What Is Tokenization: Asset Guide
Learn how tokenization converts real-world assets into blockchain-based digital tokens. Explore benefits, risks, and institutional adoption of asset t...
Tokenization converts ownership rights to a real-world or digital asset into digital tokens on a blockchain (a shared, tamper-resistant ledger) that records those rights permanently across many computers. Each digital token acts like a digital certificate of ownership: a verifiable record of your stake in an asset, tradable on digital platforms.
A note on terminology: If you arrived here looking for data tokenization in cybersecurity or payments, where sensitive information such as credit card numbers is replaced with non-sensitive placeholder tokens under PCI DSS standards, that is a different concept entirely. This article focuses on blockchain-based asset tokenization in finance.
Think of tokenization like converting a building into shares. Instead of one buyer needing to purchase an entire property worth millions of dollars, thousands of people can each own a small digital piece of it. The building stays in one place, while ownership is divided into tokens that can be bought and sold on a digital platform. In the blockchain context, tokenization of assets means representing those ownership rights as permanent, auditable records on a distributed ledger.
This guide covers how asset tokenization works step by step, the types of tokens involved, which asset classes can be tokenized, the genuine benefits and real risks, the regulatory framework, and how you can begin exploring this space. Major institutions including BlackRock and JPMorgan have already launched tokenized products, so this is not speculative territory.
How Does Tokenization Work?
Asset tokenization works through a structured sequence: a legal ownership framework is established, a smart contract is deployed on a blockchain to define token rules, and digital tokens are issued and made available for trading on a platform. Here is how each step plays out in practice.
Asset Selection The process begins with identifying the asset to be tokenized. This could be a commercial property, a government bond, a fine art piece, or a commodity like gold. The asset must have measurable value and clear legal ownership before anything else can proceed.
Legal Structure
A legal wrapper is created to connect the physical or financial asset to its digital representation. This typically involves forming a Special Purpose Vehicle (SPV), LLC, or trust that legally holds the underlying asset. The tokens you purchase represent ownership rights within this legal structure, not direct title to the asset itself.
Smart Contract Deployment A smart contract is written and deployed on a blockchain. Think of a smart contract like a vending machine: you put in the required payment, the machine automatically releases the product without needing a person to approve each transaction. In tokenization, the smart contract defines the token rules, governs ownership transfers, enforces conditions like lock-up periods, and automates income distributions. Developers working with Ethereum typically build to the ERC-20 standard for fungible tokens or ERC-721 for non-fungible tokens, per Ethereum Foundation documentation.
Token Issuance
Digital tokens are minted (created on the blockchain), representing fractional or full ownership of the underlying asset. Each token is a verifiable digital record tied to the smart contract and the legal structure. Once the asset is tokenized and those records are minted, they exist permanently on the ledger.
Platform Listing The tokens are listed on a tokenization platform or secondary trading market so investors can access them. Specialized platforms are built specifically for compliant tokenized asset trading, separate from standard cryptocurrency exchanges.
Investor Purchase
Investors can purchase tokens using fiat currency or, in some cases, cryptocurrency. Each purchase is recorded on the blockchain, creating a permanent and auditable ownership record.
- Ongoing Management After issuance, the smart contract handles ongoing operations automatically: distributing proportional income to token holders, processing compliance checks, and updating ownership records when tokens change hands.
[DESIGN BRIEF: Commission a tokenization lifecycle diagram showing the five core steps as a left-to-right horizontal flow with icons: Asset > Legal Wrapper > Smart Contract > Token > Market. Place adjacent to the numbered steps above.]
Which Blockchains Are Used for Tokenization?
Ethereum (co-created by Vitalik Buterin in 2015) is the dominant platform, home to the ERC-20 and ERC-721 token standards that underpin the majority of tokenized assets. Ethereum's smart contracts run on the Ethereum Virtual Machine (EVM), the computational engine that executes token logic across the network. Other platforms used for tokenization include Polygon (lower transaction costs, Ethereum-compatible), Avalanche (fast transaction finality, institutional adoption), Solana (high throughput), and Stellar (purpose-built for financial assets and cross-border settlement). Ethereum remains the most widely used, but it is not the only option.
Blockchain is the most common type of distributed ledger technology (DLT), the broader category of decentralized record-keeping systems used to track token ownership. Finance professionals working with enterprise implementations may also encounter permissioned DLT systems such as Hyperledger or R3 Corda, which are not public blockchains but serve similar record-keeping functions in institutional contexts.
For asset owners considering tokenizing their own property or business, the process typically requires working with a licensed tokenization platform and qualified legal counsel. Platforms such as Securitize and Polymath provide the technical infrastructure for issuance, but professional guidance is needed to navigate the legal and regulatory requirements. Tokenization is not a do-it-yourself activity.
Types of Tokens: Fungible vs. Non-Fungible
Not all tokens work the same way. The type of token used depends on the nature of the underlying asset, and understanding this distinction also clarifies how tokenization relates to NFTs, which many people assume represent the whole of tokenization rather than one part of it.
Fungible Tokens
Fungible means interchangeable: every unit of the same token is identical in value to every other unit. A fungible token works like a $10 bill. Your $10 and my $10 are worth exactly the same and can be exchanged without any difference to either party. This makes fungible tokens the right tool for financial assets where equal units matter: equities, bonds, commodities, currency equivalents. On the Ethereum network, fungible tokens are built to the ERC-20 standard, which defines the rules for how these interchangeable units are created and transferred.
Non-Fungible Tokens (NFTs)
Non-fungible means unique and not interchangeable. A non-fungible token is like a house key: every key is cut for a specific lock, and one key cannot substitute for another. Your token representing a specific painting is not interchangeable with someone else's token representing a different painting. Each carries a distinct identity that cannot be replicated.
NFTs have applications well beyond the digital art market that made them famous between 2021 and 2022. Real estate parcel titles, event tickets tied to specific seats, identity credentials, and collectibles are all use cases where uniqueness matters. The NFT market for speculative digital art experienced dramatic volatility during that period, but the underlying technology has continued to develop in more substantive financial applications. On Ethereum, NFTs are built to the ERC-721 standard.
The key point for anyone arriving with NFT confusion: all NFTs are tokenized assets, but not all tokenized assets are NFTs. NFTs are one specific category within a much broader space.
| Characteristic | Fungible Token | Non-Fungible Token |
|---|---|---|
| Interchangeable? | Yes | No |
| Examples | Currency, bonds, commodities | Art, real estate parcels, event tickets |
| Token standard (Ethereum) | ERC-20 | ERC-721 |
| Typical asset type | Financial instruments | Unique assets |
Tokenization vs. Cryptocurrency: What Is the Difference?
Tokenization and cryptocurrency both use blockchain technology, but they serve fundamentally different purposes, and conflating the two is the single most common misconception in this space.
Cryptocurrency (like Bitcoin or Ether) is a digital currency that operates natively on its own blockchain. Unlike Bitcoin, which operates as a purely digital currency with no underlying real-world asset backing it, tokenization represents ownership of an external asset, such as property, a bond, or gold, as a digital token on a blockchain. The blockchain is the shared infrastructure, but what each technology does with that infrastructure is entirely different.
| Dimension | Tokenization | Cryptocurrency |
|---|---|---|
| Definition | Process of representing asset ownership as digital tokens | Digital currency operating natively on a blockchain |
| Purpose | Ownership representation and transfer | Medium of exchange and store of value |
| Underlying asset | Real-world or financial assets (property, bonds, art) | No underlying asset; value is intrinsic |
| Examples | Tokenized real estate, tokenized bonds, tokenized gold | Bitcoin (BTC), Ether (ETH) |
| Blockchain relationship | Uses blockchain as a ledger for ownership records | Runs natively on its own blockchain |
Cryptocurrency is the money of the blockchain world. Tokenization is the property deed.
What Can Be Tokenized? Asset Classes and Real-World Examples
Almost any asset with measurable value and clear ownership can be tokenized, from commercial real estate and fine art to government bonds, gold, private equity. Tokenization is used to make illiquid, high-value assets accessible to a broader range of investors, to increase trading efficiency, and to automate ownership transfers through smart contracts.
| Asset Category | Named Example | Why Tokenization Helps |
|---|---|---|
| Real estate | St. Regis Aspen Resort (2018 tokenized offering) | Converts illiquid property into tradable fractional stakes |
| Art and collectibles | Fractional ownership tokens for physical paintings | Enables shared ownership of high-value unique works |
| Equities and stocks | Tokenized private company shares | Opens private equity access to a wider investor base |
| Bonds and fixed income | Tokenized government bonds | Automates coupon payments via smart contract |
| Commodities | PAX Gold (PAXG): each token backed by one troy ounce of gold | Provides fractional precious metals exposure without storage burden |
| Private equity and VC | Tokenized fund units | Reduces minimum investment thresholds for private funds |
| Intellectual property | Music royalty tokens | Allows artists and investors to trade income streams |
| Infrastructure | Energy project tokens | Enables retail participation in large-scale infrastructure financing |
Real Estate Tokenization
Real estate is the most frequently cited tokenization use case because it sits at the intersection of everything tokenization addresses: high value, low liquidity, and historically restricted access. Buying a commercial property typically requires hundreds of thousands to millions of dollars, plus legal counsel, property management expertise, and months of transaction time.
Tokenization changes that equation. Think of it like buying a single share of a company rather than buying the entire company. Instead of needing $500,000 to invest in a rental property, you could purchase a $50 token representing a fractional ownership stake in that building and earn proportional rental income through smart contract distributions.
RealT is a platform that tokenizes US residential properties, making them accessible to investors starting from small amounts. The St. Regis Aspen Resort became one of the earliest high-profile commercial real estate tokenization examples in 2018. The general process for tokenizing a property runs: property valuation, creation of a legal wrapper (typically an SPV), token issuance, and listing on a regulated platform. This is not a process a property owner undertakes alone; it requires both legal counsel and a licensed platform.
Real-World Asset (RWA) Tokenization
In financial circles, tokenizing physical and traditional financial assets is specifically called real-world asset (RWA) tokenization. RWA tokenization is the fastest-growing sub-sector of this space, attracting the most institutional attention and capital.
Major financial institutions are actively launching RWA tokenization products. BlackRock has entered this market, as have JPMorgan and Franklin Templeton, each with distinct products. BCG (Boston Consulting Group) projects the tokenized asset market could reach $16 trillion by 2030, driven primarily by RWA tokenization. That projection should be read as an estimate, not a certainty, but the institutional direction of travel is clear.
Tokenization in the real world: named examples
| Institution / Platform | Product | What It Represents |
|---|---|---|
| BlackRock | BUIDL | Tokenized money market fund on Ethereum, launched March 2024 |
| Franklin Templeton | BENJI | Tokenized US government money market fund |
| RealT | Residential property tokens | US residential real estate, accessible from approximately $50 |
| PAX Gold (PAXG) | Gold tokens | Each token backed by one troy ounce of physical gold |
Benefits of Tokenization
Tokenization offers several potential advantages over traditional asset ownership and investment structures, though, like any financial innovation, it also carries risks that any investor should understand before participating.
1. Increased Liquidity Liquidity refers to how easily you can convert an asset into cash without a significant change in its price. A stock listed on the New York Stock Exchange is liquid: you can sell it within seconds during market hours. A commercial property is illiquid: selling it can take months of negotiations, legal work, and transaction costs. By converting a traditionally illiquid asset into tokens tradable on a secondary market, tokenization can increase liquidity significantly. That said, liquidity is not automatic, a point covered in the risks section below.
2. Fractional Ownership Tokenization lets many investors each own a piece of an asset that no single investor could afford on their own. A $50 token representing a fraction of a commercial building gives you exposure to that asset class without the capital requirement of direct ownership. This is similar to buying fractional shares in equity markets, with one addition: smart contracts add programmable governance, meaning distributions and compliance can be automated without a fund manager intermediary.
3. Global Accessibility Token trading operates 24 hours a day, seven days a week, without geographic restrictions. Any investor with internet access and a compatible digital wallet can participate where applicable regulations permit. Traditional private markets, by contrast, typically limit participation to accredited investors in specific jurisdictions during defined trading windows.
4. Transparency and Auditability Blockchain records are permanent and verifiable by any participant on the network. Once a transaction is recorded, it cannot be altered retroactively. Every ownership transfer appears on the ledger, reducing disputes over title and provenance. For assets like fine art or real estate, this creates a clear chain of ownership that traditional paper records cannot match.
5. Programmability and Automation Smart contracts automatically distribute rental income, dividends, or bond coupon payments to token holders in proportion to their ownership stakes, without requiring manual administration or third-party intermediaries. Compliance checks, lock-up enforcement, and transfer restrictions can all be coded directly into the token's rules.
6. Reduced Intermediary Costs Fewer brokers, custodians, settlement agents, and administrators are needed when ownership transfers occur directly on a blockchain. This reduces transaction costs over time, though the tokenized asset market is still maturing and some infrastructure and professional services remain necessary.
How does tokenization make money? Token holders can generate returns through three pathways: capital appreciation, yield distributions, and secondary market trading. Capital appreciation occurs when the token's value rises as the underlying asset increases in value. Yield distributions happen when smart contracts automatically pass through rental income, dividends, or coupon payments. Secondary market trading allows you to sell tokens at a price above the purchase price. Returns from tokenized assets are not guaranteed and depend entirely on the performance of the underlying asset and market conditions. This is not investment advice.
These benefits are genuine. Tokenization also carries meaningful risks that every investor should understand before participating, which the next section covers directly.
Risks of Tokenization
Tokenization is not inherently unsafe or fraudulent. The underlying blockchain technology is well-established, and the world's largest financial institutions have already launched tokenized products. The key risks are structural, not criminal: smart contract vulnerabilities, regulatory uncertainty, and market immaturity are the primary concerns.
1. Smart Contract Vulnerability Smart contracts are code, and code can contain bugs or be exploited. When a vulnerability is discovered and exploited, investors can lose funds with no recourse because blockchain transactions are irreversible. High-profile exploits in the DeFi space have demonstrated how damaging these flaws can be. Third-party security audits provide some mitigation, but passing an audit does not guarantee that no vulnerabilities exist.
2. Liquidity Illusion A token being technically tradable on a secondary market does not guarantee that a buyer exists at the moment you want to sell. Secondary markets for many tokenized assets remain thin, with few active participants and wide bid-ask spreads. Tokenization creates the possibility of liquidity, not the guarantee of it. An investor who assumes tokenized assets are as liquid as publicly traded stocks may find themselves unable to exit a position at the price or time they expected.
3. Regulatory Uncertainty Tokenized securities may face regulatory action, particularly in the United States under the Securities and Exchange Commission's (SEC) evolving guidance. The regulatory treatment of tokenized assets varies significantly by jurisdiction and asset class. A token qualifying for an exemption in one country may be treated as an unregistered security in another. Section 7 covers the regulatory framework in more detail.
4. Custody and Security Risk Owning digital tokens requires secure management of private keys, the cryptographic credentials that prove your ownership. Loss of private keys means permanent, unrecoverable loss of your tokens. There is no equivalent of FDIC deposit insurance for tokenized assets. If the platform holding your tokens is hacked or becomes insolvent, your recourse depends entirely on the platform's legal structure and jurisdiction.
5. Valuation Complexity Tokenized illiquid assets such as private real estate or fine art may lack transparent, real-time pricing benchmarks. Token prices can diverge significantly from the fair value of the underlying asset, particularly in thin markets. Investors may not realize they are overpaying for a token relative to the asset it represents.
6. Market Immaturity The tokenized asset market is early-stage. Secondary market infrastructure, standardized legal frameworks, investor protection mechanisms, and custodian standards are all still being built. Participants accept more uncertainty compared to established asset markets with decades of regulatory precedent and institutional infrastructure behind them.
Institutional entry by firms such as BlackRock and JPMorgan is beginning to address some of these risks, particularly around custody standards and compliance infrastructure. But the market remains nascent. Due diligence is not optional.
| Advantage | Disadvantage |
|---|---|
| Increased liquidity potential | Liquidity may be thin or absent in practice |
| Fractional ownership access | Market immaturity limits viable options |
| 24/7 global trading | Regulatory uncertainty varies by jurisdiction |
| Transparent ownership records | Smart contract code may contain exploitable vulnerabilities |
| Automated income distributions | No FDIC-equivalent protection if custody fails |
The Regulatory Landscape for Tokenized Assets
The regulatory framework for tokenized assets is still developing and varies significantly by country. What follows is an educational overview, not legal advice. Anyone considering tokenized asset investment or issuance should consult qualified legal counsel for jurisdiction-specific guidance.
United States In the US, the Securities and Exchange Commission (SEC) takes the primary regulatory role for tokenized securities. The SEC applies the Howey Test, a legal standard established by the US Supreme Court, to determine whether a tokenized asset qualifies as a security. If it does, it falls under federal securities law and requires either registration or an applicable exemption. Regulation D (Reg D) is one such exemption that allows tokenized securities to be offered to accredited investors (investors who meet SEC-defined income or net worth thresholds) without full registration. The SEC's position on specific token categories continues to evolve, and regulatory guidance remains incomplete.
European Union The EU has moved faster on regulatory clarity. MiCA, the Markets in Crypto-Assets Regulation, came into effect in 2024 as the EU's framework for digital assets including tokenized instruments. MiCA provides more defined rules than the current US framework for many digital asset categories, creating a clearer operating environment for tokenization issuers and investors in EU member states.
Security Token Offerings (STOs) A Security Token Offering (STO) is the regulated mechanism for issuing tokenized securities to investors, analogous to an IPO but using blockchain infrastructure instead of traditional capital markets. STOs differ from Initial Coin Offerings (ICOs), which were largely unregulated fundraising mechanisms common between 2017 and 2018. STOs are subject to securities law compliance, and most require participants to hold accredited investor status. The STO structure was developed specifically to give blockchain-based security issuance a compliant foundation.
| Dimension | Tokenization | Traditional Securitization |
|---|---|---|
| Infrastructure | Blockchain smart contracts | Traditional capital markets infrastructure |
| Settlement speed | Near-instant in many implementations | T+2 or longer for most instruments |
| Transparency | Ownership records publicly verifiable on-chain | Varies; often opaque to end investors |
| Regulatory maturity | Developing; jurisdiction-dependent | Decades of established legal precedent |
For specific compliance questions, consult qualified legal counsel in your jurisdiction.
The Future of Tokenization
BCG (Boston Consulting Group) projects the global tokenized asset market could reach $16 trillion by 2030, driven by institutional adoption, improving regulatory frameworks, and maturing blockchain infrastructure. That figure comes from BCG's tokenization market research and should be understood as a projection, not a prediction. Actual outcomes depend on regulatory developments, secondary market growth, and the pace of institutional adoption.
Institutional adoption is already underway
The world's largest financial institutions are no longer watching from the sidelines. Three specific, verifiable examples show the extent of institutional commitment:
| Institution | Product | Asset Type | Platform |
|---|---|---|---|
| BlackRock | BUIDL | Tokenized money market fund | Ethereum |
| Franklin Templeton | BENJI | Tokenized US government money market fund | Multiple blockchains |
| JPMorgan | Onyx | Tokenized collateral settlement | Proprietary DLT |
BlackRock launched BUIDL in March 2024, making the world's largest asset manager (with over $10 trillion in assets under management) an active participant in the tokenized fund market. Franklin Templeton's BENJI fund brought tokenized US government money market exposure to a broader investor base. JPMorgan's Onyx platform handles tokenized collateral settlement between institutional counterparties. These are not pilot programs; they are live products from institutions with extensive compliance and risk management infrastructure.
DeFi integration
Tokenized real-world assets are increasingly entering DeFi (decentralized finance) protocols. DeFi refers to financial services including lending, borrowing, trading, earning yield, conducted via smart contracts on a blockchain without banks or brokers acting as intermediaries. As tokenized bonds, real estate, and other RWAs enter DeFi protocols, they can be used as collateral for on-chain loans or deployed in yield strategies. This opens a new dimension of utility for tokenized assets beyond simple ownership transfer.
Challenges that remain
Growth projections depend on resolving several outstanding challenges. Regulatory clarity in the US remains incomplete, and legal uncertainty suppresses institutional participation. Secondary market infrastructure for most tokenized asset categories is still thin, limiting actual liquidity. Custody standards for institutional-grade tokenized assets are still being defined. Interoperability between different blockchain platforms remains a technical and governance challenge that the industry has not yet fully solved.
Tokenization is not guaranteed to transform global finance. But the convergence of institutional adoption, improving regulatory frameworks, and maturing blockchain infrastructure suggests this technology will play a meaningful role in future financial markets.
How to Access Tokenized Assets
For investors curious about exploring tokenized assets, here is a high-level overview of how access typically works. This is educational context only, not investment advice.
Check your accredited investor status. Many tokenized securities in the US require accredited investor qualification, meaning you meet SEC-defined income or net worth thresholds. Non-accredited investors have access to a narrower set of tokenized products.
Choose a regulated platform. Several platforms exist for accessing tokenized assets. Securitize is SEC-registered and focuses on institutional-grade tokenized securities. RealT offers tokenized US residential real estate with retail-accessible entry points. tZERO operates as a regulated Alternative Trading System (ATS) for tokenized securities. Backed Finance offers tokenized stocks and ETFs. These are examples of the category, not ranked recommendations. Platform availability varies by jurisdiction, and regulatory status can change.
Complete KYC/AML verification. All regulated tokenization platforms require identity verification under Know Your Customer and Anti-Money Laundering (KYC/AML) compliance frameworks before you can invest. This is standard across the regulated digital asset space.
Research the underlying asset, not just the token. The token is a representation. The investment thesis depends on the asset behind it: its fundamentals, the legal structure, the issuer's track record, and the platform's regulatory standing. Evaluate the asset as you would any investment.
Understand minimum investment requirements. These vary significantly by platform and asset class. Some tokenized real estate products start from $50; others have minimums in the thousands.
Mainstream cryptocurrency exchanges such as Coinbase or Binance do not typically list tokenized real-world assets. Specialized platforms are required for most RWA token categories. Assuming standard crypto access pathways apply to tokenized assets will lead you to the wrong place.
Educational Disclaimer: This article is for educational purposes only and does not constitute financial, investment, legal, or tax advice. Tokenized asset investing involves significant risk, including the possible loss of principal. Consult a qualified financial advisor before making any investment decisions. Platform availability and regulatory requirements vary by jurisdiction.
Frequently Asked Questions About Tokenization
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What is tokenization in simple terms?
Tokenization converts ownership of a real-world asset into digital tokens on a blockchain. Think of it like turning a building into shares: instead of one buyer needing to purchase the entire property, thousands of people can each own a small digital piece of it. The asset stays in place; ownership is divided into tradable digital records.
What is an example of tokenization?
A clear example is real estate tokenization. Instead of one investor owning an entire commercial building, the property is represented as one million digital tokens on a blockchain. Each token represents a fraction of ownership. Investors can purchase tokens for as little as $50 through platforms like RealT, earning proportional rental income. BlackRock's BUIDL fund, a tokenized money market fund launched on Ethereum in 2024, is a high-profile institutional example.
What is the difference between tokenization and cryptocurrency?
Cryptocurrency such as Bitcoin or Ether is a digital currency that operates natively on its own blockchain. Tokenization is the process of representing ownership of an external real-world asset, such as property, art, or bonds, as a digital token on a blockchain. Both use blockchain technology, but cryptocurrency is the currency and tokenized assets represent ownership of something that exists in the physical or financial world.
Is tokenization the same as an NFT?
No. NFTs are one type of tokenized asset, specifically non-fungible tokens representing unique, one-of-a-kind items. Tokenization is a broader concept covering both fungible tokens (for interchangeable assets like bonds or commodities) and non-fungible tokens. All NFTs are tokenized assets, but not all tokenized assets are NFTs. The broader tokenization technology has continued to develop across financial applications since the NFT art market's volatility in 2021 and 2022.
What are the risks of tokenization?
The main risks include: smart contract vulnerability (code bugs can result in permanent loss of funds); liquidity illusion (a token being tradable does not guarantee buyers exist when you want to sell); regulatory uncertainty (treatment varies by jurisdiction and continues to evolve under SEC guidance and other frameworks); and custody risk (loss of private keys means permanent, unrecoverable loss of tokens with no FDIC-equivalent protection).
How does tokenization make money?
Token holders can earn returns through three mechanisms: capital appreciation (the token's value increases if the underlying asset appreciates); yield distributions (smart contracts automatically distribute rental income, dividends, or bond coupon payments proportionally to token holders); and secondary market trading (selling tokens at a price above the purchase price). Returns from tokenized assets are not guaranteed and depend on the performance of the underlying asset. This is not investment advice.
What is tokenization in cybersecurity?
In cybersecurity and payments, data tokenization refers to replacing sensitive data values such as credit card numbers or Social Security numbers with non-sensitive placeholder tokens to protect against data breaches. This process is governed by standards like PCI DSS in the payments industry. It is mechanically unrelated to blockchain-based asset tokenization, which this article covers. The two share only a name.
Can anyone tokenize an asset?
In principle, any asset with measurable value and clear ownership can be tokenized. In practice, the process requires legal structuring, a licensed tokenization platform, and often securities law compliance. For individual asset owners, platforms like Securitize and Polymath provide the technical infrastructure, but professional legal guidance is still required. For investors, purchasing fractional tokens in pre-tokenized assets is significantly more accessible than issuing tokens yourself.
What blockchain is used for tokenization?
Ethereum is the most widely used blockchain for tokenization and the home of the ERC-20 standard for fungible tokens and the ERC-721 standard for non-fungible tokens. Other blockchains used for tokenization include Polygon, Avalanche, Solana, Stellar. Ethereum is the dominant platform for institutional tokenization, but different platforms offer different trade-offs in cost, speed, regulatory recognition.
What is tokenization used for?
Tokenization is used for four main purposes: investment access (enabling fractional ownership of high-value assets previously inaccessible to most investors); liquidity creation (making illiquid assets like real estate or private equity tradable on secondary markets); DeFi integration (using tokenized assets as collateral in decentralized lending and yield protocols); and ownership automation (smart contracts handling income distributions, compliance, record-keeping without manual administration).