Since the introduction of the distributed ledger technology, it has grown massively in size and number of users. The use of the technology to securely transfer and distribute chunks of information independent of a third party has been a stand out advantage. Another thing, perhaps, that drives the growth of the technology is tokenization
WHAT IS TOKENIZATION?
Tokenization is the process of converting real-life assets (goods and other products) into digital assets. These assets are then securely stored, transferred, and transacted on the distributed ledger technologyꟷ the blockchain.
Imagine a piece of an expensive painting, for example, purchasing the art valued at $1m will take a lifetime with my $50,000 a year salary. With tokenization, however, that piece of painting can be digitized and converted to thousands of tokens, after which I can conveniently purchase a token of a million dollars painting.
Fortunately, the concept of tokenization on the blockchain technology is also guarded by the technology. The distributed ledger is entirely immutable, and every asset on the blockchain can be accounted for. This ensures that multiple persons can own pieces of real-life assets they would ordinarily be unable to afford as a whole.
ADOPTION OF TOKENIZATION AND THE BLOCKCHAIN TECHNOLOGY
The use of tokenization to secure assets became popular in 2017. Since then, various industries, institutions, investors, and individuals have adopted the idea. Precious metals, stocks, bonds, artworks, and different asset classes have been backed up on the ledger.
Liquidity, security, and transparency are the primary reasons why tokenization is popularized on the blockchain technology.
Indeed, blockchain and tokenization are the future of digital assets.