What is Tokenization?

Tokenization refers to making a product or service data more secure by converting it to different values. In other words, it can be defined as adapting existing business models to the blockchain. You can find the answer to the question of what is tokenization in this article.

What is Tokenization?

Tokenization is a way of storing data by dividing it into smaller pieces. The purpose of symbolizing data with smaller fragmentary symbols, words, or phrases is to store data more securely. Tokenization of crypto-assets is a method implemented to store related crypto-asset data on the blockchain.

Tokens are cryptocurrencies that do not work on their own blockchain networks. Instead, they are built on existing blockchains. The vast majority of tokens in the market are created on the Ethereum blockchain.

The Purpose of Tokenization on Blockchain

Tokenization happens by integrating different types of financial assets into the blockchain. With the tokenization method, the property right of the data processed in the blockchain is protected more securely. Besides, the need for a third party in traditional finance is eliminated during the transactions.

By transforming data into a different form, tokenization paves the way for the protection of property rights, and enables existing data to be stored more securely. So, tokenization enables cryptocurrency transactions to occur in a decentralized way on the blockchain.

Benefits of Tokenization

Tokenization, which paves a new way for a new business model and allows existing industries to operate on the blockchain, allows the investment to be made by buying tokens when investing in a financial asset. As a result, with tokenization, non-crypto-asset financial assets also gain ownership and decentralization, and financial transactions take place within a more secure framework.