As outlined in an earlier article, blockchain-native digital bearer instruments such as Bitcoin’s mining reward bitcoin introduced new concepts of ownership and value transfer, upsetting the order of enumerated asset classes heretofore seemingly complete.
A fact that thus far has escaped many legal professionals, regulators and cryptocurrency enthusiasts, all of which seem to be content to force round blockchain pegs through narrow square holes of legacy regulations and/or vernacular designed for financial products lacking the sophistication of blockchain-based solutions.
In the absence of truly interdisciplinary discourse, amateur legal practitioners and technologists started to apply broad labels to a number of concepts which are still undergoing transformations.
The following will discuss the nuances of the frequently applied – and more often abused – term digital asset.
The meaning of “assets”
An asset represents an economic resource for a company or access that other individuals or firms do not have. A right or other access is legally enforceable, which means economic resources can be used at a company’s discretion, and its use can be precluded or limited by an owner. Assets are hence anything for which one anticipates future value – other than rights.
The term ‘digital’ is firmly anchored in the domain of technology, and when used in a legal context might refer to a method of transfer, storage and/or protection of a record. These records will usually refer to the right of person(s) and/or entities (to assets).
As with the rather unfortunate term ‘cryptocurrency’ (more here), usage of the digital asset label seems to pose an insurmountable obstacle for advancing the understanding of the state of blockchain-based solutions and its possibilities to advance technology over proprietary collections of “smart contracts”.
Private keys for a blockchain-native entry such as bitcoin (always use lower-case ‘b’ for the mining reward), or the private key to a non-fungible token such as that to a Crypto Kitty can technically be considered ‘digital assets’. After all, that’s what we are talking about here: technology.
Further Reading: Security Tokens
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