Asset tokenization is the process by which an issuer creates digital tokens on a distributed ledger or blockchain. Read more about what is asset tokenization

1. What is Asset Tokenization? A
Comprehensive Guide

2. Introduction
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Asset tokenization unlocks the potential of previously illiquid and inaccessible assets.
By turning tangible assets into digital tokens, asset tokenization is transforming the
traditional investment landscape and opening up new opportunities for investors
from all sorts of financial backgrounds. But ‘what is asset tokenization?’, you ask?
Let’s find out!

3. What is Asset Tokenization?
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So, what is asset tokenization? It is transferring the value of a physical asset into a
digital token stored on a blockchain or distributed ledger. In simpler terms, it
digitizes real-world assets, such as real estate, artwork, or various forms of
securities, into a token that can be traded on blockchain-based platforms. Asset
tokenization enables fractional ownership, meaning an asset can be divided into
smaller parts, allowing investors to buy and sell fractions of an asset rather than
owning it entirely.
This process unlocks liquidity for and gives access to a wider range of investment
opportunities, creating new avenues for investment and enabling smaller
investors to participate in larger assets previously out of reach. We do hope this
answers the question ‘what is asset tokenization?’

4. How does Asset Tokenization Work?
Now that we are aware of ‘what is asset tokenization?’, let’s jump to how it works! So,
asset tokenization is a complex process that involves multiple steps. Here is a detailed
breakdown of how asset tokenization works:
Asset selection and evaluation: The first step in asset tokenization is to select an asset
and evaluate its value and ownership structure. This could be a physical asset such as real
estate, art, or a company’s equity.
Asset ownership verification: The ownership of the asset is verified through legal
documentation and processes to ensure that the asset owner has the legal right to
tokenize the asset.
Token creation: Digital tokens represent asset ownership once the asset is verified. These
tokens are created using a self-executing smart contract operating on a blockchain
network.

5. What are the Types of Tokenized Assets?
Fungible Asset Tokenization
Fungible assets are interchangeable and divisible, meaning that one unit of the asset is
equivalent to any other unit of the asset. Fungible assets that can be tokenized include
currencies, commodities, and securities. Fungible asset tokenization allows for fractional
ownership and trading of the asset on a secondary market.
1. Interchangeable
Fungible tokens are interchangeable, meaning that each token is identical to another,
and can be exchanged for another token of the same type without any difference in
value.
2. Divisible
Fungible tokens can be divided into smaller units, allowing for fractional ownership and
trading.