Tokenization Unlocked: Turning Real Assets Digital

Imagine you are walking down a bustling street in Abu Dhabi or New York. You look up at a shimmering $500 million skyscraper. Historically, that building belongs to a massive corporation, a sovereign wealth fund, or a billionaire. For the average person, “investing” in that property would seem impossible, unless you had a few million dollars to spare.

Now look at that same building and imagine it has been “shredded” into one million tiny pieces. Each piece is a digital certificate called a token. You buy one for $500. You now officially own 1/1,000,000th of that skyscraper. When the tenants pay rent, a tiny fraction of that money automatically slides into your digital wallet. So when the building’s value goes up, so does the value of your token.

This is the core of tokenization. It has helped transform the global economy from a world of all-or-nothing ownership into a world of digital slices. Tokenization is when you turn something valuable, like a house, a bond, or even the royalties from a song, from the real world and turn it into a digital token on a blockchain. Blockchain is like an online ledger that everyone can see but no one can change. When you tokenize something, you make a digital twin of it. The token isn’t just a picture of the asset; it carries the legal rights of ownership. If you hold the token, you own the share.

Why does this matter? Because it can take a long time and cost a lot of money to trade traditional assets like stocks or real estate. You may need lawyers, banks, or brokers to enable it, and deals can take a long time to go through. But with tokenization, the process is much faster, it cuts costs, and more importantly, opens doors for the common man to invest in things that were once only for the rich.

Where did tokenization come from?

Tokenization didn’t appear overnight; it has evolved with time. Long before Bitcoin or crypto came into the picture, banks experimented with tokens to protect credit card data. Then, instead of sending your actual 16-digit card number over the internet, they sent a token. This was a random string of numbers that when seen by a hacker, wouldn’t make any sense at all, but when the bank accessed it, it would allow them to proceed with the payment.

Then, during the crypto boom phase (2017-2021) and with the rise of Ethereum, people started tokenizing “digital-only” things, like JPEGs, NFTs, or new internet currencies. This was the experimental phase, which made people believe that tokenization had merit. Today, we are in the era of maturity. Major banks such as JPMorgan and BlackRock are investing significant funds in tokenization products. It is no longer just magic-internet-money; instead, real-world assets like government bonds, private equity, art and even real estate are being tokenized.

How does tokenization work?

Tokenization follows a few simple steps that have a logical path. First, you pick an asset, like a piece of art or a government bond. Then, you create a digital version of it on a blockchain. The first step is to choose the asset and let an auditor or expert verify the asset exists and determine its value. Take, for example, its a 24-carat bar of gold that costs $70,000. It then goes through a step called fractionalization, where the owner decides how many tokens to create. They might turn that $70,000 gold bar into 70,000 tokens, each worth $1. Once this is done, law (trust) ensures that the token represents real ownership.

From here it moves to the blockchain, where smart contracts, which are pieces of code that live on the blockchain feeds it in the code as “If User A sends $1, they receive 1 Gold Token. If the gold is sold, User A gets their share of the profit automatically.” And finally comes the mounting process where tokens are created on the blockchain and released to investors. These tokens will then reside in digital wallets. You can trade them on platforms, just like swapping baseball cards, but with blockchain recording every move securely. And when you want to redeem your asset, the token is burnt or removed from circulation, to claim the physical item or its value.

Why has tokenization become so popular?

Tech geeks are no longer the only ones who find tokenization popular; Wall Street is now regularly discussing it. There are three main reasons for this: Firstly, the idea of 24×7 liquidity. If you want to sell a house, it can take months. Tokenized assets, on the other hand, can be traded anytime, Secondly, regulations have cleared up. The U.S. passed the GENIUS Act in 2025, setting rules for stablecoins and tokens, making big players feel safe. Soon, big institutions wanted in. Banks like JPMorgan and Goldman Sachs ran pilots for tokenized bonds and funds. BlackRock’s CEO called it the future: “Every stock, every bond” on blockchain. A study showed that by 2026, tokenized assets could hit $400 billion, up from $36 billion.

Can everything be tokenized?

Technically, yes. You could tokenize your dirty socks, but no one would buy them. For tokenization to be successful and legal, it generally needs to meet certain criteria:

• Identifiable Value: There must be a clear way to prove what the asset is worth.
• Legal Framework: There must be a “legal bridge” between the digital token and the physical world. If the building burns down, the token holders need to be protected by insurance and law.
• Demand: Someone, somewhere, must want to buy a “slice” of it.

Certain items might be out of purview, like illegal items and drugs. This also applies to assets that lack value, such as air. Personal data might violate privacy laws. Highly regulated things, like defense codes or government-restricted technologies, stay off the blockchain. However, audits are always necessary to maintain trust.

Tokenization is doing for value what the internet did for information. Just as the internet allowed us to send “slices” of data (emails, videos) across the world instantly, tokenization allows us to move “slices” of wealth.