Real-World Asset Tokenization: A New Form of Asset Ownership
Bitcoin has proven a concept that spawned an entire industry: digitally-native assets and asset tokenization. The invention of the blockchain created the infrastructure the internet needed for hosting digitally native assets that are able to be owned, transferred, and exchanged between people.
It doesn’t stop at Bitcoin. Digitally-native assets are a new form of ownership. Land titles, stock certificates, property rights, and more are all managed by a paper-based symbol of ownership, backed by a legal system. Digital token on a blockchain follows a similar structure: a digital token that represents a symbol of ownership, backed by a legal system.
The tokenization of assets is a brand new technological innovation, yet the World Economic Forum conducted a study that predicted that 10% of global GDP to be managed by blockchain infrastructure by 2027, as numerous different digital assets come to exist on the same financial platform.
What is Asset Tokenization?
Asset tokenization refers to the act of turning the ownership of a real-world item into a digital token. This can be done in various ways, but all result in the legally-upheld bridge between the physical asset (real estate property, vehicle, gold, etc.) and its representative token.
A token is a transferable unit of something. Deeds, titles, and certificates are all traditional versions of a “token,” a symbol or item that represents something else. A deed to a house represents ownership of that house. “Token” is used to refer to the digitally native asset which represents the real-world asset itself.
“Digitally native” refers to how the asset exclusively lives on the internet. Whereas traditional asset ownership like a deed, title, or certificate requires a piece of paper with legal approval, digitally native assets have ownership baked into the asset itself.
How Does Tokenization Work?
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