Tokenization

The process of converting real or digital assets into digital tokens that represent their value or ownership on a blockchain.

What is it? - Dummies

La Tokenization It's like convert something from the real world (such as a house, a painting or a concert ticket) into a digital token that you can use online. That token is called Token and it allows you sell, buy or share a part of that asset more easily, without paperwork or intermediaries.

What is it? - PRO

La Tokenization It's the process by which a physical or intangible asset is digitally represented in the form of one or more tokens registered on a blockchain, allowing for its fractionation, transfer, traceability and automated management. Tokenized assets can be expendable (such as shares, points or digital money) or non-fungible (NFTs) (such as works of art, unique properties, or digital identifiers).

From a technical perspective, a token can represent:

  • Property rights (buildings, vehicles, works).
  • Financial rights (stocks, debt, dividends).
  • Access to services or platforms (utility tokens).
  • Unique identity or certifications (NFTs, credentials, registrations).

Tokenization allows these assets to:

  • If Divide into smaller fractions accessible to more users (democratization).
  • If exchange immediately and without friction through smart contracts.
  • Sean transparently and immutably verified.
  • They are programmable: they can include usage rules, royalties, veto rights or governance.

There are different levels and approaches to tokenization:

  • Legal or regulated tokenization: when the token has explicit legal support (stocks, bonds, real estate).
  • Economic tokenization: when value or liquidity (stablecoins, commodities) is tokenized.
  • Functional tokenization: when access, reputation, or utility in a digital ecosystem is tokenized.

The technology behind this process is usually based on standards such as ERC-20, ERC-721, ERC-1155 or ERC-3643, depending on the type of token and its functionalities.

In Europe, The MiCA regulation And Marcos like The ERIR allow the issuance of legally backed tokens such as financial instruments or valid digital representations, opening the door to secondary markets, regulatory compliance automation and operational efficiency for sectors such as real estate, energy, art, logistics and finance.

Key points

  • Convert real or intangible assets into digital tokens
  • Facilitates the fractionability, liquidity and asset transfer
  • It can apply to physical assets, legal rights, financial value or digital functionality
  • It relies on smart contracts and blockchain to ensure security and traceability
  • It can be regulated or not, depending on the type of asset represented
  • Advantages

  • Immediate global access to ownership or ownership
  • Reduction of intermediaries and bureaucracy in asset management
  • Increased liquidity and fractionation of traditionally illiquid assets
  • Automating payments, dividends, royalties and usage rights
  • Traceability, transparency and integrity of records
  • Disadvantages

  • Legal risk if the legal framework is not properly structured
  • Technological and operational complexity in the implementation
  • Lack of interoperability between networks and standards in some cases
  • Negative perception due to misuse in speculative markets
  • Dependence on technological and regulatory adoption in each country
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