction script.  Roc-A-Fella Records filed a lawsuit targeting its co-founder’s purported attempt to sell the copyright of Jay-Z’s album Reasonable Doubt as an NFT.  And Playboy Enterprises sued the operators of a look-a-like website that was selling counterfeit “Rabbitar” NFTs.    

These lawsuits represent the intersection of new tech with the established law of copyright, trademark and contract.  This will present some difficult, novel issues, just like the advent of the Internet did a few decades ago.  For example, the U.S. Copyright Office just rejected a copyright registration attempt for an A.I.-generated work of art, finding that the image “lacks the human authorship necessary to support a copyright claim.”  Many NFTs are generated en masse by an automated process, so this may be an emerging issue.  If NFTs or similar blockchain-secured ownership models proliferate, there will likely be many novel legal challenges presented along the way.