What is “tokenization”? EXPLAINED
One of the popular transaction types among blockchain technologies is tokenization. It is also one of the topics that those who want to enter the cryptocurrencies and digital assets ecosystems are researching what tokenization is and how it works. Tokenization, in its simplest form, is the process of converting assets into digital tokens by creating new tokens. Thanks to the tokenization process, you can manage or evaluate your assets without the need for intermediaries. Tokenization, where you will convert your assets into digital assets, has been a very common practice in recent years.
The process, which started with the step-by-step transformation of the entire financial process of cryptocurrencies and the tokenization of financial products based on all kinds of tangible/intangible assets, has attracted the attention of regulators in recent years, with the addition of the tokenization of securities. In other words, our real estate, which is now a value in traditional banking, will also have a counterpart for blockchain technology in the new period, these real estate will be able to be traded.
You can use fiat currencies, stocks, real estate, and even your original artworks in the tokenization process. As these assets become digital tokens, they are kept in reliable conditions. It will also be possible to trade these assets with other users who have tokenized them. Tokenization is an application that businesses can use when integrating their existing systems with blockchain technologies. The interest in cryptocurrencies continues to increase in recent years. Especially reliable stablecoin types such as reliable stablecoins are recommended to businesses thanks to the advantages such as fixed price.
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What is tokenization in simple terms?
Tokenization can simply be defined as the technology in which physical assets are converted into digital assets. It is a good solution for those who want to securely store their assets in the decentralized and secure atmosphere of blockchain ecosystems. Technically, it is the process of integrating your asset into the cryptocurrency exchange with a software tool that works with the token principle. For example, you have an oil painting work. This work will be uploaded digitally to online environments and become a valuable asset approved by you. You will be able to earn income from the sales of this work through online channels. Maybe you can become a globally known artist in seconds, thanks to the unlimitedness and high speed of cryptocurrencies, who knows?
The tokenization process, where your real-life assets are converted into digital tokens, offers many advantages. Your new digital asset will be securely stored thanks to its new form. In addition, it can be bought and sold with other products in the same category. It will provide trade opportunities for businesses. With the tokenization of your assets, it will be possible to include them in commercial processes. On the other hand, you will be able to manage your assets more easily thanks to digital channels’ practical interfaces.
In the digital area, all data is stored in a special area called “Distributed Ledger Technology”. Another technical definition of tokenization is the expression of sensitive data with a unique and random token for the secure transfer of sensitive data from one system to another. It is predicted that tokenization technologies will become a larger sector in the future with the development of mathematics and software. In terms of cyber security, tokenization offers important solutions with advantages. Information such as credit card information, and citizenship number, even when our assets are recorded or sent to a medium, the token that symbolizes them is created, and the data becomes inaccessible and circulates securely between systems. Blockchain technology works with similar principles. Your assets will be in a decentralized and secure ecosystem thanks to tokenization.
Moreover, tokenization is a good solution not only for the digitization of assets but also for identities. We can create our digital identities thanks to the tokenization process. We can safely continue our payments and other commercial activities in digital ecosystems in different forms within tokenization processes. reliable stablecoins is one example of a digital token just like other digital assets. Unlike other cryptocurrencies, it offers the same stability as traditional banking fiat currencies.
