What is Tokenization?. Tokenization converts rights to an asset—currency, commodities, invoices, tickets—into a digital token that can be transferred and settled on‑chain.
How it works
A legal framework defines claims; smart contracts enforce transfers and supply; off‑chain processes handle custody or delivery when needed.
Why it matters
It improves settlement speed, transparency, and programmability for real‑world assets and payments.
Common pitfalls
- Assuming every token equals legal ownership
- Ignoring redemption terms and custodial risk
- Using illiquid venues for large transfers
Quick example
A company issues tokenized invoices that investors can buy to fund operations and receive on‑chain repayments.
See also
- Stablecoin
- Custodial vs. Non‑Custodial
- Proof of Reserves
TL;DR: What is Tokenization? defined in plain English with practical next steps.
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