If you’re in the financial industry, it’s likely that you’ve heard of tokenization. If not, though, don’t worry — this article will explain what tokenization is and how it works.
What is tokenization?
Tokenization is a process in which a real-world asset is converted into a digital token. The token can then be traded on a blockchain and used to represent the real-world asset it was created from.
Examples of real-world assets that have been tokenized include gold bars, diamonds, wine bottles and art pieces.
What are the benefits of tokenization?
Tokenization is the process of converting real-world assets into digital ones. This allows you to create new ways to raise capital, sell and trade assets, and represent real-world items digitally.
There are many benefits of tokenization:
- It allows you to create digital assets. You can use tokens as a representation of something that already exists in the real world (like gold or diamonds) or something that doesn’t exist yet but will soon (like land). In both cases, these tokens represent something tangible with value–and they’re easier than ever before thanks to blockchains!
How does tokenization actually work?
Tokenization is the process of converting rights to an asset into a digital token on a blockchain. This can be done through various methods, but in all cases, what you’re doing is creating an immutable record of ownership and transferring those rights onto someone else.
For example: You own shares in Apple Inc., but don’t want to deal with all of their paperwork anymore. So you take your certificate for those shares and send it off for conversion into a tokenized version on the Ethereum blockchain (or any other). When this happens, whoever receives that token now has full control over whatever rights were represented by those particular shares–including voting them at shareholder meetings or selling them off as they see fit–but none of this requires any interaction from you beyond sending off your physical certificate!
Tokenization — a form of digital asset creation — is an important part of blockchain technology.
Tokenization is a form of digital asset creation that allows you to turn anything into a digital asset.
For example, you could use tokenization to turn your car into a digital asset and then sell it online without ever having to physically sell the car itself. This means that buyers don’t have to worry about getting their hands dirty with any kind of paperwork or legalities — they just buy the tokenized asset using cryptocurrency and wait for delivery at home!
In the end, tokenization is a powerful tool that can be used to transform business processes and create new opportunities. It’s important to understand the benefits of tokenization before jumping into the world of digital assets — but once you do, there’s no stopping you!