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Legal Issues Around Tangible Asset NFTs
Midwest Tungsten, a supplier of metal for industrial uses, recently paired a blockchain with a 14.545-inch, 2,000-pound cube of tungsten to produce a non-fungible token (NFT). Assets that are digitally transferrable between two parties via blockchain are commonly referred to as "tokens." An NFT is a crypto asset or "token" that represents or points to a physical or digital asset such as art, videos, land or, in this case, a cube of tungsten. NFT for tangible assets give rise to a range of legal liability issues including those related to asset storage, transfer, visitation rights (in the case of tangible NFTs), privacy rights, as well as related costs.
These tokens are designated as "non-fungible" because they are not interchangeable for other items; they are unique. Bitcoins, which also are blockchain assets, are not unique and are therefore fungible. One bitcoin, like one dollar bill, has the same characteristics as another; they are readily exchangeable because they are of exactly equal value.
NFTs give the NFT holder the ability to claim ownership of any unique asset that it represents. The resulting NFT is trackable, easy to transfer, and uses a trustworthy technology, namely, blockchain. Blockchains are widely distributed digital ledgers, which make them nearly immutable, that are used to record transactions in "blocks" of computer code that are time-stamped and linked together, evidencing the provenance of an asset, either digital or tangible. Blockchains also disclose the history of transactions for digital assets, making it impossible for an assets record to be modified or deleted.
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