What does "tokenization" refer to in blockchain?

Tokenization refers to the process of converting rights to an asset into a digital token on the blockchain. This means that real-world assets, such as real estate, artwork, or commodities, are represented as digital tokens that can be securely managed, transferred, or traded on a blockchain network. By creating a digital token that encapsulates the rights associated with the asset, tokenization facilitates fractional ownership, increases liquidity, and enhances the efficiency of transactions. It allows for the seamless transfer of ownership without the need for intermediaries, thus streamlining the process and reducing transactional costs.

For instance, owning a digital token representing a share of a property can enable multiple investors to own portions of that property, which might not be feasible through traditional means. Tokenization opens up new opportunities for asset management, investment, and commerce within the blockchain ecosystem.