In my earlier post, I have noted that there are no fewer than three different functions which an electronic record issued and transferred on a blockchain can fulfill. Each of them has a great potential but needs support from legal infrastructure. Thus, no electronic record can be deemed to embody an entitlement to the performance of obligations unless so treated by the applicable law. It is no different from acknowledging that a paper-based transferable document would be only a piece of paper without empowering legislation. Accordingly, an electronic transferable record on a blockchain cannot function as a document of title merely by agreement of private parties.
There is, however, one feature of documents of title which make them particularly attractive as a possible use case of the blockchain technology. It is their essential feature, the guarantee of singularity. That feature had been considered to be difficult to emulate in an electronic environment and the only means which had been available was a registry administered by a trusted entity. But the blockchain technology has now made it possible to guarantee singularity in a de-centralised way. The essential feature of documents of title is thus taken care of by technology without need for legal support.
The construction of a supporting legal infrastructure takes time. In the meantime, notwithstanding the risk of unintended legal consequences, entrepreneurs develop business practices to cater for demands on the market. We have been witnessing such phenomena in the bitcoin business. Are there sufficient demands to support experimental documents of title on a blockchain?