Tokenization refers to the process of converting the rights to a physical or digital asset into a blockchain-based token. This token represents ownership or entitlement, and it can be traded or transferred more efficiently than traditional records.
In financial markets, tokenization enables fractional ownership. For example, a high-value real estate property can be split into hundreds of tokens, allowing small investors to own a piece of the asset without needing large capital. This democratizes access to investment opportunities.
Tokenization also improves liquidity in traditionally illiquid markets. By recording transactions on the blockchain, tokenized assets can be easily verified and traded, reducing the friction and paperwork found in conventional asset transfers.
