> If you have some kind of way, on the blockchain, to solve this problem, and reassign the property without Joe’s private key, then what you have is a situation where human decisions take priority over cryptographic guarantees.

I have thought about this and it's solveable. Physical goods have to have some sort of "sanctioned violence" to enforce, so there is always a government. They have a public key that is known and publish updates. So if something gets legally confiscated, there is a message published by the government that amends the chain. "The owner of X is now Y".

This same mechanism can be used in can of lost password etc. Blockchain doesn't have to be anonymous to have value. Makes the retrieval of lost or stolen property easier. It would be a boon for pawn shops who have to be suspicious of ownership of items.